The Federal Budget confirmed what many investors have been watching, from 1 July 2027, negative gearing will be restricted to new builds, and the capital gains tax discount will be replaced with cost-base indexation for assets held beyond 12 months. The intent is to shift investor demand toward new housing supply, however the reality, particularly outside capital cities, is more complicated. These changes do not remove housing pressure, they shift it. Rental supply is not interchangeable across geographies, and regional markets with limited new development pipelines are particularly exposed. However within that challenge lies an opportunity.
A look at regional markets across Australia reveals many locations where median house prices sit well below $600,000 and rental yields range from 6.3 per cent to 10.7 per cent. For investors seeking properties that can work on a cash flow basis rather than relying on tax concessions, or for first home buyers and lifestyle seekers priced out of coastal and metropolitan markets, these towns are worth understanding.
The Queensland outback story
Longreach, at a median of $281,557 with an 8.5 per cent yield, sits at the heart of Queensland's pastoral industry and serves as a regional hub for cattle properties across the Central West. The town supports a hospital, schools and retail services for a wide surrounding catchment. Barcaldine and Blackall follow a similar pattern, with medians of $225,179 and $223,334 and yields of 10.4 per cent and 8.4 per cent respectively. These are small but functionally important service centres within Queensland's beef cattle country, where employment in agriculture, health, government services and transport remains relatively stable. Charters Towers adds a gold mining and tourism dimension, with a strong school network drawing families from across North Queensland and a median of $343,883 at a 7.2 per cent yield.
Rockhampton City stands apart from these smaller centres, with a median of $383,130 and a 7.3 per cent yield. As the largest regional city in Central Queensland, it anchors a significant beef processing and agribusiness sector, supports a major hospital and university campus, and serves as a government and administrative hub. For investors, that depth of employment and infrastructure reduces the supply and demand risk that can concern buyers in smaller markets.
Further south, St George ($309,451, 6.6 per cent) and Roma ($426,351, 6.4 per cent) sit within the Maranoa and Balonne regions, areas that combine extensive cropping and grazing with oil and gas activity in the Surat Basin. Both towns have a stable employment base tied to agriculture, resources and local services, and Roma in particular has developed into a significant regional centre with solid retail and health infrastructure. Emerald ($553,071, 6.4 per cent) sits at the upper end of the price range on this list but reflects its position as a major Central Queensland agricultural and coal mining hub, with strong demand for rental housing from both the resources and farming sectors.
NSW's western belt
Broken Hill is the highest-yielding market on the list at 10.7 per cent, with a median of $217,382. It is one of Australia's most recognised mining towns, with an ongoing minerals and resources sector alongside arts, heritage tourism and a health precinct servicing a vast surrounding region. For buyers seeking cash flow at a low entry point, it presents a distinctive case. Condobolin ($251,976, 8.7 per cent), Nyngan ($200,744, 8.6 per cent) and Peak Hill ($186,426, 8.3 per cent) are agricultural service towns in the central and western wheat and sheep belt, with employment built around farming services, health and education. At these price points, even modest rental income translates into yields that most metropolitan investors would find difficult to ignore.
Coonabarabran ($282,070, 7.4 per cent) serves a similar agricultural catchment but also benefits from its proximity to the Warrumbungle National Park and the Siding Spring Observatory, which support a small but consistent tourism economy. Wellington ($346,671, 7.3 per cent) has a broader service economy and sits within three hours of Orange, adding some labour mobility appeal. West Wyalong ($321,537, 7.8 per cent) is a historic gold mining town that continues to function as a key service hub for the Bland Shire, and Quirindi ($401,602, 6.3 per cent) in the Liverpool Plains sits within one of Australia's most productive agricultural landscapes, with strong cropping and equine industries supporting local employment.
Victoria, South Australia & Northern Territory
Ouyen ($263,843, 7.8 per cent) in the Victorian Mallee is a small but strategically located town serving one of Australia's most productive dryland cropping regions. Employment is anchored in agriculture and transport, and the town sits on the main road corridor between Melbourne and Mildura. Port Augusta ($320,695, 6.9 per cent) occupies a genuinely important position in South Australia's economy, sitting at the top of the Spencer Gulf and serving as a crossroads for road and rail freight moving between Adelaide, the outback, Darwin and Perth. It has a hospital, schools and government services that employ a significant portion of the local workforce, and its role in supporting the state's renewable energy transition has added a new employment dimension in recent years. Bordertown ($365,112, 6.5 per cent) in the upper south east of South Australia is a quiet but productive agricultural centre on the Dukes Highway, with strong grain and livestock activity and an emerging role as a service town for the region's growing irrigation sector.
Darwin City ($433,646, 6.5 per cent) is the only capital city on this list and offers a different proposition from the smaller regional centres. The Territory's economy is underpinned by government, defence, construction and resources, and Darwin has long attracted workers on fixed-term contracts across health, education and public administration. Rental demand from this transient but employed population has kept yields relatively strong even as prices have been subdued compared to other capitals over recent years.
What the budget shift means for these markets
The budget changes do not take effect until 2027, and grandfathering applies to established properties already held. But investors thinking ahead about where established property still makes sense will increasingly be looking at cash flow rather than tax treatment. That calculation plays to the strengths of these regional markets in a way that it simply does not in capital cities.
These towns also need people. Healthcare, education, agriculture and resources sectors across regional Australia continue to carry vacancies that population growth would help address. For first home buyers willing to build a life outside the major centres, or for those considering a genuine lifestyle shift, affordable entry prices and strong community infrastructure make a compelling combination. Entry at these price points, with yields that can stand on their own merits, represents a different kind of investment story, one that does not depend on policy settings remaining unchanged.