In the twin cities of Albury-Wodonga on the border of NSW and Victoria, one side of the Murray River has seen more than double the annual house price growth of the other.

The median house price in Albury, north of the river in NSW, rose 11.9 per cent in the 12 months to March, according to Domain's latest State of the Market Report. South of the river, in Victoria, Wodonga's median rose just 4.8 per cent.

Despite their city centres being only about a 10-minute drive away, Albury's median house price now sits at $347,000, while Wodonga has a median of $330,000.

"[Both cities] do generally run pretty close to each other for price growth," said local agent Jamie Maynard, the principal/director of Elders Real Estate Albury/Wodonga. "But we've had a huge amount of interest in the Albury CBD of late, it's seen large growth in the past 12 months."

Albury was one of five regional cities that equalled or out-performed all capital cities - bar Sydney (13.1 per cent) and Melbourne (15.2 per cent) - for annual price growth.

"Regional markets are seeing growth as more Australians across the board consider the affordability and lifestyle advantages of moving outside the capital centres," said Domain Group chief economist Andrew Wilson.

He noted house prices in Albury, had been "lagging" behind the Wodonga market in recent years - it had a lower median house price for the majority of quarters since 2013 - as the economy weakened.

From 2014, the unemployment rate in Albury started to rise above that in Wodonga, coinciding with the closure of DSI Holding's gearbox factory which had been a major employer in the region.

It peaked at 13.3 per cent in March 2015, according to data from the Australian Bureau of Statistics, in comparison to Wodonga's 6.8 per cent. As of December, the unemployment rate had dropped to 7.4 per cent.

"Although only a bridge separates the two [cities] they do have their own distinct market drivers," Dr Wilson said.

Manufacturing and real estate service are two of the three biggest industries in each city, with public administration and safety taking the top spot in Wodonga, while construction rounds out the top three in Albury.

North of the river there is the Norske Skog newsprint paper mill and the Australian Taxation Office, while to the south are the headquarters for food and pet food company Mars and an Australian army logistics base and training centre.

"Albury is improving economically and that's driving market movement ... it has become a perceived hot spot for property spruikers," said Dr Wilson.

Albury mayor Kevin Mack said the twin cities were maturing in terms of their lifestyle offering, with a rise in cafe culture, sporting facilities and major events making it an appealing place for people to live in or invest.

"The steady increase in population and an influx of residents from major capital cities has added to the cosmopolitan feel of the city," he said.

Cr Mack said as Albury, which has a population of about 52,400 in comparison to Wodonga's population of about 40,000, was the larger city, it had traditionally had more retail and infrastructure development.

"Albury has always been the bigger regional city ... but Wodonga is growing," he said. "Our development has probably outstripped Wodonga's in the last 12 months, but there are ebbs and flows between the two cities ... and I think we work very well together."

He noted patterns of land release would also be a contributing factor to the shifting nature of the median house prices in the two cities.

Mr Maynard said Albury-Wodonga was becoming increasingly popular for relocating Melburnians, while investment from Sydney was on the rise due to the strong rental yield and low vacancy rates.

While residents tend to stick to their side of the state border, Victoria's stamp duty exemptions and concessions for pensioners did prompt some Albury residents to head across the river when they retired, Mr Maynard said.

He suspects new exemptions for first-home buyers could have the same affect.

"It all comes down to affordability, and if you can buy a cheaper house in Wodonga with no stamp duty - that's a drawcard for a first-home buyer."

"Wodonga offers more value for money but I can potentially see a change coming ... with our land values going up in Wodonga over the last six months."