Regional boom proves pandemic-era durability

Australia's regional property markets are proving more durable than the pandemic era that sparked them, continuing to outperform the nation's capital cities in a trend that defies earlier predictions of a fleeting 'tree-change' cycle.

New property data reveals the gap is widening. Over the three months to January, regional areas expanded at 1.2 per cent—slightly ahead of the capitals' 1 per cent. While the margin is narrow, the consistency is notable, representing a sharp shift from pre-COVID property dynamics.

The pandemic years of 2020 to 2022 saw explosive growth across regional Australia as remote workers and families fled congested cities. Once lockdowns lifted and commutes resumed, many expected the trend to reverse. It hasn't.

"Outside of the pandemic growth between 2020 and 2022, the outperformance of the regional markets relative to the capital cities is a fairly new phenomenon," said CoreLogic research director Tim Lawless. But he offered crucial nuance: this isn't a regional acceleration, but rather a capital city slowdown.

The standouts paint a clear picture. Regional Western Australia has led the charge. The coastal town of Albany posted quarterly growth of 7.7 per cent, while Bunbury grew 6.2 per cent. Over a 12-month horizon, just six regional areas achieved double-digit growth—a striking contrast to the pandemic years when such figures were routine. Those standouts included Bunbury in Western Australia and Bundaberg and Rockhampton in Queensland.

The concentration of strength in two states is telling. Western Australia and Queensland are the only states recording positive interstate migration, according to Lawless. These regions boast diverse economies underpinned by agriculture, tourism, ports and mining—factors that have proved resilient as the broader property market cools.

The rental market reinforces the trend. Regional rental indices climbed 2.3 per cent over the same three-month period, outpacing the capitals' 2.1 per cent. Again, Western Australian coastal towns led: Albany, Bunbury and Busselton all posted strong gains. In Queensland, only Gladstone and Mackay achieved double-digit annual rental growth outside the West Coast.

Looking ahead, Lawless identified the likely winners: regional cities in the 'sweet spot'—those within commuting distance of a capital city, offering lifestyle benefits and affordable housing. These markets should continue attracting migration and investment.

More remote regional areas, by contrast, will depend on local economic conditions. Infrastructure projects, weather, agricultural policy and international commodity prices will determine their trajectory. Geography, in other words, will matter more than pandemic-era migration did.

The durability of regional growth—even as it moderates—suggests the property market shift sparked by lockdowns has left a lasting imprint. Australia's regions may have gained something more valuable than a temporary boom: they've earned a structural advantage.