While Sydney and Melbourne have fallen through 2026, regional Australia has held up much better. Cotality reports regional dwelling values rose 5.6% over the year to September, compared with a 1.8% fall across the combined capitals.
For buyers on the NSW South Coast, in the Hunter, the Illawarra or regional Queensland, that's a very different story from the city headlines.
Why the regions are outperforming
Affordability. Regional homes are generally cheaper, so higher rates don't hit borrowing power as hard. Cotality has noted that more affordable properties have been more resilient this year.
Lifestyle and flexible work. Hybrid work arrangements continue to support demand in commutable regional centres and coastal towns.
Tighter supply. Many regional markets have limited new housing.
Lower starting point. Price levels relative to local incomes are often less stretched.
Not all regions are equal
Even in the regions, momentum is slowing. In September, 71% of regional sub-markets recorded a monthly decline. Some coastal and lifestyle areas that boomed during the pandemic have been softer.
Regional markets are also smaller and can move sharply on local factors: a major employer opening or closing, infrastructure projects, or insurance costs.
How lenders view regional property
Most mainstream lenders lend on regional property without issue, but some apply different rules:
Postcode restrictions. Some lenders cap LVRs in small or remote towns.
Property size. Large rural blocks may be treated as rural property. Many lenders limit how much land they'll lend against for a residential loan, often around 10 to 50 hectares depending on the lender. Larger holdings may need a rural or agricultural loan.
Valuations. Fewer sales mean less comparable data, so valuations can be conservative.
Insurance. Flood and bushfire risk can affect insurance availability and cost. Lenders need the property insured.
First home buyers in regional NSW
- 5% Deposit Scheme: price cap $1.5 million in NSW regional centres, $800,000 in the rest of the state
- Stamp duty: no duty up to $800,000 for first home buyers
- First Home Owner Grant: $10,000 for new homes up to $600,000, or $750,000 for land and build
A house-and-land package in many regional NSW towns can still fit within these caps.
Investing in the regions
Regional rental yields are often higher than in the capitals. But consider:
- Vacancy risk in small markets
- Reliance on a single industry
- Short-term rental regulations in tourist areas
- Lower liquidity when you want to sell
Moving from Sydney to the regions
If you're selling in Sydney and buying regionally, you may be able to buy outright or with a much smaller loan. That can free up cash flow, but think about job security, the cost of commuting, and whether you'll want to return to the city later.
Frequently asked questions
Do regional properties qualify for the same home loan rates?
Usually, yes, as long as the property meets the lender's criteria.
Is the South Coast considered regional?
Yes. Towns like Batemans Bay and Ulladulla fall under regional price caps for government schemes. Check exact caps by postcode at firsthomebuyers.gov.au.
Can I get a loan for a property on acreage?
Often yes, with the right lender. Very large blocks or working farms may need a specialist rural loan.
Buying in regional NSW or anywhere outside the capitals? Call Finfident on 0424 545 654. We know which lenders are comfortable with regional postcodes and acreage.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.