Regional property markets are slowing in value growth due to affordability issues, normalising listings, and high interest rates, according to CoreLogic’s Regional Market Update.

Values in regional markets rose by 1.3% over the three months to July, compared to 1.8% in capital cities. CoreLogic economist Kaytlin Ezzy said the pace of growth has eased as migration patterns return to normal, cooling demand for regional housing.

"The quarterly growth rate in regional dwelling values slowed from 2.2% in April to 1.3% in July. Growth in capital cities also moderated from 2.0% to 1.8%," Ezzy noted. However, growth trends across Australia’s largest 50 non-capital city areas (SUAs) are increasingly diverse. Forty percent of these areas recorded a value decline, while 11 regions saw rises of more than 3%.

In May, just eight markets saw declines, but by July, 20 of the largest SUAs were falling. Ezzy expects values and rents to moderate further as listing costs and high interest rates weigh on household budgets.

Queensland topped growth, overtaking Western Australia, with Gladstone values rising 9.2%. Other top performers included Townsville (7.8%) and Western Australian markets like Busselton (7.2%), Bunbury (6.7%), and Geraldton (6.2%), all with annual growth over 20%. Meanwhile, 14 NSW and six Victorian regions saw declines, with Coffs Harbour (-3.8%), Ballarat (-3.4%), and Orange (-3.1%) experiencing the largest drops.

Rental growth has also slowed, with regional rents rising by 1.3% over the quarter, down from 2.8% in March. Capital city rents rose 1.1%, down from 2.9% in April. Geraldton saw the largest rent rise (5.1%), while WA’s Kalgoorlie-Boulder region recorded a -1.0% rent drop. Bunbury recorded the strongest annual increase, adding $80 per week.

Affordability remains a key concern, with dwelling values in regional areas rising 52.5% since the pandemic, and rents up 39.1%, compared to 33.4% and 35.4% rises in capital cities.