NEWCASTLE house prices are tipped to rise at an average rate of almost $450 a week over the next three years, according to a national property industry analyst.
In good news for homeowners, BIS Shrapnel has predicted prices will soar by up to 18 per cent to June 2016.
But the prediction will come as a further blow to first-home buyers struggling to break into the market.
The Residential Property Prospects 2013 to 2016 report says the region’s prices will be boosted by low interest rates, relative affordability compared to Sydney, and the tight rental market.
Property values to rise $450 a week
NEWCASTLE’S property market is back in business, with values predicted to rise at an average rate of almost $450 a week for the next three years.
There have been solid gains in the past six months with the median house price expected to hit $395,000 to June – up $15,000 or 3.9per cent – new figures reveal.
National property industry analyst and economic forecaster BIS Shrapnel has predicted prices will soar by up to 18per cent to June 2016.
The company’s flagship Residential Property Prospects 2013 – 2016 report says the region’s prices will be boosted by low interest rates, relative affordability compared to Sydney and the tight rental market encouraging investors.
It predicts modest gains over the next year, with the following two years showing greater increases.
The report estimates Newcastle median house prices will increase on average $448 a week over the next three years.
According to the Australian Bureau of Statistics, the median Australian weekly cash earnings for all employees was $963 a week last year.
Real Estate Institute Newcastle Hunter divisional chairman Wayne Stewart said anything ‘‘priced on the money’’ was selling ‘‘almost the first day it hit the market’’.
Mr Stewart said the only thing holding confidence back was job losses in the mining sector.
‘‘We have very limited new land available which increases the pressure on existing homes and with a shortage of stock on the marketplace, prices will be pushed up,’’ he said.
‘‘Despite concerns about the mining sector and the fact that we are between a lot of major infrastructure projects, I think we will see the kind of growth predicted.’’
Hunter Valley Research Foundation director of research Simon Deeming agreed the Lower Hunter was well placed to experience growth in the coming three years.
Mr Deeming said he expected price increases to switch away from the Upper Hunter following the downturn in mining, with Newcastle and Lake Macquarie values set to rebound.
He said the ‘‘massive growth’’ experienced in the Upper Hunter market was over.
‘‘There will be a real difference in the region with growth more towards the metro urban areas and we probably won’t see it at all in the Upper Hunter,’’ he said.
‘‘Around 5per cent per annum growth is not inconceivable … the short-term weakness is people will need to get their confidence back around employment.’’
Median house figures produced exclusively for the Newcastle Herald by Australian Property Monitors reveal gains made in the majority of Hunter suburbs in the past year to May31.
Some of the most impressive include Abermain with a 32.1per cent increase in median house price to $350,000 and Fern Bay with a jump of 26.5per cent to $537,000.
Walkom Real Estate director Scott Walkom said there was a chance the predictions in the BIS Shrapnel report were understated and growth could reach above 20per cent by 2016.
Mr Walkom said he expected ‘‘steady growth’’, nothing like the price spikes seen in previous property booms.
‘‘We are seeing overall steady growth in the economy and I think the market will increase in line with that,’’ he said.
‘‘Under the $800,000 mark is very strong at the moment and units under $350,000 are extremely popular.
‘‘It’s always hard to predict the future but Newcastle is in the best position it has been in a very long time.’’
Street Property Group sales manager Damon Sellis said the university moving into the inner city and the announcement of a funding plan for light rail would boost confidence.
‘‘We would expect that these projects would help stimulate activity and generate optimism in the residential property market,’’ he said.
‘‘Demand has definitely increased, and we have noticed strong sales especially for off-the-plan purchases.’’’