So far 2021 has been a strong year for the property market in Lake Macquarie Newcastle, with buyers looking to put the uncertainty of the COVID-19 pandemic behind them.

We look at the trends behind the data to find out what’s happening in the sales and rental markets in our local area and explore why buyers are acting so confidently.

Lake Macquarie and Newcastle house prices continue to grow

One of the real trends over 2020 was the flight of many homeowners and would-be buyers from major metropolitan centres to smaller cities and regional areas. This helped push property prices up in regional NSW at a time when they were falling in capital cities such as Sydney and Melbourne. Our area was one of the real beneficiaries of this trend, with price increases in Newcastle doubling the national average last year.

The Sydney property market has recovered over 2021, with prices rising rapidly, and some parts of Lake Macquarie and the Hunter region are showing similar growth. This is particularly true of premium areas, such as Redhead, Valentine and Warners Bay.

Suburb Median Price May 2020 Median Price Jan 2021 Median Price May 2021 Increase (over 12 months)
Redhead $957,500 $1,057,500 $1,200,000 25.3%
Warners Bay $647,000 $685,000 $755,000 16.7%
Valentine $750,000 $807,500 $880,000 17.3%
 * Source: Realestate.com.au Suburb Profiles

Different markets, different drivers

That said, one trend that has become noticeable over the past 12 months is that apartment prices and house prices have started moving further apart. We’ve also seen less growth in the middle and lower end of the market than at the top end.

This can be seen in suburbs such as Toronto, where house prices increased by 9.4% in the 12 months to April 2021, while apartment values rose just 1%.

One of the reasons this is happening is an influx of buyers from Sydney and Newcastle, as well as overseas. As a result of COVID-19, many of these buyers, who previously worked full-time in city offices, find that they’re now able to do their job from home. As a result, many are looking to create a better lifestyle for themselves and their families, with more space and less stress, without losing that connection to major cities. And this is the perfect location in which to achieve those goals.

Low stock levels have kept prices high

As we wrote in December’s market report, low stock levels have been a feature of our local property market for some time and they continue today.

While the shortage of property listings isn’t as acute as it was in 2020, when many would-be sellers were holding off, there still aren’t enough properties on the market to satisfy the number of buyers out there.

For example, in Toronto there is still around 21% less stock on the market compared to a year ago, according to realestateinvestar.com.au.

Low stock levels almost always act as a cushion under prices and mean that, where a property appeals to several groups of buyers, prices get pushed up. Again, that’s what we’re seeing in certain parts of the market – especially high-end family homes – where buyers are competing strongly for properties that match their criteria.

Increased borrowing including from investors

But while low stock levels are impacting the supply side of the equation, it’s really the demand that’s driving today’s market. And this can be seen in the record level of borrowing that’s been taking place.

The ABS reports that housing loans increased by almost 70% across the country in the year to April 2021 – the result of record low interest rates and increased confidence in the fundamentals of Australia’s economy.

Drilling down further into the data, two statistics really stood out to us. The first is that the number of first home buyer loans increased by 60% over the year to April 2021. That’s great news because virtually nothing contributes to our long-term wealth as much as owning our own home.

This is a great time to be a first home buyer too, with both the State and Federal Governments operating generous schemes to help people onto the property ladder. On the State level, this includes the First Home Owner Grant, as well as stamp duty concessions and exemptions, both of which can substantially cut the cost of getting into a home. This is complemented by the federal government’s First Home Loan Deposit Scheme which makes it possible to get a home loan with as little as a five per cent discount, without the need to pay expensive lenders mortgage insurance (LMI).
We’d encourage anyone who hasn’t taken their first step onto the property ladder to check out whether they qualify for these schemes and to do the numbers to work out whether you can afford to get into the market today. You may be surprised.

The other statistic that stood out was that investor loans were up 63% in the past 12 months. An increased number of investors indicates broad confidence in the property market fundamentals and usually helps push prices higher – another reason for first home buyers to get in now.

Rental market outperforming the average

Interestingly, while both yields and rents have fallen in Sydney and Melbourne, in Lake Macquarie and the Hunter they have remained strong. Rental properties here have remained in demand over the past 12 months and we continue to have close to a zero percent vacancy rate across our residential leasing portfolio.

Some of the demand in the rental market is being driven by relocators looking for a temporary residence while they ‘test the waters’ before buying.

Given that the median rental yield in Sydney is just 2.3% for houses and 3.4% for units, according to SQM, the table below shows just how attractive Newcastle and Lake Macquarie can be for income-focused investors.

Suburb Rent house per week Yield Rent unit per week Yield
Belmont $460 3.5% $360 3.9%
Maitland $385 4.6% $305 4.3%
Newcastle $600 2.8% $513 3.8%
Toronto $410 4.1% $380 3.5%
* Source: Realestate.com.au Suburb Profiles

Altitude: from strength to strength

22020 was a big year for us, with the addition of three new offices and we’ve now cemented our place as the fastest growing independent real estate business across Newcastle, Lake Macquarie and the Hunter Valley.

This wouldn’t be possible without your generosity and support and we’re looking forward to continuing to serve you over 2021.

Lake Macquarie and Newcastle: by the numbers

Warners Bay

  • Houses median sales price: $755,000
  • Units median sales price: $632,000
  • Houses weekly rent: $510
  • Units weekly rent: $480
  • Vacancy rate: 0.47%

Valentine

  • Houses median sales price: $880,000
  • Units median sales price: $600,000
  • Houses weekly rent: $600
  • Units weekly rent: $528
  • Vacancy rate: 0.40%

Toronto

  • Houses median sales price: $515,000
  • Units median sales price: $568,750
  • Houses weekly rent: $410
  • Units weekly rent: $380
  • Vacancy rate: 0.89%

Redhead

  • Houses median sales price: $1,200,000
  • Units median sales price: $N/A
  • Houses weekly rent: $560
  • Units weekly rent: $N/A
  • Vacancy rate: 0.45%

Maitland

  • Houses median sales price: $434,500
  • Units median sales price: $N/A
  • Houses weekly rent: $385
  • Units weekly rent: $N/A
  • Vacancy rate: 0.95%
* Source: Realestate.com.au Suburb Profiles, Realestate Investar

Want to know more about the state of the local market?

Find your ideal home in Lake Macquarie or Newcastle by contacting our team today.

Altitude Real Estate

Altitude Real Estate

Altitude is known as one of the region's most successful real estate teams for constantly exceeding their client's expectations. Our award winning agents provide our clients with specialised services across all facets of real estate incorporating Residential Sales, Property Management, Strata Management and Project Marketing. Learn More

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