House prices in this regional city are rising 40 times faster than in Sydney

When 30 Cullen Road Wagga Wagga sold in August 2024 the current owner was able to pick it up for $450,000.

Just 18 months later it's back up for sale with a price guide of $1.15 million.

Admittedly, there are now two homes on the site in the thriving Riverina town in south-western NSW.

Along with the renovated original three-bedroom house at the front of the block, a second two-bedroom one has been built at the back of the block. According to records the build of the second home cost $174,000.

Selling agent Anthony Ivey of Ray White Wagga Wagga said the price reflects "where the market is".

He said a similar dual-residence property of two separate two-bedroom homes at 40 Cullen Road sold for $1.05 million in December.

And that the area within the city's hospital precinct attracted good tenants for investors.

With 19 years as an agent in Wagga Mr Ivey said he sees nothing exceptional about the price rises, with the city always attracting good prices.

"Wagga has always been a strong market, " he said.

Top spot

The regional city of just under 70,000 has now taken out the title of having the highest growth in property prices in Australia over the past three months.

The median home price rose by 8.1 per cent during that period, according to the Cotality Regional Market update. The median house price sits at $665,026.

In the same time home prices in Sydney, the country's most expensive capital rose by just 0.2 per cent.

"That really reflects that there is now a wave of people who are leaving Sydney looking for opportunities in various regional areas," said Gerard Burg, Cotality's head of research - Australia.

And unlike during COVID when prices rose in coastal sea change centres, along with those within commuting distance of capital cities, it was inland centres that were seeing a price bump.

"What we are seeing is that there has been move towards what you might term tree change rather than sea change centres," Mr Burg said.

He said that Wagga Wagga fits that bill offering lifestyle and community along with more affordable prices than big cities.

"Places like Wagga are more self-contained, have their own community and affordability," Mr Burg said.

"For many people the lifestyle is more to their liking and it just gives greater opportunity."

That opportunity comes in employment and people, with many being attracted to the city by large infrastructure projects including the current Inland Rail project.

"There is a lot of infrastructure going on and a lot of people have to be accommodated," Mr Ivey said.

Can prices keep on climbing?

Wagga Wagga is not the only regional centre seeing prices on the rise, and outpacing capital cities.

Regional Australia extended its lead over the capital cities, with dwelling values rising 3.2 per cent over the three months to January, compared with a 2.1 per cent increase across the combined capitals.

Growth in regional Australia has gathered pace since the previous quarter (3.0 per cent in October), while capital city markets have slowed from 3.3 per cent.

Mr Burg said the results point to a deepening divergence between city and regional markets.

"This reflects a renewed movement of people and capital into areas where buyers' budgets stretch further and competition for available homes is strong."

On the demand side property soon may be affected by increased interest rates and overseas immigration being a little bit softer.

Yet housing shortages unable to be solved quickly due to labour shortages in the industry and labour costs very high would keep supply tight.

"And that really puts a floor under prices," Mr Burg said.

"So if you're looking to purchase a home and things aren't going to become cheaper in the near term people are going to ask where can I afford to buy.

"For many people that makes regions look very attractive."