Are Newcastle’s property prices insane? 2016 saw the Newcastle and Lake Macquarie property markets come onto the radar for a number of reasons. With prices in Sydney continuing to soar, the dream of home ownership for many, especially first home buyers, is becoming a distant memory; whilst for others soaring Sydney house prices have provided wealth that they never dreamed of – both of these factors are contributing to the demand for property in Newcastle and Lake Macaquarie.
Herron Todd White in their December Year in Review article on Newcastle wrote “we are absolutely inundated at the moment with valuation requests which is indicative of a market at the very height of its cycle……An appropriate word might be bullish. Buoyant would also get the job done.” The article goes on to question if now is a good time to buy stating “If you do, you are likely to pay more than it’s worth. Only time will tell whether the price you pay now is cheap in 12 months time”. Herron Todd White place the Newcastle market at the top of the property clock. A quick look back to December 2015 Year in Review shows that it was there 12 months ago. The question is how long will it remain there?
CoreLogic reports in their December Quarter Regional Update that Newcastle and Lake Macquarie house prices to September 2016 rose 8.8%, and that growth looks set to continue with BIS Shrapnel, in the Australian Housing Outlook report for 2016-2019 , predicting further price growth over the next 3 years of 12%. With an already rising market, articles in the Domain with headlines,” Forget Sydney investors have their eye on a new booming hotspot in NSW” added some heat to an already pretty hot market.
So why Newcastle? For a start there is the gross rental yields. In the Corelogic Best of the Best 2016 tables the best gross rental yield within 10 Kms of the Sydney CBD was 3.5%, whilst the lowest median price of any house within 10 Kms of the Sydney CBD were still more than $1 million. In Newcastle you would battle to find a suburb with a gross rental yield less than 3.5%.
Affordability. In June 2016 Newcastle’s median house price was just 48% of Sydney’s.
Newcastle is the second largest city in NSW, and has everything an aging population needs. There is great shopping and restaurants, first class medical facilities with good access to doctors, plenty of recreational facilities, the airport, less traffic and it is only 2 hours from Sydney if they need to go there.
For young families, that dream of owning a house is a great draw card. Increasingly I am talking to people who studied here or grew up here who are returning to live in Newcastle because of the lifestyle that it offers. Whilst job opportunities may not be as plentiful in Newcastle as Sydney and salaries not as high, it seems for some these are sacrifices that they are prepared to make. For others, they have been able to negotiate to work from home or at shared spaces and commute to Sydney once or twice a week, giving them the best of both worlds.
Property prices in Newcastle in 2016 seem insane but with significant amounts of infrastructure either under construction or in the planning stages (see Newcastle Revitalisation), and Sydney absolutely choked with people and traffic everywhere you go, why wouldn’t you want to move to Newcastle. I am not surprised that Newcastle came on the radar in 2016 what surprised me is why it took so long.
Margaret Godfrey is a mortgage broker in Newcastle who takes a keen interest in the Newcastle Property market. If you are looking to buy property in Newcastle and need a home loan or you are looking for guidance as to a local buyers agent, conveyancer or real estate agent then please feel free to email her at email@example.com