Featured Suburb – Newcastle NSW

July 14, 2014 Sam Saggers

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Newcastle, situated 162km North of Sydney at the mouth of the Hunter River, is a growing market which offers great potential for investors in search of strong yields and solid growth.

in spotlight_newcastle

Market Drivers

Right now, the key indicators of growth that suggest a market will be viable are most definitely visible in Newcastle:

  • Population – Australia’s 7th largest population base (148,000)
  • Economics – Diverse employer base including construction, tourism, wineries, horse breeding, mining and education.
  • Supply and Demand – 2.2% Vacancy rates (as of July 2013)
  • Infrastructure – $1 Billion Dollar upgrade to export facility; $1.1 billion Mangoola Coalmine development; $320 million expansion of the Mount Arthur coal mine; 90% of NSW coal is exported through Newcastle Ports ($4Billion Dollars worth); John Hunter Hospital upgrades of $26 million and much, much more
  • Yield – 5%+
  • Demographics – Blue collar working families and University students. (30,000 students)

Natural resources and Amenities

As the predominant city within the entire Hunter Valley region, Newcastle is famous for its coal – a major industry within the area.
Fuelled by the strong increase in Asia’s demand for coal, Newcastle and surrounding areas increased their output in 2013 to 150.5 million tonnes – up from 68 million tonnes in 2000.

Newcastle beaches are rightly considered a surfer’s paradise and have produced some of the best surfers Australia has to offer, including such greats as Mark Richards, Matt Hoy, Simon Law and Luke Egan.

The following list is only a partial accounting of the many sights and amenities Newcastle offers:

  • Queen’s Wharf – marina/restaurant complex with a boutique brewery
  • Merewether Baths – largest sea baths in the southern hemisphere
  • The Bather’s Way – scenic 5km coastal walk stretching from Merewether Beach to Nobbys
  • Walk from the foot of Fort Scratchley to Nobbys Head lighthouse
  • Bar Beach – family friendly beach with a wonderful rock pool and a good view of hang-gliders launching from the nearby lookout

Newcastle residents have access to a variety of transportation options and services including:

  • Newcastle Airport – Situated 15km North of Newcastle
  • Rail – Newcastle is serviced by the Newcastle and Central Coast line
  • Bus – Regular bus service within Newcastle City
  • Road – Access to the F1 Freeway between Sydney and Brisbane

Outlook

In his January 7th article about the Newcastle market for Commonwealth Bank, titled Newcastle: Rising Tide of Property Investment, Jean-Paul Pelosi quotes John Edwards, an analyst for Onthehouse.com.au:

“The trend in the data is clearly indicating continued growth and we can be reasonably confident that we are looking towards a year of growth of something a little better than we saw in the last 12 months.

“Our expected outcome for the next 12 months is growth of close to 7%, which would suggest a median value of about $454,000 at this time next year. The market is on the move with growth for the last three months to October being in the order of 4%.”

Pelosi goes on to state that, “…economic forecaster BIS Shrapnel predicts as much as 18% growth through to mid-2016. This type of price increase will surely be led by inner city and coastal suburbs such as the already popular Bar Beach and The Hill. Home values in these areas are now well into the millions.”

As these numbers indicate, Newcastle is still humming along quite nicely, offering investors some solid investment opportunities.

The information presented is not a substitute for your own due diligence. We recommend you conduct your own research before making any investment decisions.

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