A few years ago, not many property boffins in the city would’ve tipped Newcastle on the New South Wales north coast would be one of the hottest investment prospects going.
The former industrial hub is in the midst of an unprecedented real estate boom, with median house prices soaring 9.1 per cent over the past 12 months to $660,000. That’s growth our big capitals would be happy with!
Local agents say their phones are ringing off the hook. