Australia’s property landscape is experiencing a significant shift. First home buyers are increasingly turning their backs on expensive metropolitan markets and setting their sights on regional towns where their dollars stretch much further.
The numbers tell a compelling story. Regional dwelling values rose 6.0% in 2024, outpacing the 4.5% growth seen in capital cities. More telling still, 35.6% more people moved from capital cities to regional areas than made the reverse journey. This represents the new reality for Australian first home buyers: affordability lies beyond the city limits.
The Great Regional Migration: Why First Home Buyers Are Looking Beyond Cities
Sarah Chen, a 28-year-old marketing coordinator, recently purchased her first home in Townsville after two years of failed attempts to secure anything affordable in Brisbane. “I was competing against investors and upgraders with massive deposits,” she explains. “In Townsville, I found a three-bedroom house for $480,000. The same money in Brisbane might get me a one-bedroom apartment, if I was lucky.”
Sarah’s experience reflects a broader trend reshaping Australia’s housing market. The average first home loan is expected to climb to around $563,000 by the end of 2025. Meanwhile, non-first home buyer loans now average $698,053, creating a staggering 31% premium that effectively prices out many young Australians from metropolitan markets.
The financial pressure is real. The average first home buyer deposit has climbed to around $159,000 nationally. In Sydney, that figure can easily exceed $200,000. Regional towns offer a different equation entirely, where the same deposit can secure a family home rather than a cramped apartment.
Regional Australia is also benefiting from workplace flexibility changes that became standard during the pandemic. Many professionals have discovered they can maintain their city salaries while enjoying lower living costs and better lifestyle balance in regional centres.
Government Schemes Unlock Regional Opportunities
The Australian Government has recognised this trend and responded with targeted support. The Regional First Home Buyer Guarantee allows eligible buyers to purchase homes in regional areas with just a 5% deposit, avoiding the costly lenders mortgage insurance that typically applies to low-deposit loans.
Recent political developments have amplified these opportunities. The Labor Government has promised to expand first home buyer support, offering unlimited 5% deposits for all first home buyers with higher property price limits and no caps on places or income thresholds.
For first home buyers considering regional moves, this represents a game-changing policy shift. A Queenslander can now purchase an $850,000 home with just a $42,500 deposit under these expanded schemes. The same approach in a regional town might secure a substantial family property rather than a modest city apartment.
The Regional First Home Buyer Guarantee specifically targets areas outside major metropolitan centres. Eligible buyers earning up to $125,000 individually or $200,000 as couples can access these benefits, provided they intend to live in the property as owner-occupiers.
Current data shows these schemes are gaining serious traction. First home buyer loans are projected to rise 6.5% in 2025 to 133,308 total loans. This growth is being driven largely by regional opportunities that simply didn’t exist for previous generations of buyers.
Where the Smart Money is Moving: Top Regional Markets for 2025
Not all regional markets are created equal. Smart first home buyers are targeting towns with strong economic fundamentals and growth prospects rather than simply chasing the cheapest options available.
Townsville stands out as a regional success story. Property values surged 26.9% annually, with the median price reaching $518,082. The city benefits from major infrastructure projects, a diverse economy spanning education, defence, and resources, and lifestyle amenities that rival much larger centres.
Port Lincoln in South Australia offers a different proposition. With 12% annual growth and a median price of $465,000, the town delivers 5% rental yields that appeal to both owner-occupiers and investors. The local economy benefits from $3.2 billion worth of annual exports and major renewable energy projects in development.
Western Australia’s regional centres are experiencing particularly strong growth. Geraldton saw dwelling values surge 28.7% over the year, adding more than $100,000 to median values. Bunbury recorded 24.5% annual growth, while Busselton achieved 21.2% gains.
These aren’t speculative bubbles. Infrastructure investment, job creation, and lifestyle migration are driving sustained demand. Towns with university campuses, hospitals, and major employers are proving especially resilient.
Location
Annual Growth
Median Price
Key Drivers
Townsville, QLD
26.9%
$518,082
Infrastructure, defence, education
Port Lincoln, SA
12.0%
$465,000
Agriculture, fishing, renewables
Geraldton, WA
28.7%
$490,000+
Mining, port facilities
Gladstone, QLD
27.2%
$490,427
LNG, industrial hub
Financial Reality Check: What First Home Buyers Need to Know
The regional opportunity comes with important considerations. First home buyers need realistic expectations about employment prospects, infrastructure access, and long-term growth potential.
Regional properties often require larger deposits relative to income because local wages may be lower than metropolitan areas. However, the total dollar amount required remains substantially less than city purchases.
The “bank of mum and dad” remains a significant factor, with this informal lending sector worth approximately $35 billion nationally. More than one in five Australians under 40 have either received or expect to receive financial assistance from parents to purchase property.
Rentvesting has emerged as another strategy. This approach involves purchasing an investment property in an affordable regional market while continuing to rent in a preferred metropolitan location. First home buyer investor loans grew 12% annually, more than double the 5.5% growth in traditional owner-occupier loans.
Regional markets also offer faster settlement times and less competition. Where metropolitan auctions might attract dozens of bidders, regional properties often sell through private negotiation with far less stress for purchasers.
Looking Ahead: Interest Rates and Market Predictions
The Reserve Bank of Australia is expected to begin cutting interest rates through 2025, with the cash rate potentially reaching 3.35% by year’s end. This monetary policy shift should improve borrowing capacity and make first home loans more accessible.
Regional markets are positioned to benefit disproportionately from rate cuts. Lower interest rates typically boost demand for affordable properties more than expensive ones, as buyers can suddenly afford higher loan amounts.
Housing construction remains well below demand, with monthly dwelling approvals averaging just 15,900 compared to the 20,000 needed to meet national housing targets. This supply shortage supports continued price growth, particularly in regional areas where construction costs are often lower.
First home buyers face a narrow window of opportunity. Government support schemes are expanding, interest rates are beginning to fall, and regional markets still offer genuine affordability compared to metropolitan alternatives.
The advice from property professionals is clear: buyers who can act decisively in 2025 will likely secure better deals than those who wait for perfect conditions. Regional Australia offers the combination of affordability, lifestyle, and growth potential that disappeared from major cities years ago.
Conclusion
For many first home buyers, the path to property ownership no longer runs through expensive metropolitan markets. Instead, it leads to regional towns where a first home loan can still deliver the Australian dream of homeownership.
Empower Money offers tools that help prospective buyers assess their options clearly, including a servicing calculator to better understand borrowing capacity. With sound planning, a well-structured first home loan, and a willingness to look beyond the major capitals, buyers can find quality homes in growth locations without sacrificing financial stability.
The opportunity is real, but time-sensitive. As migration trends and policy reforms continue to shape the market, acting early may be the key to making regional homeownership a reality in 2025 and beyond.