Best areas to invest in Newcastle and the Central Coast in 2019

Have you been diligently eyeing real estate in Newcastle and the Central Coast? If the answer is yes - you've been doing your homework!

In the midst of the nation's record-breaking property downturn, these two beautiful regions - packed with vineyards and exquisite coastlines - have experienced continued stable growth over the past five years.

Heavily influenced by Sydney's performance, the housing market in Newcastle and the Central Coast is largely driven by its relative affordability when compared with the metropolitan Sydney market.

They don't just offer affordability though. Setting a higher standard for liveability with bountiful natural attractions, regional city centres that are bustling towards the future and improved employment possibilities, there is a lot of opportunity about for wise investors.

Read on to find out what leading forecasters predict will happen in 2019 and beyond, and what 2018 looked like for the Hunter region and Central Coast real estate market.

What did the Newcastle and Central Coast property market look like in 2018?

real estate central coast

The last year saw Australia's property market take a stumble, with the biggest players - Sydney and Melbourne - the most affected by the crash. The downturn has been marked by a handful of contributing factors:

  • Tighter lending criteria, particularly for interest only loans
  • A decline in foreign investor activity
  • Fewer buyers in a saturated market
  • The lowest clearance level rates in 20 years
  • Unit oversupply in most Australian states.

Despite this, the Hunter region and the Central Coast have been bucking the trend.

According to the QBE Australian Housing Outlook 2018-2021, the Newcastle property market performed strongly over the past five years to June 2018, with an average price growth of 7.6% per annum.

In fact, suburban Newcastle rental properties provided some of the greatest investment returns in the country in 2018. Signs point to a solid market with a strong foundation being laid:

  • Unemployment in the Newcastle and Lake Macquarie region fell from 7.9% in June 2015 to 5.6% in June 2018.
  • Vacancy rates tightened to 1.9% (June 2018) as more professionals migrated from Sydney in search of a laid back lifestyle.
  • A large number of new dwelling commencements were approved (an annual increase of 27% in 2017/18).

Interestingly, the report highlights that due to a weakening investment in the local coal industry, growth was actually significantly less than that experienced in Sydney and other large population hubs in New South Wales. However, employment growth is strengthening and prices are more inline with local incomes.  

While Newcastle offers affordability, it may be too far to commute to Sydney for the average employee. The Central Coast benefits from a close proximity to the capital and some areas have experienced property prices grow a whopping 40% in the past 12 months alone. As Sydney fell by -5.1%, real estate in Central Coast grew 3.8% in the past year, with prices set to continue to rise in 2019.  

People are flocking to the Central Coast in search of affordability and a better lifestyle, which has resulted in a dramatic increase in regional commuters.

How can we expect the Newcastle and Central Coast real estate market to change in 2019?

While Newcastle's economy has been quietly transforming in recent years with infrastructure developments and a strong population growth, the city is standing on its own feet and coming out of the shadows of Sydney.

QBE says market confidence is strong in Newcastle. Its role as a logistics hub is set to continue and with an employment boost from other industries, like the agriculture and tourism sectors, that sentiment is growing.

Infrastructure in the city continues to expand and will drive employment in the region. The proposed University of Newcastle Honeysuckle expansion project's first stage is planned for completion within just a few years.

"QBE forecasters expect Newcastle's median house prices to rise by a cumulative 7% by June 2021..."

So, what does this all mean for housing? QBE forecasters expect Newcastle's median house prices to rise by a cumulative 7% by June 2021, to reach $635,000.

Overall, the Hunter region economy forecast remains positive and if migration from Sydney to Newcastle increases at a higher rate, the demand will drive price growth further.

Buyers squeezed out of the Sydney market and into the Central Coast will be happy as price growth figures are expected to rise another 8% in 2019 alone.

Hunter Valley real estate

Best areas to invest in Newcastle and on the Central Coast in 2019

With the outlook for price growth in the greater Hunter region and the Central Coast projected to be on the rise, savvy investors will be ready to pounce on the best performing pockets.

When looking for houses for sale in Newcastle NSW, check out:

  • Kotara
  • Islington
  • Hamilton South
  • Merewether
  • Charleston
  • Mayfield

The best suburbs in Newcastle for house price growth are in the suburbs, and are returning some of the highest investment yields in the country.

Top performing areas for houses for sale in Lake Macquarie are:

  • Swansea
  • Belmont
  • Toronto
  • Warners Bay

Lake Macquarie real estate is experiencing very high year on year rental yields for houses with returns at about 5% and thin vacancy rates at an average of 0.81%. Homes for sale in Lake Macquarie have a median sale price of $565,000.

Suburbs like Swansea are just 30 minutes from the Newcastle CBD and the picturesque fishing town has an annual growth rate of 9.3% and a median house price of $590,000. Warners Bay is just 20 minutes from the CBD with an annual price growth of 7.5%.

When looking for houses for sale in Hunter Valley also check out pockets of price growth in Cessnock and Maitland that have easy commutes to Newcastle.

The best investment houses for sale on the Central Coast are tipped to be located in the following suburbs:

  • Umina Beach
  • Woy Woy
  • Ettalong Beach
  • Erina
  • Wyong
  • Kariong
  • North Gosford
  • Shelly Beach
  • Avoca Beach

The Central Coast property market continues to boom as Sydney slides further. Umina's popular sandy beach draws in regional commuters and is experiencing strong annual growth of 11.9% and has increased by a staggering 75.3% from the same period five years ago. The median house price is $745,000. It takes a little over an hour to reach the Sydney CBD.

"Wyong offers an affordable entry point... and is experiencing solid price growth gains of 7.8% per annum."

Woy Woy is experiencing similar growth at 11% per annum and houses are more affordable at $675,000. Wyong offers an affordable entry point at a median house price of $545,000 and is experiencing solid price growth gains of 7.8% per annum.

Ettalong Beach is a little pricier at $840,000 for the median house price, but the growth potential is off the charts, experiencing a 110% increase over the past five years equating to a compound annual growth rate of 16%.

What should buyers and investors be wary of in Newcastle and on the Central Coast?

Lake Macquarie real estate

The Newcastle real estate market has a large amount of new dwelling projects in the pipeline. Commenced projects are yet to hit the market, so you could see rental yields and vacancy rates affected once that happens.

Another thing to watch is that property prices in Newcastle and Lake Macquarie have followed in the footsteps of Sydney in the past, and although the outlook from QBE looks good for the next three years, you should still be wary of this and ensure you find areas to invest in with high growth potential.

How to identify an area with high growth potential

If it's your first step onto the property ladder and you haven't had much experience with property investing before, there are a few things you need to look out for when finding regions or suburbs with strong growth potential. Look for these four factors and you will be headed in the right direction toward a better ROI:

  1. Large infrastructure projects planned or under construction, including shopping centres, transport upgrades, schools, hospitals, etc. These developments will not only increase housing prices, but will improve the local job market and the lifestyle of the area.
  2. High rental yields that are on the rise indicate there is high demand for rental accommodation
  3. Tight vacancy rates will drive higher property price
  4. A growing population and signs the area is gentrifying, such as lots of renovations in the area and more retailers popping up.

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