The City of Lake Macquarie is within the Greater Newcastle Area, being adjacent to the City of Newcastle local government area (LGA). At a distance of 150 km, Sydney is easy to reach from Lake Macquarie. However, the housing market of the LGA isn’t treated as part of Sydney’s commuter belt and is more influenced by economic developments in Newcastle.
As the map below shows, Lake Macquarie property performance has not been dragged down by the downturn in the Sydney urban area, where a correction from previous overheating has seen negative growth. The LGA is so closely linked with the Newcastle, that some suburbs, such as Adamstown Heights straddle the border between the two LGAs.
The map of the areas around Lake Macquarie shows that the market for houses in all of Newcastle’s urban area rose in value during 2019 Q3. However, Lake Macquarie and the City of Newcastle LGAs had the worst price growth performance in the neighbourhood (0.58 and 0.41 percent respectively). Inland and northern LGAs in the area fared much better: house prices in Cessnock City Council area grew by 2.86 percent, in Maitland City Council area by 3.02 percent, and in Port Stephens by 3.93 percent.
Sales volumes increase in the opposite geographical direction to price increases. Sales of houses were at 141 in Port Stephens, 284 in the City of Newcastle, 342 in Lake Macquarie, and 680 in the Central Coast LGA. The median house price in Lake Macquarie, at A$665,985 is very similar to that in Port Stephens: A$622,963, between those two LGAs, the City of Newcastle has a higher median house price at A$782,699.
The market for units in the City of Lake Macquarie fell in the last quarter by 3.67 percent. This is unusual in the context of the unit sales market in the Newcastle urban area. Among its neighbours, the LGA is the only zone that showed negative growth and is an outlier in the general trend of progressively better market performance in each district moving north from Sydney. For example, the unit market in the Central Coast Council area to the south rose 0.5 percent in the last quarter and the City of Newcastle rose by 1.34 percent. Units in the Port Stephens Council area, to the north of Newcastle rose in price by 2.68 percent and unit prices in the Mid-Coast Council area, to the north of Port Stephens rose by 6.24 percent.
The sales volumes for units in the LGA, at 25 sales in the quarter, were much lower than those in Central Coast (54) and Newcastle (47). However, they were comparable to the level of unit sales in the northern Newcastle Urban Area suburbs in Port Stephens (16). Unit median prices in Lake Macquarie are influenced by the LGA’s coastal position and proximity to Newcastle. For example, the median price of A$500,650 is much higher than inland neighbour, Cessnock (A$283,189) but lower than in the City of Newcastle (A$649,508).
Demand for houses to buy in Lake Macquarie is considerably higher than the national average and rental demand for houses in the LGA are slightly above national averages. The picture for units is the reverse: sales demand is considerably lower and unit rentals are slightly lower than the national averages.
The lower demand for units in the LGA is reflected in falling prices, with a drop of 3.67 percent. This, together with a slight rise in median rent levels in the LGA resulted in a large increase in yield in the unit rental sector of 4.18 percent in 2019 Q3.
Prices in the sales sector for houses rose slightly by 0.58 per cent and the rent levels for houses rose by a larger percentage: 6.38 percent. This notably fast rise in housing rent levels increased the profitability of renting houses in 2019 Q4 by 2.02 per cent.
The median price levels for houses is higher than that for units (A$665.985 vs A$500,650). The rental sector sees the same phenomenon with median rents for houses at A$430 and that for units at A$342.
The graph below the demand profile for sales in Lake Macquarie. Three and four-bedroom houses are by far the most in-demand property type and size in the LGA. Sales of houses outstrips those of units in all property sizes except for one-bedroom properties, where 34 units were sold vs 27 houses. All sales of five-bedroom properties over the last year were houses, except for four sales in the “Other” category.
The sales market for houses in Lake Macquarie has more volume than the market for units. The house rental market is larger than the sales market. In Q4 of 2019, 330 sales contracts were signed and 800 rental agreements were completed in the market for houses.
The graphs below show the long-term view of the house market in Lake Macquarie, both for sales and for rentals. You can see that the sales volume of houses rose strongly from the beginning of 2008 to the end of 2017, peaking at 780 sales in 2017 Q3. Since then, sales volumes have fallen in almost every quarter. One quarter, 2019 Q2 did show a slight lift.
