Capital Cities vs Regional Markets: Where Are Property Prices Growing Faster?

Australia’s property market in early 2026 is no longer moving as one single story. National prices are still rising, but when you zoom in, you’ll see a clear split forming between metro and non-metro areas. The debate over capital city vs regional property markets is now more important than ever for buyers and investors trying to decide where the strongest growth lies.

Using the latest data from the Cotality Home Value Index (HVI) for February 2026, you can clearly see that growth is not evenly distributed. Some capital cities are outperforming strongly, others are moderating and many regional markets are quietly beating the capital city average.

If you’re planning your next property move, especially with guidance from the best buyer agent in Australia, this guide will help you understand where prices are growing faster and why.

Let us explore it:

National Snapshot: Growth Continues, But It’s Uneven

The latest Cotality HVI figures show that Australian dwelling values are still rising nationally, with solid annual growth. However, performance varies widely by location.

Key national indicators (Feb 2026 HVI):

• National dwelling values continue to record positive annual growth.
• Combined regional markets are growing slightly faster than combined capital cities.
• Lower-priced and more affordable markets are seeing stronger demand pressure.
• Western and northern markets are leading growth tables.

This immediately sets the stage for the capital city vs regional property markets comparison, as the averages mask meaningful differences beneath the surface.

Annual Price Growth by Market (Latest Data)

Based on the February 2026 Cotality HVI dataset, here is how major markets are tracking annually:

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Key takeaway: Across Australia's combined regional markets, dwelling values have grown by around 10.3% annually, slightly outpacing the combined capital cities’ average of around 9.2%. This captures one of the clearest examples of the capital city vs regional property markets divergence in early 2026.

How Growth Differs: Capitals vs Regionals

Let’s break down the key differences:

Capital Cities

Capital cities remain prime hubs of population and investment, but growth rates are uneven:

• Perth and Brisbane are standout performers among the capitals, with strong annual growth in dwelling values.
• Sydney and Melbourne show more moderate price increases, constrained by affordability pressures and slower demand.
• Darwin’s market, though smaller, is consistently showing above-average gains, benefiting from a compact market base.

This underscores that not all capital cities are moving in unison and investors must look beyond national headlines to pinpoint the real opportunities.

Regional Markets

Regional Australia continues to outshine the combined capitals overall:

• Regions typically deliver more affordable price points, attracting more active competition.
• Combined regional values are growing faster than the combined capitals, with 10.3% annual growth vs 9.2%.
• Some regional labour markets and lifestyle hubs are benefiting from in-migration and stronger local demand.

This performance has been driven by affordability advantages, lifestyle appeal and shifting buyer preferences, especially among first-home buyers and downsizers looking beyond major cities.

What’s Driving the Regional Outperformance?

Several structural factors are favouring regional markets over some capital cities:

1. Affordability Pressures in Major Cities

High prices in Sydney and Melbourne are limiting growth momentum, while more affordable regional centres are seeing first-home buyers and investors increasingly active.

2. Shifts in Migration and Demand

Population flows, including interstate migration, are reshaping demand patterns with lifestyle regions benefiting from relaxed living, remote work opportunities and lower costs.

3. Investor Preferences

Investors increasingly look to markets with more favourable rental yields and growth prospects, an edge often found in regional areas.

4. Lower Price Points Fuel Competition

Across many regional hubs, entry-level homes yield quicker turnover and stronger demand compared to pricier metropolitan stock.

Total Return & Yield: Another Measure to Compare

Beyond price growth, total returns and rental yields tell another dimension of the capital city vs regional property markets story:

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Note: Total return factors both price growth and rental income.

This reinforces that many regional markets are not only growing in capital value but also delivering attractive rental yields, a compelling combination for property investors.

Price Levels vs Growth Rates: A Key Contrast

Another important difference between capital cities and regional markets is the relationship between price level and growth speed.

Higher-priced capital city markets, especially Sydney, now show slower percentage growth compared to several lower-priced regional markets. That pattern suggests affordability ceilings are shaping demand.

In simple terms:

• Higher entry prices → slower percentage growth.
• Lower entry prices → stronger buyer competition → faster growth rates.

It is a recurring pattern in the latest HVI data and helps explain why the capital city vs regional property markets growth race is currently tilting toward regionals in percentage terms.

Supply Pressure Is Not Equal Across Markets

Price growth is not only about demand; supply also plays a huge role. The February 2026 HVI data indicate that supply constraints remain tight nationally, but their impact differs by geography.

Capital cities tend to have:

• Larger construction pipelines
• More medium and high-density projects
• Greater listing turnover in some segments

Many regional markets tend to have:

• Smaller development pipelines
• Lower new stock flow
• Fewer listings relative to demand

When demand rises in lower-supply regional markets, prices can adjust faster. This structural supply difference is one reason why regional growth rates are currently edging ahead in the capital city vs regional property markets comparison.

Key Takeaways

• The capital city vs regional property markets gap is clearly visible in the latest February 2026 HVI data, with regional markets slightly outperforming combined capital cities in annual growth.
• Combined regional dwelling values are rising faster (around 10.3% annually) than combined capitals (around 9.2%), showing that growth leadership is no longer metro-only.
• Capital city performance is uneven. Perth, Brisbane and Darwin are leading growth, while Sydney, Melbourne and Canberra are showing more moderate increases.
• Regional markets are benefiting from affordability, tighter supply and lifestyle-driven demand, accelerating price growth in many non-metro areas.
• Lower entry prices are directly linked to faster percentage growth, giving many regional areas a structural advantage in the current cycle.
• Rental yields and total returns are generally stronger across regional markets, making them increasingly attractive in the capital city vs regional property markets comparison.
• Supply pipelines are deeper in major capitals but thinner in many regional areas and when demand rises in low-supply markets, prices tend to move faster.
• National averages now hide more than they reveal. Suburb-level and region-level data matter more than headline figures.

Conclusion: Capital Cities vs Regional Markets Growth Is No Longer One-Speed

Australia’s property market in early 2026 remains resilient, with national dwelling values continuing to rise according to the latest HVI data. But the story beneath the averages is clear: the divide between capital city vs regional property markets is widening and growth is no longer moving at a single national pace.

Both segments are growing, but not equally and not uniformly.

What the latest data shows:

• Some capital cities (Perth, Brisbane, Darwin) are delivering very strong growth.
• Others (Sydney, Melbourne, Canberra) are rising more moderately.
• Combined regional markets are now slightly outpacing combined capitals in annual growth.
• Lower-priced markets are seeing stronger competition and faster percentage gains.
• Yield and total return profiles are often more attractive in selected regional areas.

For buyer and investor success in this cycle, averages are not enough. Market selection, price segment analysis and supply-demand balance now matter more than ever.

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If you want deep, data-driven property insights tailored to your goals, working with the best buyer agent in Australia can make a real difference. PropXperts helps with suburb selection, negotiation and acquisition strategy so you can move with confidence using real market intelligence.



Disclaimer: This article is for informational purposes only and does not constitute financial, legal or investment advice. Market data is sourced from reputable publications and is accurate at the time of writing, but property markets can change without notice. Always conduct your own research or consult a professional before making property decisions.