The ongoing lack of housing supply and affordability in Australia’s capital cities is driving more homebuyers to explore regional property markets.

Buyers Agent has identified 10 regional hotspots to watch, based on investor activity (including sales and inquiries) over the past 12 months, along with capital growth and rental yields.

According to Brisbane-based buyer’s agent Andrew Pizzino, Queensland and Western Australia are leading the charge with the fastest-growing regional markets.

“When analysing key property metrics like rental yields, vacancy rates, population growth, and demand in both rental and owner-occupied segments — it’s clear that regional investment markets in north Queensland and Western Australia are the most popular.

Mandurah, in particular, remains a top investor hotspot. As Western Australia’s largest regional city, it’s steadily transitioning from a mining town to an affordable alternative to Perth,” he says.

“On the other hand, Queensland’s lifestyle is especially attractive to buyers, driving further population growth in these affordable regions. Plus, the quality of properties at reasonable price points is generally quite high in the Sunshine State.”

How has the increased interest in regional areas affected property prices?

According to Andrew, regional property prices have surged to the point that many properties are now listed without a price, making it harder for buyers to know what to offer. In Brisbane, for example, a property listed at $500,000 may sell for 10% more, but in a hot regional market, the final sale price could be closer to 20% above the listed price.

What factors are driving the current boom in regional markets?

According to Sky Hammer, Head of Investment at Convergence Buyer’s Agents, housing affordability and the limited supply of properties in regional markets are the primary drivers of the regional boom.

“In many regional markets in Queensland and Western Australia, buyers can still find four-bedroom homes on large blocks for under $550,000. As rents increase, more first-home buyers are using government incentives to move from renting to owning,” he says.

“For instance, a property in Townsville, where a three-bedroom house was listed for offers over $400,000, received 30 written offers — most from first-time buyers — and sold for over $480,000. This demand is expected to rise as interest rates decline and borrowing power grows for most buyers.”

What are the key benefits of buying a home in a regional market versus a capital city?

Investing in regional markets offers several advantages, including strong rental yields, lower entry costs, and the opportunity to diversify across different states. Many regional markets are still in the early stages of their capital growth cycles, with potential for double-digit growth in the coming years, according to Sky.

“This growth allows investors to build equity, which can then be used for future deposits. Rentvestors, particularly in cities like Melbourne and Sydney, are increasingly turning to regional markets as they often have substantial deposits saved but can’t afford properties in their home cities,” he says.

“By purchasing regional properties with stronger growth potential and solid rental yields, they can build equity more quickly, and buy homes in their city faster than if they were only saving for a deposit.”

How do you identify the best regional areas for long-term growth?

Short-term indicators like days on market, inventory levels, and vacancy rates are useful for investors while long-term growth depends on factors like infrastructure investment, building approvals, and economic diversification. Predicting short-term growth is simpler, but long-term growth requires deeper insight into local market trends.

“When looking for short-term growth, we prioritise days on market as a key indicator due to its strong correlation with capital growth. As an example, we were buying in the Rockingham region southwest of Perth when days on market were around 50 in 2021. That figure is now around 7 days on market and the market there has seen more than 70% capital growth in just three years,” he says.

What should buyers consider to future-proof their investment in booming regional markets?

Buyers should have a solid understanding of local market trends and avoid jumping in too late in the capital growth cycle. Many investors wait until regional markets gain attention in the media before making a move. However, once you hear that a market has experienced 20% capital growth in the past year, it’s typically already too late or not the ideal time to buy.