It’s Time to Fight Back Against the Media Narrative Regarding Real Estate Com...
1008 Nsw Resi Suburb View Newcastle
1. MARKETVIEW
October 2008, New South Wales
NEWCASTLE
Residential Area Overview
Situated 162km NNE of Sydney, at the mouth of the Hunter River, Newcastle is the predominant city within the
Hunter Region. The Newcastle local government area had a population of 141,753 at the 2006 Census. Yet
Newcastle’s wider statistical subdivision area (including the Newcastle and Lake Macquarie local government
areas and Fern Bay) is growing at a faster rate than Sydney with around 522,000 residents.
The first European to explore the area was Lt. John Shortland in September 1797. His reports of the deep-water
port and abundant coal initiated the areas mining in the early 1800’s. Convicts had the painstaking job of
mining the coal in this area resulting in NSW colony’s first export.
Newcastle remained a penal settlement until 1822 when the settlement was
opened to farming. After removal of the last convicts in 1823, Newcastle was
freed from the infamous influence of the penal law and began to acquire the
aspect of a typical Australian pioneer settlement. A steady flow of free settlers
soon poured into the area.
The 1989 Newcastle earthquake, measuring 5.6 on the Richter scale, killed
13 and destroyed or severely damaged a number of prominent buildings. The
following economic recession of the early 1990s meant that the city took
several years to recover.
Modern times see Newcastle the economic and trade centre for the resource
rich Hunter Valley region and for much of the north and northwest of NSW.
Newcastle has the world’s largest coal export port and Australia’s oldest and
second largest tonnage throughport. Over 3,000 shipping movements take place a year, handling cargo of 85.6
million tonnes, of which coal exports represented 80.2 million tonnes in 2005/2006.
The old city of Newcastle has seen new apartments and hotels built in recent years, but the rate of commercial and
retail occupation remains low as alternative suburban centres have become more important. The CBD itself is
shifting to the west, towards the major urban renewal area known as “Honeysuckle”. This renewal, to run for another
10 years, is a major part of arresting the shift of business and residents to the suburbs.
Residential infill sites are providing the city with product diversity; an example is the heritage area to the east of the
CBD centered around Christ Church Cathedral. The area is home to a number of historical Victorian terrace houses
embedded in architecturally “sympathetic” modern housing developments.
Source – Wikipedia
2. October 2008, New South Wales
Newcastle Dwelling Type
Not surprisingly, separate houses dominate Newcastle
housing. Of the 58,755 occupied private dwellings,
74% are separate houses, unit and apartments
account for 15% and semi-detached terrace houses or
townhouses consume 11%. The increased introduction
of unit and townhouse developments to Newcastle is
likely to see a percentage change in dwelling type
come the next census. The largest concentration of
high-rise units is in and around the Newcastle CBD.
Proposed residential projects will see this area increase
in density over the coming years as new mixed-use
(including residential, commercial and retail) buildings
are built. Larger residential subdivision projects are
planned in the suburbs of Fern Bay and Fletcher with
medium density continuing in the suburb of Wallsend.
Who lives in Newcastle?
Tourism is thriving in the region supported by the
famous vineyards of the Hunter Region and the city’s
historical attractions. The 2006 Census recorded an
even division between residents who had never
married at 37.5% and those married at 42.5%. The
Census also showed residents who owned their home
and those renting were equal at 32.1%. Those paying
a mortgage followed closely at 28.4% with an average
loan repayment of $1,300 per month. Newcastle
bears a bright positive outlook that reflects a resource
rich town atmosphere and lifestyle coastal living.
Newcastle Residential Market
While Newcastle’s industrial sector continues to play an important role in the economic strength of the city,
Newcastle has evolved beyond its former presence as a ‘steel city’. A substantial and growing portion of
Newcastle’s economy is now based around education, health services, tourism, retail and hospitality.
The June 2008 quarter saw Newcastle’s median house price correct by -1.91% to $356,000. Annual house
sales also dropped to just fewer than 6,000, indicating that a period of correction is underway. The weekly
median rent for a three bedroom house was $315, providing a rental return of 4.62%, which is trending
upwards. House rents in Newcastle increased $25 per week over the June quarter, supporting increasing
yields and reflecting the growing demand for rental accommodation.
The unit market in Newcastle has shown similar results, with the June quarter median unit price of $322,500
only increasing 7% in the last four years. Newcastle’s median unit rental yield has risen from 3% to nearly
4.5% during this time. The trend in rising unit rentals is likely to continue with the June quarter median
weekly rent reaching $255.
