Newcastle

The Smartline Report – May Edition

The month in review: Newcastle

By Herron Todd White
May 2015

Everyone has that dream home in that dream location that they one day hope to live in. Where is it in the Hunter that we may strive to live once the Lotto fantasy hits? The answer to that question is varied but likely to include suburbs such as Merewether, The Hill, Bar Beach, Cooks Hill and inner city Newcastle. If standard residential is not quite your cup of tea you could always look for somewhere like Burwood Road in Whitebridge. These properties (or estates in other terminology) seemingly have above average living areas and larger than standard land areas many of which have breathtaking ocean views. You may even find a famous neighbor or two if you are lucky.

So how much do you need in your pocket to enter this prestige end of the property market? Entry level prestige (if there is such a thing) would be classified as around $1.75 million and over. Over the past ten years in Newcastle there are just a handful of properties that have sold for over $3.5 million. So that really gives you an indication of the target window for prestige property. Central Coast prestige properties generally transact higher than these thresholds which is likely a combination of some pure beachfront homes, of which Newcastle does not really have any, and also a closer proximity to Sydney. Compare this to prestige properties located in one of Sydney’s top suburbs where an entry level price of around $5 million can be expected.

The prestige property sector is performing strongly (with caveats) although is characterised by a market which is tightly held with few offerings available for sale. In March an old knock-down on 800 square metres opposite Bar Beach fetched $2.66 million which was well above the auction guide of over $2 million. The property hasn’t been maintained adequately in a number of years and will most definitely be knocked down to make way for either several units or a large prestige dwelling. This result exceeded all expectations but highlighted the tightly held nature of the area and scarcity of supply aligned with low interest rates.

It’s very difficult to summarise the prestige market given the lack of available properties for sale resulting, as it must, in a lack of transactions occurring. It makes valuation very difficult. The questions it raises are also ones of doubt:

• Is the lack of supply a result of vendors not seeing value in the market place if they are trading to another property? • Are vendors seeing the market increasing out of reach and therefore deciding to stay put? • Are they putting their resources and equity into cheaper investment grade property and therefore maintaining their existing homes? • Are they generally taking their house and renovating and expanding rather than selling and moving?

All of these questions are difficult to answer and all together point to an exceptionally tightly held market where the seller is king and the buyer is one of a number of fishermen fighting with many others for the few fish in the pond. It is hard to advise buying a prestige property in this market climate without the buyer acknowledging they are likely to be paying overs unless the market keeps growing.

www.smartline.com.au

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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