HtAG predicts that the trend of falling house sales volumes will abate with gradual increases in each quarter through to the end of 2021.
House prices rose along with sales volume up until the end of 2017. Since that point, sales prices have risen only slightly. HtAG expects that prices will remain at current levels through to the end of 2021.
Records of the rental market since 2009 Q4 has shown a quarter-by-quarter steady rise in volume, which has continued to the present day. Rental prices have risen modestly over that period. HtAG predicts that small quarter-on-quarter volume and rent increases will continue for the foreseeable future.
HtAG’s bedroom-level forecasts are currently using a beta model source, so expect these forecasts to be revised once the model is fine-tuned by our data science team.
Price changes in the housing market in Lake Macquarie have always been in positive territory since the start of records in 2007. The annual rate of price increase peaked at 9.4 percent in 2017. Prices have continued to increase since then, but at a progressively lower velocity. This is a much better performance than other areas of the country, particularly Sydney. HtAG forecasts that prices will continue to increase at a slower rate up to 2021.
The close-up heatmap of the Lake Macquarie LGA shows a mixed picture in terms of market growth. As should be expected within any local government area, price growth is not uniform. However, in Lake Macquarie, there seems to be no firm pattern to price movements – it isn’t possible to spot a specific geographical factor that will guarantee investors rising values.
For example, Arcadia Vale median house prices fell by 8.47 percent, while prices in nearby Balmoral rose by 11.18 percent. Buttaba, which lies between these two areas showed an increase in median house sale prices of 5.67 percent. Such large value performance differences between properties that are separated by just a few streets should worry investors.
It can be observed that many areas that show extremely contrasting price directions experienced very low sales volumes in 2019 Q3. Arcadia Vale, Buttaba, and Balmoral registered sales of 3, 3, and 5 houses respectively. In these circumstances, one heavily discounted forced sale will notably drag down the average recorded sale price in an area and the sale of one rare-to-the-market, well presented home with sought-after features and a high price tag will create exceptional upward movement in an area’s average house sale price.
The scatter map below shows the locations of all house sales over the past year. While the North East of the LGA experienced heavy sales activity, some districts had no house sales at all during the year.
The market for units in Lake Macquarie has much lower volume than the market for houses. In 2019 Q3, only 25 unit sales occurred alongside 342 house sales. The rental sector is almost ten times the sizes of the sales sector. In 2019 Q3, 25 units were sold and 240 units were rented out in Lake Macquarie.
Sales volumes in the LGA have been falling since 2018 Q1 and the median price of unit sales has been falling since 2018 Q4. HtAG predicts that sales volumes will fall slightly from their present levels and remain around the same level for the foreseeable future.
The rental market has increased in volume continuously since 2009 Q3. Rent levels have also shown a generally rising trend, but have fallen slightly since the beginning of 2019. HtAG expects both volumes and price levels to steadily increase in the rental sector over the next two years.
The price change graph below shows that media unit sale prices have consistently risen up until 2019 – although not always at the same rate of increase. Prices fell in 2019 but HtAG expects this situation to reverse over the next two years.
The heatmap for unit sales in Lake Macquarie shows only four districts in the LGA. These are Charlestown with three unit sales and a price growth of 0.53 percent; Warners Bay with six sales and a 2.7 percent price increase; Toronto with three sales and a price increase of 15.27 percent; and Belmont with five sales and a price drop of 7.72 percent.
As with the housing market, there isn’t much statistical guidance for buyers in these price movements because the volume of sales is so low.
The scatter plot of unit sales shows that more areas had sales than are illustrated in the area heatmap. This shows individual sales over the past year included some price falls in the areas that show growth in the heat maps.
Overall, the housing market in Lake Macquarie is more predictable and stable than other areas in Australia. However, sales volumes of houses and unit on a quarterly basis are very low, which makes the statistics easily influenced by outliers.
On an LGA-wide basis, Lake Macquarie has good prospects for investors. However, it is a market that is suited to those with local knowledge and an eye for flair. House price changes in the area seem to be much more influenced by the qualities of individual properties rather than by location.