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3. October 2008, New South Wales
Newcastle Top Five House Sales in 2008
(Post code 2300 only)
Barker Street, The Hill sold for $7 million
Bar Beach Avenue, Bar Beach sold for $2.7 million
Dawson Street, Cooks Hill sold for $2.6 million
Church Street, The Hill sold for $2.4 million
Memorial Drive, Bar Beach sold for $2.3 million
Newcastle Top Five Unit Sales in 2008
(Post code 2300 only)
Scott Street, Newcastle sold for $1.77 million
Wharf Road, Newcastle sold for $1.36 million
Scott Street, Newcastle sold for $1.22 million
Scott Street, Newcastle sold for $1.11 million
Scott Street, Newcastle sold for $1.1 million
Residential Development
Supply Pipeline
The Newcastle LGA has 3,868 new proposed
residential dwellings/lots in the supply pipeline.
Across the 84 proposed developments, the majority
are unit and townhouse developments ranging in
size from two to 13 storeys. An example is the
Honeysuckle Lee Wharf shown here, developments
like this have modernised Newcastle and made
regional city living attractive.
From October 2007 to October 2008, 36 projects
have development applications lodged, 17 have
development approval, 20 have tenders called or
contracts issued, and 11 projects are under
construction.
Those projects that have not yet commenced
construction have scheduled completions throughout
2008 to 2014. Due to the increasing cost of
construction and tighter lending criteria, it is likely
some of these proposed projects will not be
constructed with some deferred or abandoned for
various reasons.
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4. October 2008, New South Wales
Proposed Residential Projects in Newcastle (>50 dwellings/lots)
Project Address No. Stage Developer Estimated
Units/ Project
Lots Value
UNITS
Honeysuckle – Cottage Honeysuckle Dr, TBA Tenders Hunter $20,000,000
Creek Precinct Newcastle Called/Submitted Development
Corporation
Harbourside Apartments Scott & Bolton St, 59 Development Pacific Lifestyle $5,000,000
Newcastle Approval Resorts P/L
Lee Wharf Honeysuckle Dr, 150 Early Planning Lee Wharf $25,000,000
– Stages 4-5 Newcastle Developments
Wharf Rd & Centenary Rd Wharf & Centenary 288 Development Kaross P/L $56,000,000
Units Rd, Newcastle Application
Hunter Village Hunter St, Newcastle 167 Development Pacific Lifestyle $30,000,000
Application Resorts P/L
The Royal Newcastle King St & Shortland 146 Under Construction MIRVAC $89,700,000
– Stage 1a & b Esp, Newcastle Projects P/L
Royal Newcastle Hospital Shortlande Esp, Watt 146 Early Planning MIRVAC $50,000,000
Site St & King St, Projects P/L
– Stage 1c Newcastle
Steel Street Mixed Steel St, Newcastle 131 Development Cartier $25,000,000
Development West Approval Holdings P/L
– Stage 2
Total Units 1,087
LAND
Dan Land Estate Minmi Rd, Fletcher 346 Construction North West $14,000,000
Residential P/L
Abbott Street Housing Abbott St & Newcastle 52 Development SIMHIL $4,725,000
Rd, Wallsend Application Developments
Blue Gum Vista Estate Minmi Rd, Fletcher 769 Various Stages Landcom $26,000,000
– Stages 2-3, 5a & b, further Hunter Region
stages
Fern Bay Seaside Village Seaside BVD, Fern 950 Development The Aspen $80,000,000
Bay Application Group
Fletcher Subdivision Plattsburg Pde, 267 Subdivision Kingston $7,900,000
Hebrides & Minmi Application Properties P/L &
Rds, Fletcher MIRVAC Homes
Total Lots 2,384
Source – Cordell’s (October 2007 to October 2008)
What is happening at the Coal Face?
CB Richard Ellis is pleased to announce the opening of the Newcastle Residential Valuation Mortgage Services
office, located in The Glasshouse at 101 Hannell Street, Wickham.
CB Richard Ellis Director of Residential Valuations in the Newcastle office, Peter Fallon describes the local 2008
residential market as one of sand and soil. Beachside property values appear to be holding although a couple of
benchmark breaking sales were recorded this year. Newcastle’s beachside property benchmark of $4 million in
2007 was trumped when a house on Ocean Street in Merewether sold for just under $5.5 million this year.
Undoubtedly, such high-end sales are infrequent for Newcastle but assist in boosting the regional cities evolution.
Moving inland from the beach, Newcastle’s median suburbs reacted to harder economic times with an increased
number of properties on the market and extinction of buyers. This stagnated residential market caused a slight
correction in values of approximately 5%.
However, recent interest rate cuts by the Reserve Bank along with the prospect of more have brought Newcastle’s
extinct buyers back to life. SOLD stickers across For Sale signs are being seen again and market activity is slowly
returning, albeit at corrected values.
With the influx of resource employment and Boeing calling Newcastle home, inner city units are the choice of these
Resi-SuburbView
short-term renters. This increase in demand has accelerated rents, which in turn is likely to entice investors into the
market.
Toni McKnight Peter Fallon
Senior Manager - Residential Research Director - Residential Valuations
CBRE Research & Consulting CBRE Residential Valuation Mortgage Services 4
T 61 7 3833 9773 M 0432 571 724 T 61 2 4926 6433 M 0412 498 798