Regional and city housing closely connected
Senior economist says 'when the closest capital has been strong, nearby regional markets have generally benefitted'.
REGIONAL housing markets are still linked to the buying and selling fluctuations of their nearest capital city, according to nedw research from Ray White Group.
Ray White chief economist Nerida Conisbee said the clearest pattern is that regional markets near capitals are still shaped by the capital city cycle.
“When the closest capital has been strong, nearby regional markets have generally benefitted; when conditions have softened, that weakness has also flowed through.,” Conisbee said.
“This is particularly evident around Sydney and Melbourne, where nearby regional markets have followed the broader direction of their capital city, even where they have outperformed over the longer term.
For this analysis, Ray White compared median house price trends across selected regional markets near major capitals with the performance of the closest metropolis.
The analysis covered the period from June 2016 to March 2026, using a simple average across selected LGAs for each regional group.
For Sydney, this included the Central Coast, Wollongong and the Southern Highlands. For Melbourne, it included Geelong, Mornington Peninsula and Surf Coast.
For Brisbane, it included the Gold Coast and Sunshine Coast. For Adelaide, it included Adelaide Hills, Barossa and Fleurieu Peninsula. For Perth, it included Mandurah, Busselton and Margaret River.
On average, regional markets near Sydney, Melbourne, Adelaide and Perth have outperformed their nearest capital city since 2016.
“The largest differences are around Melbourne and Perth. Melbourne-linked regional markets rose by around 86 per cent, compared with 42 per cent for Melbourne, while Perth-linked regional markets rose by around 133 per cent, compared with 103 per cent for Perth,” Conisbee said.
“Brisbane and Adelaide show a different pattern, with nearby regional markets moving much more closely in line with the capital city. In South East Queensland, this reflects the fact that Brisbane itself has been one of the strongest-performing capital city markets.
“The strongest regional markets tend to have another driver beyond proximity.
“In Queensland, the Gold Coast and Sunshine Coast have benefitted from the same forces supporting Brisbane – population growth, interstate migration and lifestyle demand – which has kept their growth broadly in line with an already very strong capital city.
“In Western Australia, the pattern is more pronounced: Mandurah has combined relative affordability with access to Perth, while Busselton and Margaret River have benefitted from the state’s broader economic strength as well as their lifestyle appeal.
“As a result, Perth-linked regional markets have pulled further ahead of their capital than the Queensland markets have.”
Conisbee said Melbourne-linked regional markets tell a different story.
“Geelong, Mornington Peninsula and Surf Coast have all outperformed Melbourne over the longer term, but the scale of growth has been far weaker than in Queensland, Western Australia or Adelaide-linked markets.
“This suggests proximity to a capital city helps but it is not enough on its own. The strength of the underlying capital city still matters”
Sydney’s nearby regional markets sit somewhere in the middle, according to Conisbee.
“The Central Coast and Wollongong have both performed strongly and are now at new highs.
“The Southern Highlands has also delivered strong long-term growth, but has softened more noticeably from its peak.
“This points to differences even within the same capital city catchment. Larger, more established regional city markets appear to be holding up better than some of the more discretionary lifestyle markets.”
Conisbee said the outlook now depends heavily on the nearest capital city cycle.
“Sydney and Melbourne are slowing more quickly than Brisbane, Adelaide and Perth, and that is likely to have the greatest impact on their nearby regional markets.
“Areas such as the Central Coast, Wollongong, Geelong, Mornington Peninsula and Surf Coast remain exposed to buyer confidence and affordability conditions in their nearest capital.
“If Sydney and Melbourne soften further, these regional markets are likely to feel it.
“By contrast, regional markets linked to Brisbane, Adelaide and Perth should hold up better while those capitals remain stronger.
“The Gold Coast, Sunshine Coast, Mandurah, Busselton and Margaret River are also supported by lifestyle and population growth drivers that extend beyond simple proximity to a capital city.”
