The month in review: Newcastle
By Herron Todd White
Newcastle/Lake Macquarie has seen a sustained period of growth for standard residential property over the past two years, despite new release subdivisions selling land at Fern Bay, Cameron Park and Fletcher in large numbers. There are also smaller estates dotted throughout Newcastle and in particular Lake Macquarie, with Catherine Hill Bay and Trinity Point at Morisset adding to the available stock. This can be put down to a number of factors including incentives for first home buyers to build, interstate migrants coming from the more expensive Sydney market and speculative out of town investors looking to add to their rental portfolios.
The recent federal election raised a few fears throughout the property market with superannuation and a possible change to negative gearing both gaining plenty of airtime. What does the election result mean for Newcastle and surrounding areas? Elections always bring in a period of uncertainty to the property market and reduced activity is often felt. It was no exception this time in the Hunter. Uncertainty and making large financial decisions are often diametrically opposed.
As we focus on the city of Newcastle, there are a number of applications before the Council for multi storey unit developments (primarily residential in nature). The total number of units proposed within these applications is projected to yield approximately 2,800 in total of varying sizes and price points. This projected supply will continue stimulating the local economy from a building perspective (assuming they all commence), however after this period there is the real possibility that there could be an oversupply. This scenario occurred recently with the last unit building boom of circa 2003 and 2004. The over supply of units at that time took a number of years to trickle through the market place.
Going against the recent growth in Newcastle is the lack of it in the Singleton area, which is still trying to cope with the mining downturn. Vacancy levels remain high and the number of houses on the market for sale are seemingly more numerous than the potential purchasers available. This dynamic only leads in one direction. Looking at the positive, the Expressway has provided some advantages with almost 25,000 vehicles using the highway everyday, which means that investing or owning a home in this area makes the travel for work to Newcastle and surrounds quicker.
As with each election there is a lull period in the market while there is uncertainly about the future. Now that the election period is over, there is a strong likelihood that activity will ramp back up again with investors and property owners alike refinancing their homes according to their strategy, and really with interest rates this low, it seems highly feasible. Markets are a bit funny though aren’t they?