Property prices in Newcastle have begun to recover following a year-long decline cut 10% off from the prices of an average home.
Data from CoreLogic reveal the house or unit median price throughout Newcastle and Lake Macquarie local government areas rose 0.3% in June 2019.
It is the first monthly price growth since last year and reflected a 0.1% increase in the Sydney property market and a 0.2% rebound in Melbourne. A CoreLogic analyst predicted a slow and rough upturn.
Since it is only a month’s worth of data, analysts are not getting too thrilled, but undoubtedly the pattern has been the pace of decline has been slowing, and these patterns are also on display in the Newcastle and Lake Macquarie regions.
With Newcastle and Lake Macquarie having followed Sydney’s decline, it is logical to assume that it will follow the turnaround. The analyst expressed surprise that the numbers were more solid this month than Sydney, but remain in wait on what the next two months will bring.
Sydney’s monthly result was its first increase since July 2017, and the Melbourne market peaked in November 2017.
Newcastle values began declining much later, at the beginning of 2018, but have began to recover at the same period.
According to CoreLogic’s monthly report in June 2019, Newcastle and Lake Macquarie council area median house price is presently at $539,000 while the median unit price is $463,000.
Another CoreLogic analyst said that reduced interest rates, high population growth, the conclusion of the federal election, and the resolution to the doubts concerning Labor’s negative gearing and capital gains tax proposals, had boosted housing demand.
The tide may have turned for the housing market but the pace of recovery is not expected to be fast.
Supported by the housing decline, a recovery in housing affordability has also been observed, though housing prices are still high in relation to household incomes in Sydney and Melbourne.
Stricter lending requirements are now customary in banks and this would continue to stifle market activity.
Banks are increasingly becoming less dependent on average household expense standards, and potential borrowers should anticipate certain an investigation of their financial situation during the loan application process.
Securing a loan may be more difficult for those who are applying for debt that is higher than six times their income.
Another issue affecting demand would be “increased supply” of high-rise apartments in Sydney, Melbourne and Newcastle.
These areas are going through the peak in a record number of off-the-plan unit sales, several of which are getting valuations at settlement day that are lower than the contract value.