With 20 years experience in property and finance Sean concentrates on the fundamentals of strategic property investment.
Just two hours from Sydney and rapidly becoming a sophisticated, cosmopolitan centre in its own right, Newcastle holds rich and attractive opportunities for any investor.
It wasn’t always this way. For a long time Newcastle was one of the roughest places in NSW. It was a coal port full of sailors, miners and a city based on steel and industry. Famous for the Star Hotel riots of 1979 and the tough Newcastle Workers Club. It also suffered a massive earthquake in 1989, one of the biggest in Australia’s modern history where over 50,000 buildings were damaged and leaving a $4 billion clean-up bill. Then, the recession of the early 90s hit the city hard, as did the closure of the BHP steelworks, the largest employer in the area.
Few would have predicted that Newcastle would turn around to becoming the second most populated city in NSW with an exodus of Sydneysiders flocking to it each year.
$6.5 billion in NSW Government investment which includes a new light rail system.
A commitment of $500 million by the State Government to gentrify the city.
House price growth in Newcastle now outstripping Sydney’s 10.2% annual growth by reaching 11.5% last year.
Median house prices growing faster than any other capital city, yet still remain affordable.
Newcastle has transformed itself from entirely dependent on coal and steel based industrial city to more service based, especially in the areas of education, health and tourism. In 2011, Lonely Planet ranked it as one of the ten greatest cities in the world.
What makes Newcastle so attractive to visitors? It’s a combination of things. It has a strong beach culture and a thriving arts scene. The historic and elegant buildings scattered throughout the city are a tourist drawcard. It’s a short drive to Port Stephens and the Hunter Valley with its blossoming wineries.
However, this is only part of the story. Newcastle may be further from Sydney than Wollongong, yet it is proving far more popular with both investors and owner occupiers. Many Sydney refugees, unable to afford Sydney’s high house prices, are fleeing to Newcastle. This is because Newcastle is now a strong, self-contained capital city in its own right.
It also has three of the features vital for any regional centre’s flourishing development: its own airport; its own university and a large hospital. These three are crucial factors for any investor to consider. It’s a sign of a city with a steady upward trajectory and means it’s unlikely to hit a downturn anytime soon.
Newcastle’s ‘East End’ site spreads over four city blocks.
A recent sale of a 1.66 hectare city block to hotel developer Iris Group for $39 million will launch an unprecedented wave of residential development. It will be a mixed space of residential apartments, 4,900 square metres of residential and 2,700 square metres of commercial spaces. It’s a by-product of a $500 million commitment by the NSW Government to revitalise and gentrify Newcastle.
This is reflected in Newcastle’s booming property prices. Core Logic reports that in the September quarter for 2016 Newcastle’s property prices soared by 6 per cent. In fact, Newcastle is on a booming trajectory and the median house price has grown faster than every other capital city in the last five years. As of January 2017, Newcastle’s median house price is at $466,000 and is expected to rise by 8 per cent over the next 12 months, overtaking Brisbane.
Newcastle’s current population is 161,225 people and the Department of Planning have projected it will reach 190,000 by 2036. It has a gross regional worth over $14 billion. It’s also slashed unemployment (traditionally a bugbear of the Hunter area) down by 2 per cent over the last year thus strengthening the labour market. Meanwhile, both private and government sectors continue to pump investment money into it as a very innovative and dynamic regional centre.
All these indications show very clearly that Newcastle is unlikely to slow down any time in the near future. Its proximity to Sydney and combination of wonderful climate, natural landscape as well as its powerhouse economy and affordable housing makes it a very potent place to invest. But, as always, careful research is the key.