The mass exodus of "tree changers" heading from urban areas to the country during Covid appears to have slowed to the point that regional Australian house prices are facing a market downturn of almost 25 per cent in some areas.

The premium end of the regional market in the more 'desirable' areas are taking the brunt and are now seeing softer values, longer days on the market and bigger vendor discounts.

The latest quarterly data on the state of the national property market in regional areas was released by Corelogic Australia last week and their economist Kaytlin Ezzy said she was not surprised.

“These markets were among the largest beneficiaries of regional migration through the COVID-induced upswing and, as a result, became significantly more sensitive to the rising cost of debt and the normalisation in regional migration trends,” she said.

There is a bright side with Ms Ezzy saying affordable rural markets, such as those around the western plains, continue to show resilience.

“Despite two interest rate rises over the first few months of the year, these markets offer relative affordability, have low listing levels, increased regional migration inflows and strong economic activity off the back of mining, agriculture and tourism. This has all helped support mild value growth,” she said.

According to statistics at February this year, the Western Plains housing market is experiencing the "mild growth" that Ms Ezzy mentions.

The house value index (the change in value over the previous 12 months) has been stable across our region. Gilgandra saw 77 residences sold with an overall increase of nearly four per cent. Warrumbungle Shire saw a slight drop in prices of 1.8 per cent while Narromine fared well with house prices jumping 4.4 per cent.

Narromine Mayor, Craig Davies has been vocal about issues he sees affecting the growth of housing the Western Plains regions.

"The Biodiversity Offset Scheme is stifling the growth opportunities for our area," Mr Davies said.

In simple terms, the Biodiversity Offsets Scheme was developed to help offset the impact of development activities on the NSW's biodiversity. Under the scheme, developers are required to avoid or minimize the impact of their activities, such as constructing houses, on biodiversity. If this is not possible, they must provide biodiversity offsets to compensate for the loss or damage caused by their development.

"We pay people to come up with this lunacy," Mr Davies said. "It is nothing but a tax on development in rural and regional NSW."

While overall house prices may be experiencing a downturn, land prices are heading in the opposite direction.

According to the NSW Valuer General, rural land values increased an average of almost 22 per cent across the nation.

"In Narromine alone, house prices have gone up 44 per cent in 12 months and rental market up 40 per cent. And all along any development is hampered by the BDOS," Mr Davies said.

Lachlan Shire was a stand out with total land valuations rising considerably over the last few years, a fact that has seen local residents concerned about possible rate increases.

“Landowners receive the Notice of Valuation showing their land value before it is used by Council for rating," Lachlan Shire Council General Manager Greg Tory said in March.

"The total land valuations across Lachlan Shire rose by 61 percent between 1 July 2019 and 1 July 2022. The new valuations will be used to calculate the rates that will be charged over the next three financial years, commencing in the 2023/24 financial year. However, it is important to note that if your land value increases, it doesn’t necessarily mean your Ordinary (Land) Rates will rise by the same percentage."

The Valuer General is responsible for providing independent and impartial land values for use by State and local governments for taxes and rates. Those values do not include the value of a home, or other structures or improvements on the land.

“The impact on individual rate assessments will depend on the change in land value and changes in other rating categories. The increase in general rates that Council can collect from one year to the next is limited by the Independent Pricing and Regulatory Tribunal (IPART) and known as the rate peg. Therefore, even though land values have increased significantly, Council must adjust the rate calculation so that general rate income does not exceed the rate peg,” Mr Tory said

Mr Tory also said the increase in land valuations was good news for Lachlan Shire showing the region was not simply holding its own, but growing.

Meanwhile Dubbo landlords are making the biggest profit margins in NSW, with the cost of rent rising a further eight per cent in the past year, according to CoreLogic data. The latest research found the Far West/Orana region, which covers Dubbo, had the highest gross rental yield in the state at 5.9 per cent.