Australian Property Monitors data shows that Newcastle's median house price rose almost 17 per cent to $355,000 in the six years to December.

The median price in December 2003 was $295,000.

Sydney prices in that time grew 5.5 per cent only, from a median of $563,236 to $595,745.

According to the research, Newcastle prices enjoyed steady growth throughout the period with only a few dips, while Sydney prices experienced steeper declines.

Newcastle valuer for the past 35 years Bob Dupont said Newcastle's strong and diverse employment base was behind the growth.

"The Hunter has been held up in the past six years by the mining boom, which has helped to keep employment relatively high, money turning over and has allowed for money to dip into other developments such as expansion of the port," he said.

"Sydney is heavily dependent on the financial sector, and so when the bad times hit, the bad times didn't hit our resources sector like the sector in Sydney."

Mr Dupont said a flurry of first-home buyers on the back of Federal Government incentives had helped to boost the city's median price.

He said upgraders, pushed again into the market by first-home buyer sales, were also behind the surge because of their investment in higher-priced housing.

Newcastle-based valuers Preston Rowe Paterson director David Rich said the region's growing education and health sectors had helped attract employment and investment in the city.

Mr Rich said Newcastle property prices had had more room to move than their Sydney counterparts after the 2003-04 boom.

Hunter Valley Research Foundation senior research fellow Simon Deeming agreed, saying that Newcastle's house prices had been "playing catch-up" with Sydney property during that time.