The Smartline Report – December Edition

The month in review: Newcastle

By Herron Todd White
December 2015

The 2015 Newcastle property market can be classified categorically as one of mixed fortunes depending on your location.

As Australia enters a new era of significant economic change and a decreasing reliance on mining and resource industry booms, the Newcastle and Hunter Valley economy finds itself exploring new avenues to sustain and boost economic growth in the region.

Largely, Newcastle’s property market has managed to weather the impacts of wider economic instability and continues to diversify into a growing service based economy. While Newcastle is still heavily reliant on coal exports, the economy seeks to diversify.

The strongest performers in the local market remain houses and units within seven kilometres of the Newcastle CBD, while the Lake Macquarie and Port Stephens markets experienced reasonable capital growth in 2015. Pleasingly this echoes the 2015 property market predictions made in our February 2015 forecast. In the main, rental yields have remained strong at around 4% to 5% with many investors relying on better performing capital growth returns.

On the flip side, a downturn in the Hunter Valley mining industry and more recently the Williamtown contamination fall-out have created market jitters in parts of the Hunter Valley and Port Stephens property markets. In the short term, residents within the Williamtown contamination zone are likely to remain on edge as further investigation unfolds.

In 2015, the NSW Government mooted possible amalgamations for many NSW local governments. Residents in the Hunter Valley, Lake Macquarie and Port Stephens LGA’s will remain on watch for decisions that may impact their investments into the future. Let’s hope common sense prevails on every level through this process to ensure our local economies continue to remain strong, vibrant and flexible.

In November, interest rates remained at an all time low of 2%. The RBA left interest rates on hold due to global volatility continuing, Australia’s terms of trade falling and the cooling of property prices in Sydney and Melbourne. It’s anyone’s guess as to the RBA’s next move. The last increase by the RBA was November 2010 and since that time investors have seen capital values rise, rental rates rise and portfolio values increase with little to no effort. To suddenly see an interest rate increase is a fundamental shift in mindset that may rock a few and place onto the back foot those investors who have leveraged their portfolio too high.

Please note that information in this publication is subject to change without notice. Smartline assumes no responsibility for any errors, omissions or mistakes in this document. © Smartline Home Loans P/L 1999 – 2015. Australian Credit Licence Number 385325

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DISCLAIMER: The information contained in this article is correct at the time of publishing and is subject to change. It is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, Smartline recommends that you consider whether it is appropriate for your circumstances. Smartline recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.