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with Propell National Valuers and says
many suburbs in Newcastle experienced
strong growth throughout 2013 due to low
interest rates and a lack of quality stock
on the market.
“The market activity was also driven
by the FOMO (fear of missing out) factor
where investors and locals alike heard
of the market movement and hype
and wanted to get in to capitalise on
the predicted future capital growth,”
“It wasn’t uncommon for quality
investment grade properties between
$400,000 to $550,000 to sell within the first
week of being listed and we witnessed a
number of cases where properties would
have ‘offer and acceptance’ within 48
hours of the property being listed.
“Currently vacancy rates are trending
upwards which is having an impact on
gross yields that can be achieved. At the
end of 2012 and beginning of 2013 you
could achieve a gross yield in excess of
five per cent for an investment grade
house around the median price for a
suburb. Now you’re more likely to achieve
a gross yield around the mid four per cent
for a freestanding house.”
Hosking says there’s still a lack of quality
stock on the market, which will continue
to put pressure on prices while the
demand is still there.
“It’s a common thread when you chat to
To sell or not to sell?
Chris Fairbrother and wife Andrea
purchased their Newcastle property five
years ago – a two-bedroom house on a
Since buying the property the couple has
become parents, with their son Zachary
born just four weeks ago. Chris plans to add
to the family and says they’ll soon outgrow
their principal place of residence, leaving
them with some decisions to make.
“We’ve just had a little baby boy so we
might sell this one in the next few months
and buy something bigger.
“I’d like to buy in Redhead or Dudley
because it’s a nicer lifestyle, it’s quieter and
the blocks are bigger.
“We’re going to talk to the bank and try
and weigh up our options at the moment
to see if we can use the equity from the
property to buy a second one and keep this
as an investment,” Chris says.
“The property is now worth $550,000,
which is a great equity gain, but I’ve done
new kitchen and new timber floors, painted
it inside and out, put built-in cupboards
and bi-fold doors out to the deck, plus
“We were going to put a big extension on
it, but we decided we wanted to keep a bit
of yard and after paying for the architect we
had some issues with council and decided
not to go ahead with it.
“We decided to just leave the property as
is and buy something that already had what
“It’s very difficult to know what to do with
my wife now on maternity leave.
“We’d like to buy an investment property –
that’s our five-year goal. At the moment the
market is pretty hectic down here.
“Investment properties here, for a small
rundown house, start at $350,000 and
up to $400,000 and then you need to
put money into it to get it livable and up
“The real estate agents are telling us
people who can’t afford to buy in Sydney are
“We went to an open house and the
agent said they’re selling places before
they even get listed because they’re
keeping people’s names on the books and
as soon as something becomes available
they sell. It really is a case of first in best
dressed,” he says.
Chris works for Rio Tinto and says his
roster is very family-friendly, which gives
him ample opportunity to make use of
Newcastle’s beaches and laidback lifestyle.
“I work seven shifts a fortnight for Rio
Tinto and have plenty of time off, so with
the beach right there and plenty of cafés
and nice bars, there’s a good lifestyle
“The area is appealing because of the
beaches and nearby wineries just a short
drive away. Nelson Bay is about 45 minutes
up the road and it’s very central to Sydney.
“It’s like a big country town. The feel here
is quite laid back. It’s not flat out like a city,
we have more of a coastal lifestyle.
“We love where we live. The street and
neighbours are great, but we think we
might outgrow it.”
Names: Chris and
Purchase date: 2009
Purchase price: $340,000
Strategy: Sell in near future
agents that they discuss the lack of stock
to meet the buyer demand.”
¿ WHERE TO LOOK
For keen investors looking to get into
this market, Hosking says there are some
areas to be avoided.
“Any investors who aren’t familiar
with the Newcastle market need to
be very diligent with their research
and target areas. There are a number
of low-lying areas throughout some
suburbs of Newcastle that were affected
by the ‘Pasha Bulker’ floods in 2007.
Although an event as extreme as this
is unlikely to occur again, these areas
are still susceptible to such flood events
or even localised flooding from extreme
“There are also scattered pockets of
government housing that can have a
negative impact on an area, particularly
the future demand from locals who will
want to avoid living in areas that may be
susceptible to higher crime rates.”
Key pockets to focus on are within close
proximity to major employment hubs such
as the John Hunter Hospital, Westfield
Kotara and surrounding shops, University
of Newcastle, Charlestown CBD and
Newcastle CBD, he says.
“The CBD of Newcastle has great
potential for future gentrification.
Hunter Street and various pockets of the
Newcastle CBD are rundown and tired,
which is holding the CBD back from
attracting more economic activity and
being a great potential tourist attraction.
“The NSW Government is looking to
privatise the Newcastle Port and the
government expects to finalise the
privatisation by the middle of this year.
“If the privatisation goes ahead, the
sale is expected to achieve around
$700 million and the government has
committed about $340 million of the
proceeds to be spent on a revitalisation
project for Newcastle, including light rail.
This should have a great impact on the
City of Newcastle.”
Player says there’s a high demand for
affordable housing in the area.
“Affordable housing, as distinct
from social housing, has significant
demand. Medium and high-density
apartments remain strong for new product
with several developments having
“Investors are also being drawn
here because of council and State
Government investment along with the
However, Player also warns buyers to
THE STATES // NSW
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