Australia’s real estate market remains a cornerstone of wealth for most Aussies, underpinned by a staggering $11.1 trillion in residential property value.
But while housing comprises 55.9 per cent of household wealth, market dynamics vary starkly between urban capitals and regional hubs.
New research from leading data-driven property investment advisory firm InvestorKit has identified Australia’s top-performing local economies and housing markets in a new whitepaper: ‘10 of Australia’s Economic Powerhouse Cities’.
On the capital front, Greater Sydney, Adelaide, Perth and Darwin featured prominently on the list, underpinned by surging population growth and an active job market.
But its key regional hotspots, including Dubbo, Townsville, Toowoomba, Newcastle, Geelong, Gold Coast and Sunshine Coast, that could truly see investors taking note.
“Local economies and housing markets are closely linked. A thriving or strongly recovering economy is often a precursor to a booming housing market, and a strong property sector can also help drive broader economic growth,” CEO and Head of Research at InvestorKit Arjun Paliwal said.
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The whitepaper examined a range of key economic and housing indicators across 10 local economies, including gross regional product, industry diversity, population growth, unemployment and job creation, construction pipeline trends, housing market pressures and affordability.
Mr Paliwal said one of the standout indicators identified was rental pressure, including the competition for rental properties in a given area, which often signals growing demand ahead of future capital growth.
“Although rental market pressure isn’t the whole story, rising rents and tight vacancies signal rising demand, which can flow through into price growth,” he said.
“Right now, Australia simply doesn’t have the housing supply to meet this demand. Until that changes, we’re likely to continue seeing low vacancy rates and elevated rental yields across many of our major cities.”
The 10 standout economic powerhouse cities in Australia, in no particular order, are as follows.
Greater Sydney
New South Wale’s economy is not growing as fast as the RBA cash rate remains high, with the eastern seaboard state ranking just fifth in terms of economic growth, according to the latest State of the States report by CommSec.
However, Greater Sydney, contributing more than one fifth of the country’s GDP, has shown resilience thanks to its large size, the government’s heavy investment in infrastructure improvement, and the surge in overseas migration in the past few years.
In the housing market, supply continues to rise while sales volumes remain steady, resulting in a gradual increase in inventory and moderate market pressure.
Combined with extremely low affordability, this is likely to lead to another year of subdued growth in 2025.
Sydney is set for another year of subdued growth in 2025.
Greater Melbourne - Geelong
Victoria’s economy, much like New South Wales’, hasn’t led the nation in growth over the past year –but it’s performing strongly in key areas, including retail spending (9 per cent above the decade average) and population growth – up 2.1 per cent, second only to WA.
According to the InvestorKit whitepaper, the Greater Melbourne–Geelong region, in particular, is showing steady growth momentum.
Greater Melbourne continues to experience strong net overseas migration, while Geelong ranks as the second-highest internal migration destination among regional cities.
In the housing market, supply is continuing to rise while sales volumes remain stable, leading to a gradual increase in inventory and moderate market pressure.
As a result, short-term growth is expected to remain slow.
However, in the medium term, the region’s rapidly growing population, active job market, and relative affordability (compared to other major capital cities) are expected to drive a return to stronger growth.
Aerial photos taken of Geelong's central business district overlooking Corio Bay.
Greater Brisbane - Gold Coast - Sunshine Coast
The South East Queensland trio has been a major beneficiary of internal migration in recent years.
Greater Brisbane leads all capital cities in net internal migration gains, while the Sunshine Coast tops the list among regional cities.
This booming population, coupled with significant infrastructure investment, particularly in transport and urban renewal, is set to support strong local economic performance across South East Queensland for years to come.
In the housing market, supply has been increasing faster than demand, leading to a rise in inventory levels since mid-2024.
While market pressure remains high, as seen in the persistently low days on the market, the growing inventory suggests gradual relief, which could result in slower growth over the coming year.
In addition, rapidly worsening affordability may limit these cities’ growth potential in the medium term.
Noosa on the Sunshine Coast in Queensland from an aerial perspective
Greater Adelaide
South Australia’s economy has remained resilient over the past year, ranking equal second (with Queensland) on CommSec’s latest State of the States economic performance leaderboard and first in economic growth.
