NEWCASTLE’S booming property prices are pushing first-home buyers into the suburbs, as the city’s median house price ticks closer to $700,000.
New housing data reveals that in 2016 house prices in Newcastle grew by 7.7 per cent, as the emergence of “million dollar suburbs” like Bar Beach push up prices in traditionally affordable suburbs like Mayfield and Adamstown.
While the record $4.7 million sale of a four-storey Bar Beach mansion in November set tongues wagging it was no surprise to the city’s real estate agents, who have seen a big uptick on sales above the $4 million mark.
“For a suburb to have had a million dollar median it would have been a really big deal a few years ago, but now we’ve started to see high volumes of $2 and $3 million sales, and in 2016 we undoubtedly saw an unprecedented number of $4 million sales,” Mark Kentwell from PRDnationwide Newcastle said.
While Sydney’s property behemoth has forced investors to look more closely at Newcastle’s market, Mr Kentwell said he believed much of the city’s price “momentum” was attributable to “growth drivers” like the University’s new inner-city campus and the state government’s revitalisation efforts.
But while the strength of Newcastle’s residential market is good news for home owners, it also means those looking to buy are having to head further into the suburbs.
“Of course there is a ripple effect into suburbs on the outskirts of the city,” Mr Kentwell said.
“As it gets harder to afford places in the inner city, people are going to start having to look further out.”
One of those prospective first-time buyers getting swept up in the suburban sprawl is 26-year-old Georgina Beavis.
Ms Beavis, who works full-time as a child care worker, has been closely watching Newcastle’s property market for the last two to three years while saving for a deposit.
Three months ago she received pre-approval for a loan, and is looking for a two or three bedroom home for about $400,000.
But in that time Ms Beavis says she’s seen the market shift dramatically, so that the suburbs she’d initially earmarked are now out of reach.
“I was hoping for Mayfield East and potentially Tighes Hill a few years ago, but that’s been well and truly ruled out,” she said.
She’s now looking further out to North Lambton, or Charlestown in Lake Macquarie.
“It’s further than what I’d probably like to go, but just from my experience it seems like every two months I have to expand the radius of areas I’d like to buy in because prices are rapidly increasing,” she said.
“I think what I’ve found is that the rise in prices definitely doesn’t align with the wage increase, they seem to be going at very different paces.”
It’s an experience that Century 21 Newcastle’s managing director Wayne Stewart says is common in the current property market.
“I had a young couple breakdown down in tears at a listing in Mayfield last year,” he said.
“They’d been looking for 18 months and in that time they’d seen prices rise by over 100,000.
“I think the moral is to do your research but make decisions fairly quickly about buying because sitting around for six months can cost you $50,000 to $60,000 in this market.”
And market data suggests those price increases may have stretched outside of Newcastle. While the median house price in Newcastle in the November quarter of 2016 was $695,000, in Lake Macquarie it crept up to $650,000, a 7.6 per cent annual increase.
Maitland saw a 6 per cent increase of the same period, up to $520,000.
“Areas like Cooks Hill, Hamilton South and Bar Beach all have an acute shortage of homes on the market and while that remains we’re going to see pressure on prices,” he said.Mr Stewart said he believed the market growth has been driven less by a strong economy than a simple case of lack of supply in the inner-city suburbs.
“I expect that probably for the first six months of 2017 we’ll see more of the same but I think as we see pressure coming on interest rates [and] the fear of mortgage stress we may see more properties on the market.”