Australia’s regional resurgence: the lifestyle factor driving growth
An article by George Bougias
Australia’s regional markets are continuing to attract the attention of buyers and new residents, outpacing capital city counterparts. Research released by CoreLogic has found that 72.6% suburbs across regional Australia saw an increase in dwelling values over the quarter to Jan 2025. In contrast, almost half (48.6%) of capital city suburbs reported quarterly falls.*
While there are cyclical factors that can affect price growth, such as the level of interest rates and markets correcting after a period of sustained growth, there continues to be a range of underlying and long-term structural factors driving growth/decline. These include many interrelated factors:
1. Affordability has become even more important in buyer decision making
Australia’s housing shortage has continued to worsen
Many buyers and tenants have become effectively ‘locked out’ of many (if not all) capital city markets
Building costs are rising, and
Regional areas offer value for money - more land, larger homes, and lower costs - a significant factor for families, first-home buyers, and retirees.
2. Cost of living
Australia is also experiencing a cost-of-living crisis (energy/utilities etc), putting more pressure on budgets.
3. Continued growth in net regional immigration
The regions have benefited from both an elevated flow of capital city residents moving to the regions, along with a reduction in the number of people leaving the regions for the capitals.
4. Remote working and technology
Hybrid working arrangements remain popular, well after COVID
Technology continues to transform Australia’s economy and, specifically, the relationship between cities and regions.
5. Record population growth, underpinned by high levels of overseas immigration.
Many new migrants, including many Australians, are increasingly looking at regional areas. This trend is set to continue, especially as Australia’s population undergoes record population growth and our capital cities struggle to deal with growth. The Centre for Population expects Australia’s population to increase by 4.1 million over the next decade (largely from overseas migration), with most of this growth projected to occur in Sydney, Melbourne, Brisbane and Perth.
6. Decentralisation
Many businesses continue to look to regional areas, driven in part by the increasingly high costs of operating in capital cities (property taxes remain a key issue, e.g. land tax).
7. Investment
The higher yield on offer in regional markets, combined with improving fundamentals in regional areas (and broader understanding of these fundamentals), continues to attract investor
8. The emergence of “Lifestyle Zones”
In addition to the adoption of remote work, allowing people to live further from traditional job hubs, many professionals are prioritising lifestyle over proximity to the office, choosing locations that offer better living conditions without long commutes
Tree-change and sea-change trends have strengthened, with professionals, retirees, and young families relocating for a more relaxed lifestyle. Futurist Bernard Salt has predicted the rise of Sea-change 2.0** - in the post pandemic era Australians still want the quality of life associated with living by the beach, however they want it in a way that provides access to amenity and aligns with current values of living within the environment – characterised by the emergence of “lifestyle zones” on the fringe of coastal city hubs
Growing regional centres (driven by a larger population with a greater critical mass) are developing stronger cultural, dining, and recreational offerings, creating vibrant destinations in their own right
9. Infrastructure and connectivity improvements
Governments are investing in transport infrastructure, such as faster rail connections and improved highways, making commutes from regional areas more feasible
Enhanced digital infrastructure, including high-speed internet, allows professionals to work effectively from regional locations
Many regions are also seeing investment in healthcare, education, and community services, making them more viable long-term options
Opinions vary on the long-term sustainability of this trend. While some argue that economic conditions and migration patterns could eventually reinstate traditional population growth patterns, concentrating demand back in capital cities, recent data indicates that interest in regional areas may have gained momentum in recent years. New research commissioned by the Regional Australia Institute (RAI) shows the number of city-dwellers looking to relocate to the regions has doubled over the past 18 months. The result of a nationwide survey shows 40% of capital city residents are considering a move to regional Australia – up from 20% in May 2023^.
Rapid growth will drive change, presenting both opportunities and challenges in balancing infrastructure, housing supply, and employment growth. Regional areas are also facing many of the same challenges as cities, with the population shift to these areas now contributing to affordability pressures.
While the strength of demand will ebb and flow between cities and regions (in line with prices and other factors), we expect that regional areas will perform strongly overall over the medium to long term. There is an increasing need for sound strategic planning to ensure regional centres/areas can accommodate this demand in a sustainable way, while also maximising the opportunities that come from growth.
With our extensive experience in regional development, Solve Property has a deep understanding of the market, including current and emerging trends. This expertise allows us to help clients navigate the opportunities arising in regional areas. Reach out to our advisory team to find out how we can assist you.
Sources:
*CoreLogic February 2025 Housing Report
**Solve Property Group Northern Rivers Housing Forum, keynote address by Bernard Salt
^ https://regionalaustralia.org.au/Web/Web/Media/Media-Releases/2024/two-in-five_city_dwellers_looking_to_make_a_regional_move.aspx)