Canberra Times | Regional Property Values Rise as Sydney & Melbourne Fall

Why Regional Property Values Are Rising While Sydney and Melbourne Prices Fall

Journalist Nina Hendy, writing for the Canberra Times, examines the growing divide between regional and capital city property markets, drawing on the latest Cotality national Home Value Index for May 2026.

According to Cotality's data, combined regional property values recorded cumulative growth of 8.8 per cent to 31 May 2026, with median values reaching $941,864. Regional rental yields also grew 4.2 per cent amid persistently low vacancy rates - a signal of continued demand outside the capitals.

Capital City Markets Lose Momentum in May 2026

Sydney and Melbourne dwelling values fell 0.9 per cent and 0.8 per cent respectively in May, now sitting 2.1 per cent and 2.9 per cent below their cyclical highs from November 2025. Nationally, home sales over the past three months were tracking 2.2 per cent lower than a year ago and 4.1 per cent below the five-year average. Affordability pressures, reduced borrowing capacity, and a narrowing buyer pool continue to weigh on demand, particularly at higher price points where borrowing limits are most binding.

What the Outlook Means for Australian Property Buyers

Oliver Hume chief economist Matt Bell noted that Australian land markets held steady in the March quarter but are easing into the June quarter. Bell described national dwelling price growth as having come to a "grinding halt" in May, with Federal Budget uncertainty around negative gearing and capital gains tax adding further headwinds.

"A softening established market isn't going to help matters," Bell said, adding that 2026 will be

"a tough slog for pretty much every residential market segment across the country."

On a more positive note, Bell pointed to a shifting interest rate outlook for Australian property buyers. Softer inflation and a rising unemployment rate have reduced the likelihood of further RBA rate hikes, with markets now pricing in less than one additional increase. Many economists are forecasting a stable rate environment until potential RBA cuts in the second half of 2027.

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