In the three months to April, regional dwelling values increased by 3.3 per cent, outpacing the 1.1 per cent rise across Australia's capital cities, according to Cotality's Regional Market Update which was released on Wednesday.
City slickers have been flowing out to the country in waves for years, but since mid-2023, their motivations have changed.
"In the past, it's been much more about the lifestyle markets on the coast," Cotality's head of research for Australia Gerard Burg told AAP.
"This time, it seems to be very much about affordability."
Australians are now migrating to inland, regional towns as rising prices in cities force them out.
This is clear in some parts of regional WA, where values have risen 5.9 per cent over the three months to April, up from 5.6 per cent in the previous quarter.
Perth's housing supply has been particularly low in recent years.
"That has caused demand to spill out from the boundaries of Perth and into the surrounding regions," Mr Burg said.
Similar stories are playing out in Tasmania, where prices are rising in Launceston and Burnie-Somerset, and Queensland, where strong conditions are evident in Townsville and Toowoomba.
Across the nation, rents have continued to rise, with regions recording a 1.8 per cent increase compared with 2.1 per cent in the capitals.
But regional vacancy rates remain extremely tight at 1.9 per cent.
Construction costs have also become significantly elevated in recent months due to inflation challenges posed by the US war in the Middle East, making it difficult to address the supply side of the housing crisis.
While migration to the regions could help towns struggling with dwindling populations, it could also further drive up rents and house prices, placing additional burdens on people who already live there.
Those moving out of the cities may be supported by hybrid working styles and metropolitan wages offering them advantages, though impacting housing affordability for others.
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