Sydney has been the property hotspot for nearly five years but it’s now time for investors to cast their eyes on another area a harbour city 160 kilometres north of Sydney.
Median house values
With the city’s median house price approaching $1.07 million investors are aggressively searching for less expensive alternatives to enter the housing market. And, as NSW’s regional areas collectively records a median house price of $440,000, one particular location has attracted the attention of investors.
Newcastle, where the median house price is $530,000, is already receiving massive investor interest. Figures are predicting strong growth for Newcastle. According to the Domain Regional House Price Report house prices were up 9.3% in the year to September 2016 and 4.2% during the quarter. In contrast, the latest house prices for Sydney and Melbourne were up just 2.1% and 9.1% over the year, respectively.
The big draw cards for Sydney-based investors are the affordability factor and the prospect of adding value with granny flats and subdivisions in these locations.
The spotlight is on Newcastle
Newcastle, which is at the top end of the market, is on the move. The sale of a six-bedroom house on 6 Parkway Avenue, Bar Beach for $4.7 million in the first week of November 2016 saw property records shatter. The house was last sold for $3.4 million in 2010. Several $4 million-plus sales were recent records, and the city’s revitalisation is seen as a positive factor.
With Sydney property becoming more expensive, NSW investors are increasingly looking towards regional properties. A new State Custodians Galaxy Poll showed that 72% of Victorian investors continue to buy in Melbourne, but 49% of NSW investors are looking at other markets to invest their money.
A number of investors’ decision to look in the country is driven by lifestyle, as they look to buy in areas where they would eventually retire and using the property as an investment in the interim.
Growth forecast on Newcastle
The area is expected to have a better prospect than Greater Sydney in terms of capital gains and rental return. In 2015, Hotspotting listed Newcastle in the top 5 boom towns nationally because of its massive residential and non-residential development projects in the pipeline.
But according to Domain Group chief economist, Andrew Wilson, the recent growth forecast was a little bit of a shock because Newcastle, the biggest coal export port in the world, reported a drop in coal-related economic stimulus. The area has affordability advantages and is undoubtedly capturing a large amount of the Sydney heat.
The local economy is seeing a remarkable turnaround, with a construction boom in inner city apartments and no problem selling them at this time.