The millionaires’ club

Stockton joins pricey property clubHunter prices a happy medianA RECORD number of Hunter residential property owners have joined the millionaires’ club, with a new cashed-up crowd emerging from the region’s real estate boom.
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Exclusive data prepared for the Newcastle Herald by leading property information group CoreLogic reveals in the year to March, more than $9 billion worth of residential property changed hands across the region.

This equates to buyers spending on average more than $1 million every hour.

Sydney investors, low interest rates, relative affordability and lifestyle properties underpinned a flurry of buying, that recorded almost 20 per cent median house price growth in some suburbs.

The frantic buying saw the doors to the Hunter’s property millionaires’ club blown open, with 62 of the region’s 65 postcodes now boasting residential property with a million-dollar price tag.

With buyers desperate to get in, dumps have been selling for more than they are worth, auction clearances have been strong and, best of all for sellers, reservepricesare being smashed.

This year’s price surge has pushed a swag of Hunter suburbs into the million-dollar club for the first time, including Windale, Shortland and Kurri Kurri. The region now has 10,085 homes and 1218 units with a price tag above the million-dollar range.

The figure is more than double five years ago when there were 4155 homes and 524 units.

In the year to March, there were 677 homes sold for more than $1 million and 59 units.

As inner-city house prices break records, experts warn that $1 million sales will continue to spread through the suburbs.

The price rises have meant that many people’s homes are making more money each day than they are.

Real Estate Institute Newcastle Hunter divisional chairman Wayne Stewart said million-dollar sales were pushing way beyond the CBD.

“I have no doubt that we’ll be seeing sales above $1 million in places like Fletcher in the next 12 to 18 months,” he said.

“We’re talking about suburbs that have never seen property prices anywhere near this high.”

Novocastrians have always paid a premium to live close to the beach. More than half, or 54 per cent, of the homes sold in the year to Marchin the 2291 postcode – covering Merewether, Merewether Heights and The Junction –were valued at more than $1 million.

There were 196 houses sold for a total of$231,443,100, and 107 were valued above$1 million. Of the 4028 homes in the 2291 postcode, 65 per cent or 2656, have a price tag of more than $1 million.

Mr Stewart said blocks of land in inner-city suburbs were now so valuable that having a two-bedroom cottage on them no longer madeeconomic sense for some residents. Hesaid second and third generation “blue collar” families were selling up and cashing in.

“You are looking at getting $1.5 million for a knockdown in Merewether,” he said.

“Anything within half-a-kilometre of the coastal strip is hot property.”

Mr Stewart saidMayfield and Tighes Hill were the hot spots to watch this year, but he did not expect double-digit growth.

“I think we’ll see growth more around the 5 and 6 per cent mark,” he said. “That’s still pretty good going though.”

Street Real Estate director Damon Sellis said buyers were being forced to look further afield, creatingan emerging corridor of millionaires branching out from the city.

He said over the past year peoplewere flocking to Wickham, Maryville and Islingtonto buyunrenovated propertiesfor more than $700,000.

“We’re noticing a stronger presence of buyers who are considering the fringe suburbs more and paying between $800,000 and $1.1 millionin suburbs like Adamstown, Charlestown andHamilton,” he said.

“Peopleare starting to realise that they can’t buy in Merewether for under a million dollars and they know they can getmore value for money by considering the next circle of suburbs.”

LJ Hooker Cessnock owner Bryce Gibson said activity in the Coalfields market had intensified over the past year.

Mr Gibson said the strongest performer was Pelaw Main, which had seen 19.8 per cent median house price growth, to $326,500, in the last financial year, with an average of 39 days on market.

“We’re not talking million-dollar properties, but we’re talking really significant growth,” he said.

“Backyards are getting smaller andfamilies that want a backyard are now looking out of the city.”

Investors priced out of the Sydney market have floodedIllawarra and the Hunter, with real estate agents reporting hundreds of properties selling before theygo to market.

PRD Nationwide Newcastle and Lake Macquarie managing director Mark Kentwell said locals werefeeling more confident in the market, getting price growth and moving into the next bracket.

He said Warners Bay, Eleebana and Speers Point experienced good growth and were predicted to do well in the coming year.

“You are looking at water and there is a dining precinct that has really come into its own –the sort of dining that people go to The Junction and Darby Street for,” he said.

Despite widespreadwindfalls, analystswarnprospective home buyers to think before rushing into the market.

Since 2000, households have consistently borrowed more against the family home or investmentproperty, withdrawing from their piggy bank of equity.

Deloitte Access Economics’ director Chris Richardson warnscheap credit and high leveraging poserisks.

Mr Richardson, one of Australia’s most respected economists, used his recent speech at the National Press Club to advise young people to rent.

“The one bit of advice I give to young Australians amid our housing market right now is: don’t buy,” he said.

Nevertheless, activity in the Lower Hunter propertymarket remainsstrong, with agents reporting widespread growth.