More buyers than homes, that’s the problem with Newcastle’s real estate market says one local agent.
First National Real Estate Newcastle City agent Tom Lemke warns while the former steel city is experiencing a real estate boom, buying and selling happen within the same market.
“The Newcastle market is still really strong,” Tom says.
“The main driver for this is a very low supply of homes coming [onto the market] each week, coupled with lots of people looking to buy.
“The main frustration we are hearing from sellers is that they know they will get a great price if they sell, but they will also be paying more for the next property, and trying to find the right one could take months.”
According to Corelogic figures released on 1 April, regional NSW has experienced a 13.6% increase in property values since the same time last year.
“We were in the midst of COVID-19 in 2020 but to give you a good example – you could have purchased a house in Mayfield for about $550,000, that same house right now would be worth at least $650,000,” Tom said.
“The market was mainly driven by First Home Buyers during the pandemic period as they didn’t seem to be concerned with what was happening globally.
“As soon as restrictions were lifted, we saw an influx of people relocating to Newcastle who are now able to work from home.
“This has continued to drive house prices up.”
The former plumber, who has renovated seven homes himself, said the increase in home values meant real estate agents were struggling to offer buyers a price range.
“We are averaging 25 groups through our first open home,” Tom explained.
While locals, he says, still make up 70% of sales, they are feeling the pinch from Sydney buyers.
“There is definitely frustration from locals having to pay more because of competition from out-of-town buyers,” he said.
“Local buyers are starting to look at neighbouring suburbs that they wouldn’t have looked at beforehand for affordability.”
Tom’s advice is to make sure you have a back-up plan.
“I would seriously recommend buying before you sell in this market,” he said.
“With vacancy rates well below 1% finding a house to rent seems to be even harder than buying something.
“I recently sold a house in Birmingham Gardens, it took 200 days for the home to sell in 2018 for $350,000.
“The same house has just been re-sold for $499,000 in seven days.
“We sold another house in Georgetown, which would’ve sold for $800,000 12 months ago – it recently sold for $1,025,000.”
There appears to be no end in sight either.
“The only thing that can slow this market down will be banks increasing interest rates,” Tom said.
“But, this seems to be highly unlikely with most of the major banks offering fixed loans at less than 2% for four years.”