The Hunter Valley region has been outperforming the national average for the past couple of years.
And, as we make our way into the second half of 2019, we expect prices to grow in a sustainable and controlled way. In this snapshot, we break down the numbers and provide our own insights into what’s going on in the local property market and why.
Regional Hunter Valley: a different market to Sydney
You no doubt read the headlines about the downturn in Australia’s property market over the past couple of years. Across the country, the average property value fell -8.2% between October 2017 and July 2019. While Melbourne and Sydney have seen slight price rises over the later months of 2019, they’re far from the heady days of the property boom. It’s sombre news that gets attention, that’s for sure. But, at the same time, it doesn’t give the full picture and it doesn’t really show what’s been happening in our local market at all.
The reality is that the national figure is weighted towards the capital cities, particularly Sydney and Melbourne. Our local property market doesn’t run in unison with these two markets at all.
In fact, while the Sydney market declined -14.5% between 2017 and 2019, the market in the Hunter Valley was rising. In reality, property prices in parts of the Hunter went up by more than 25% over the past year.
According to realestate.com.au the average property price in Singleton actually increased by $35,000 over 2018, or more than 10% – at the same time as Sydney was experiencing the worst of its falls.
What’s driving the Hunter Valley Regional property market?
The relative buoyancy in our market has happened because we have different factors and different types of buyers underpinning our local market.
Obviously, one of the most important factors in any property market is how the local economy is performing. The wider Hunter Valley has been outperforming both NSW and Australia as a whole. Our unemployment rate fell rapidly from 8.6% in June 2015 to just 5.1% in June 2019 – making our economy healthier than most parts of the country.
At the other end of the equation, housing here remains relatively affordable. The average house price in Singleton was $366,250 and units were $220,000 in October 2019 and although it’s a much pricier $596,000 in Branxton, it’s still below the national average of close to $750,000 and way less than the Sydney average of more than $1,000,000.
When a strong economy meets affordable housing like this, property experts would usually expect prices to rise.
First home buyers stand out in our local market
Because of this affordability, first home buyers are more heavily represented in our market compared to most places and when conditions suit these buyers, our market tends to do well.
First home buyers kept buying in our area, even though the wider downturn and, given recent events, we expect them to become even more of a factor over the next 12 months.
Lately, a lot has been going in favour of first home buyers, including interest rate cuts and changes to lending criteria. This comes on top of generous stamp duty concessions, which means most first home buyers in our area pay no duty at all when purchasing their first home. There’s also the First Home Super Saver Scheme to help with deposits.
The impact of the Federal election result
Of course, there are many types of buyers in our market, including families, upsizers, downsizers, tree changers and investors too. And from what we’re seeing and hearing on the ground, as the year has gone by, these groups are also growing in confidence. A major factor in this seemed to be the May 2019 election result.
This isn’t necessarily because the Morrison government was returned, although it was clear some investors were concerned by Labor’s proposed changes to negative gearing. It is more that, for the first time in a while we seem to have some degree of stability at our federal level and the property market, like all markets, likes stability.
We believe that this has helped underpin prices over the second half of 2019, and should continue for the next while and bring more investors back into the market too.
Hunter Valley named property hotspot for investors
This comes at a time that the Hunter Valley has been singled out as a property hotspot by multiple publications. In March 2019, Property Observer noted that the Hunter Region had no less than five local government areas where buyer demand was trending higher. This included the Singleton LGA.
Meanwhile, OpenAgent named both Pokolbin and Singleton among the best areas in regional NSW to invest in earlier this year, with 12% growth in unit values over the previous 12 months in Pokolbin, and 11.41% in Singleton.
This capital growth comes on top of yields substantially higher than those investors could expect in metropolitan areas. For instance, in November 2019, Singleton offers a rental yield of 4.83% for houses, 5.5% for townhouses and 6.96% for units, according to realestateinvestar.com.au. This compares to a national average of 3.9% for units and just 3% for houses. Coupled with this, rents in Singleton have gone up 8%-9% over the past 12 months.
If employment continues to stay strong and interest rates remain low, we expect property values in the Regional Hunter Valley should continue to grow. And we believe there’s cause for optimism on this front.
The Hunter region is currently home to a large number of infrastructure projects, including road and hospital upgrades. Meanwhile, the upgrade of Newcastle Airport to full international capacity should help promote tourism and increase business efficiency. All of this helps create jobs and boost local businesses.
This means now is an excellent time to enter the property market but also a good time to sell, especially if you’re considering upgrading or downsizing into the same area.
Want to know more about the state of the local market
Find your ideal home in the Hunter Valley region by contacting One Agency Lindy Harris today.