As the capital city of this robustly growing state, Greater Adelaide is benefiting from major Defence Force contracts, the construction of the North-South Corridor, and a series of medical and educational infrastructure projects.
In 2024, Adelaide’s housing market was one of the most active and best-performing among the capital cities.
Market pressure remains high, evidenced by declining days on market and persistently low
inventory levels. This elevated pressure is expected to continue supporting healthy price growth into the year ahead.
Adelaide. Airviewonline unveils Australia's top aerial views captured or curated by veteran photographer Stephen Brookes. Picture: Stephen Brookes
Greater Perth
Western Australia and Greater Perth’s economy is staging a strong comeback, currently ranked #1 on CommSec’s latest State of the States economic performance leaderboard.
A booming job market is drawing thousands of new residents each year, fuelling both internal
and overseas migration.
Perth’s property market was the top-performing capital city in 2023 and 2024.
While market pressure remains elevated, early signs of relief, such as rising days on market and growing inventory levels since mid-2024, are emerging.
As a result, Perth is expected to see continued healthy growth in the year ahead, though likely at a more moderate pace compared to last two years’ surge.
Aerial View of Matagarup Bridge in Perth.
Greater Darwin
The Northern Territory’s economy has not seen strong growth in recent years, currently ranking last on CommSec’s latest State of the States economic performance leaderboard. However, a substantial pipeline of infrastructure projects is expected to gradually stimulate
economic activity in the years ahead.
While Darwin’s house prices saw little growth in 2024, the market has been reactivated by investor interest in recent time, driven by its relative affordability and high rental yields. Market pressure is rising quickly, as shown by falling days on market and declining inventory.
As a result, a notable improvement in price growth is expected in the year ahead.
Darwin’s property market has seen strong growth in recent years.
Greater Newcastle
The Greater Newcastle region’s economic growth has accelerated since 2020, with Gross Regional Product rising steadily, population growth gaining pace, and unemployment remaining at historically low levels.
The property market is showing clear signs of recovery, led by Newcastle itself.
This rebound is particularly evident in the declining days on the market, with houses selling more quickly over the past year.
While affordability poses challenges for local income earners, the region remains relatively affordable for buyers and relocators from Sydney, the capital city. With a few more interest rate cuts expected in 2025, the stage is set for continued healthy growth.
Coastal aerial of Merewether Baths and Merewether Beach, Newcastle.
Toowoomba
Toowoomba’s local economy has returned to strong growth since 2021, recording 6.3 per cent Gross Regional Product growth in the past financial year.
In addition to this high growth rate, the city is also experiencing a declining unemployment rate despite high interest rate headwinds, alongside healthy population growth.
In the property market, pressure remains elevated. Days on market have stayed at their lowest level in 20 years, and inventory remains well below two months of stock.
While inventory has been rising slowly since late 2024 – a sign of gradual pressure relief – we still expect healthy price growth in the year ahead.
Across many suburbs in Toowoomba it is now cheaper to buy than rent. Photo: LJ Hooker Toowoomba.
Townsville
Townsville’s economic growth has been gaining momentum since 2021, following many years of underperformance.
We’re now seeing accelerating Gross Regional Product growth, unemployment rates at decade lows, and robust population growth.
The property market has been riding the wave of this economic recovery, supported by an active job market, affordability, and Townsville’s appealing tropical coastal lifestyle.
Market pressure also remains high, with days on market having dropped to their lowest level in 20 years, and inventory falling to an extremely tight 1.15 months of stock.
This elevated pressure, combined with strong affordability and healthy rental yields, is likely to drive continued growth in Townsville’s housing market, especially in the high-interest-rate environment in 2025.
Aerial view of the stadium and Townsville City
Dubbo
Dubbo’s economic growth has been strong since 2021, with Gross Regional Product rising by 5.6 per cent in the past year — well above the national average.
The thriving local economy is further reflected in a low unemployment rate of just 2.5 per cent.
While Dubbo continues to rely on traditional industries such as construction, manufacturing, mining, and agriculture, it is also seeing rapid growth in emerging sectors like renewable energy, agricultural research, logistics, and tourism.
The housing market is regaining strength following last year’s slowdown, as shown by declining inventory levels.
While the recovery may take some time, with days on market still trending upward, Dubbo is expected to build further growth momentum gradually as the local economy strengthens.
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