Despite the uncertainty and impact of COVID-19 the property market in our area did very well over 2020.
This has been an excellent year to sell or lease real estate in Lake Macquarie, Newcastle and the Hunter Valley.
We take a look at what happened in our local property market, as well as the bigger picture of the Australian economy and national property market. We also highlight some of the key factors we’ve observed over the last 12 months.
Many positive indicators for our local property market
When COVID-19 struck Australia in early 2020, many were concerned about the local economy and its impact on house prices. Luckily, we’ve not experienced anything like the gloomy predictions many economists and others were making. In fact, there’s been quite a lot of good news for the property market this year.
By early December 2020, the Newcastle Herald was running headlines about Lake Macquarie and Newcastle’s property market being more favourable for sellers than it was 12 months ago, with prices rising and days on market falling.
In fact, Corelogic had the preliminary auction clearance rate for Newcastle and Lake Macquarie sitting as high as 91.3% for the week ending 6 December 2020. It also reported that our region has the lowest average vendor discount for houses, which sits at -2.4%. This means, for instance, if a home was listed for $600,000, technically you could expect it to sell for $585,600 – although we all know that the market doesn’t work quite that way.
Low stock levels have kept prices high
As we wrote in September, the defining factor in this year’s property market across has been low stock levels. This has been a nationwide phenomenon. There simply aren’t enough properties on the market to satisfy the number of buyers.
This trend has been playing out for some time. Across the nation, 2019 saw fewer listings than 2018 and the numbers have been falling for some time. However, when COVID-19 first hit, even more, potential sellers began holding off than before, waiting to see what happened to the economy.
For example, in Toronto, there is still around 46-51% less stock on the market compared to a year ago, according to realestateinvestar.com.au.
This has pushed up the amount of competition among buyers and has constituted to keeping prices stable despite the recession.
Increased buyer interest
But low stock is not the only driver of our local property market. On the demand side, we’ve also seen renewed interest from buyers outside our area seeking lifestyle properties. This influx of seachangers and treechangers is part of its own, longer-term trend but it is one that the pandemic has helped speed up.
According to the REA Insights Regional Australia Report for 2020, Newcastle and Lake Macquarie saw the fifth-highest increase in views per property listing between March and September 2020. Meanwhile, the Hunter Valley came ninth on the list of the regions that experienced the largest population growth, with its population increasing 6.7% over the past five years.
These out of town buyers have been competing with a large number of local buyers and investors, helping fuel a long-term trend of increasing prices.
A seller’s market
As these factors combine with greater economic certainty and rising consumer confidence, we see our local property moving full steam ahead to become a true seller’s market in 2021.
Australia has been lucky enough to escape the worst of the pandemic, and this, combined with record low-interest rates is keeping the property market healthy too. The Australian Bureau of Statistics says the value of new loan commitments for housing grew for the fifth consecutive month in October, hitting levels not seen since before the GFC. And, after two-quarters of negative growth for the March and June quarters, Australia’s economy grew 3.3% in the September quarter.
This faster than expected economic recovery from COVID-19 has meant that the traditionally busy end to the year has seen even more intense competition than usual, with many of our properties having multiple buyers competing fiercely to buy their new home.
In a single weekend during early December, more than 300 new buyers inspected our open homes. This resulted in a larger percentage of properties selling quickly.
In fact, as 202 draws to a close, there’s currently such a high level of buyer engagement that we most likely already know buyers who’ll be interested in a property before it goes to market. In this environment, selling property becomes a case of matchmaking.
The broader property market
CoreLogic’s national index shows that national dwelling values were up 0.8% over the month. Dwelling values in regional NSW increased 1.4% over that same period. This means the median price in regional NSW has 3.1% over the quarter to 30 November 2020 and 7% over the past 12 months.
In fact, regional areas like ours have been the property success story of 2020, with CoreLogic’s combined regionals index showing a monthly growth rate that’s double that of the combined capitals.
If conditions stay the same into 2021, we expect to see consumer confidence keep rising, along with local house prices.
Innovative rental strategies achieve excellent results
Our rental properties have also experienced strong demand from tenants, which has resulted in close to a zero per cent vacancy rate across our residential leasing portfolio by the third quarter of 2020.
Right now the rental market is very tight and we’re seeing consistently low vacancy rates of 0.5% across the board.
We’ve been achieving premium rents, minimal vacancies and great results for our landlords by using a strategy where we offer properties for rent within a price range. We’ve also been using our database of pre-qualified tenants to match prospective renters with properties that are coming up for lease.
Overall, the rental market in our area has been stable. However, in some cases, the low vacancy rate and growing demand have seen them increase.
For example, in the first week of December we leased a property for $40 above the top of its price guide, which equates to approximately $60 per week over our estimated rental amount.
Our agency achievements
Although 2020 has been a challenging year on many fronts, we’re grateful that it’s been a very successful year for us here at Altitude.
We’re now the fastest growing independent real estate business across Newcastle, Lake Macquarie and the Hunter Valley. This year our business more than doubled.
We grew from three offices to seven as we added new locations in Belmont, Redhead, Maitland and Newcastle. We also tripled our property management business, so that we now have more than 1,500 properties under management.
Most importantly, we’ve adapted as a business, shown strength and resilience as a team, and continued to provide great service to our community by assisting our clients with their property journey. We also continued to embrace innovation by implementing new technologies during the pandemic, including online auction tool Open Negotiation.
Now, we’re really looking forward to 2021 and believe it will be an even stronger year for our local property market.
We wish you and your families a very Merry Christmas and a Happy New Year.
Lake Macquarie and Newcastle: by the numbers
Houses median sales price: $677,500
Units median sales price: $590,000
Houses weekly rent: $460
Units weekly rent: $475
Vacancy rate: 0.74%
Houses median sales price: $780,000
Units median sales price: $675,000
Houses weekly rent: $535
Units weekly rent: $500
Vacancy rate: 0.4%
Houses median sales price: $505,000
Units median sales price: $480,000
Houses weekly rent: $395
Units weekly rent: $333
Vacancy rate: 0.54%
Houses median sales price: $1,090,000
Units median sales price: $N/A
Houses weekly rent: $560
Units weekly rent: $N/A
Vacancy rate: 0.26%
Houses median sales price: $449,500
Units median sales price: $N/A
Houses weekly rent: $370
Units weekly rent: $N/A
Vacancy rate: 0.74%
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.