Smaller capital cities have outpaced the global average for price growth, according to the latest study by Knight Frank.

Canberra, Hobart, and Darwin registered double-digit growth over the first quarter of the year, higher than the global average of 7.4%. These three cities ranked in the top 41 of 150 cities across the world.

Adelaide and Perth also registered substantial increases in prices, higher than the growth in Sydney and Melbourne.

"Australia’s five least-populated capital cities led the residential price growth over the past year, and all trended above the elevated average annual price growth across the 150 global cities," said Michelle Ciesielski, head of residential research at Knight Frank.

Ciesielski said the higher price growth in these smaller cities suggests an increasing demand from people moving from bigger cities.

"The increase in sales transactions demonstrates the commitment in the migration of people moving towards these smaller cities and regional areas, and many first home buyers have been in a better position to buy given the relative value compared to where they were previously living," she said.

Vacancy rates in these smaller capital cities are also shrinking, falling from an average of 2.4% at the start of the pandemic to 1.2% currently.

"In these markets, we estimate the balance between supply and demand to be around 3%, so there is already a significant shortage of stock with very little planned to be built in these cities in the coming years," Ciesielski said.