Regional property markets are now starting to consistently outperform the major capital cities, as retiring baby boomers look for a sea change and younger households look for more affordable locations.
The latest data from CoreLogic show home prices were flat nationally last month, but it was a 0.4 per cent gain in regional markets that offset a 0.2 per cent fall for the capitals.
Notably, the Sydney market, which had been roaring along at an annual growth rate around 16 per cent this time last year, fell 0.3 per cent over March and is down 2.1 per cent over the past year.
Melbourne is still growing on an annual basis, but was down 0.2 per cent in March and 0.5 per cent over the first quarter of the year.
The only capital city showing strong growth is Hobart, which was up 1.7 per cent last month and is 13 per cent higher over the past year.
CoreLogic's head of research Tim Lawless said there had been a clear trend in growth away from the cities to the regions since spring last year.
"We are now starting to see many of those mining regions have improved, we're seeing coastal lifestyle markets showing very strong capital gains, and some of the strongest capital gains regionally are coming from the satellite cities those cities just outside of the metro areas of Sydney and Melbourne," he observed.
"All those people that have held their properties in those markets are now starting to utilise that equity to buy into holiday home markets or second homes."
Within the two biggest capital cities, unit prices outperformed houses over the past year, despite fears of an oversupply of apartments in some areas.
Mr Lawless said the outperformance of apartments was due to their relative affordability in light of tighter home lending standards and a shift back towards first home buyers.
"It's really first home buyers that have really surged back into the marketplace in Sydney and Melbourne, taking advantage of stamp duty concessions that became available in July last year," he added.
