Property values rose one per cent in regional Australia in the three months to January, compared to a 0.7 per cent fall in the cities, the latest regional market update from property data firm CoreLogic has revealed.
The historically affordable mining markets of Gladstone, Townsville and Mackay in Queensland and Geraldton in WA have added between $100,000 and $140,000 to their respective medians over the past year, said CoreLogic economist Kaytlin Ezzy.
The same is true for the coastal WA towns of Bunbury and Busselton.
But signs are growing that prices in these areas are losing steam.
Gladstone's quarterly growth rate has more than halved from the 9.9 per cent rise in July, while Geraldton has slowed by 2.6 percentage points from its peak.
Altogether, growth is easing in 10 out of 11 Queensland markets and three in four Western Australia markets.
Ms Ezzy says regions that had previously experienced weaker growth are now seeing their affordability advantage return, especially in Victoria and southern parts of NSW, such as Ballarat and Bathurst.
"We could be seeing the first green shoots in these markets, if growth conditions continue to improve," she said.
Rents were also still growing faster in the regions, climbing 1.6 per cent over the quarter, compared to a 0.3 per cent increase in capital cities.
But Ms Ezzy said the increase was largely a result of seasonal factors, as more listings are added to the market at the start of the year, coinciding with the arrival of overseas students looking for a place to rent.
The broader annual trend in rental growth continued to moderate, she said.
Low availability of rentals will continue to hamper affordability, with vacancy rates in the regions falling slightly from two per cent to 1.9 per cent over the course of the year.
Picturesque Warrnambool on Victoria's Great Ocean Road was particularly tricky for renters, with a vacancy rate of just 0.3 per cent.
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