Newcastle’s property market forecast is looking more resilient for the next three years compared to Sydney and the other capital cities. Newcastle’s median house price presently, $604,000 is expected to dip by around 3%-5% to 2022 but bounce back in 2023. By comparison Sydney’s median home price now, $1,147,000 is forecast to fall by 7.9% by 2022 and recover up 5% in 2023.
The factors affecting the property market are;
Covid-19 restrictions and it’s negative economic effects such as rising unemployment and much lower net overseas migration. Net overseas migrations in 2019 was 201,000 people, this has fallen to 150,000 in 2020 and forecast to fall to 80,000 in 2021. A large rebound is forecast in 2022 to 250,000 and to 280,000 in 2023.
Newcastle and the lower Hunter is less affected as it has population growth as a result from more affordable housing prices drawing people to live in the region. There are more people moving from Sydney looking for properties with an improved lifestyle as a result of Covid-19 and coming to live in Newcastle and the Hunter Valley.
Low interest rates for home and business loans forecast to continue until 2023 making it easier to fund a property purchase. Currently interest rates set by the RBA are at a record low. See cash rate movements below. Home loan rates for First home buyers are from 1.99% and property investment loan from 2.89% as per Canstar.com.au
Also, Newcastle currently has a stronger rental market with low vacancy rates of around 1.5%, compared to Sydney forecast at 3.5%. Rents in Sydney are expected to drop by around 14% as supply is greater than demand. Sydney is affected by large reductions in overseas migration due to Covid-19 restrictions. This is drop in rents is unlikely to happen in Newcastle.
There is more bang for your buck from the Government incentive the ‘Home builders package’ in Newcastle. The $25,000 grant for home renovations, has a much greater benefit in Newcastle being 4% of the median house price, rather than just 2% of a home in Sydney.
First home buyers are back. Up 20% in April, the biggest increase since 2010, as home affordability improves as interest rates remain low.
Our firms experience in the past 3 months has been that that overall the property market in Newcastle is holding up inline with forecasts. Rents are stable and properties are in demand. Buyers in all categories are in the market actively looking to buy. Its more a buyers market then sellers market, but if your buying and selling in the same market it balances out. Newcastle is growing and the cities infrastructure is improving making it a great place to live now and it will be even better in the future.
Sources: BIS Oxford Economics, ‘Residential property Prospects 2020-2023’ June 26th, 2020. RBA ‘Domestic Economic conditions’ July 2020, Canstar & CoreLogic/RP Data.
Prepared by Scott Walkom, Licensee, Walkom Real Estate, www.walkom.com.au. 24.7.20