HUNTER property prices are set to boom, according to a report that predicts a 17 per cent increase in the next three years.
The study, by business research agency BIS Shrapnel, predicted the greater Newcastle housing market would be boosted by the ‘‘inward migration’’ of people fleeing the Sydney squeeze.
It comes less than a month after Residex, a property information firm that collates data on real estate markets throughout Australia, listed 17 Hunter suburbs as among the best for capital growth in NSW.
The author of the latest study, Angie Zigomanis, told the Newcastle Herald a tight rental market, an undersupply of housing and a strong local economy propped up by the resources boom would ensure positive returns for homeowners and investors.
Mr Zigomanis said the market was ready to kick back into life, after a boom in the early part of the 2000s followed by four or five years of modest growth.
‘‘Prices probably overshot the mark [in the early 2000s] and we witnessed a period of catching up,’’ Mr Zigomanis said.
‘‘It may well be that lower interest rates have become a trigger for bringing people back into the market.’’
The Herald reported on Saturday that Hunter-based lenders the Greater Building Society, Hunter United Credit Union and the Newcastle Permanent Building Society had all recorded significant increases to their home loan portfolios in the past year.
Mr Zigomanis said Newcastle was a better place to invest than similar-sized areas such as the Gold Coast, where there was an oversupply of housing.
The report also predicted that Sydneysiders squeezed out of an increasingly unaffordable market would look to Newcastle and Wollongong, where prices were lower.
BIS Shrapnel predicts the median house price in Sydney will be $750,000 by 2015, and the report says new dwelling construction in the city is well below the level required by population growth.
‘‘As the deficiency of dwellings in the Sydney market increases, and affordability deteriorates due to a combination of rising prices and higher interest rates, [Newcastle and Wollongong] are likely to benefit from a higher inward migration of residents from the state capital,’’ the report said.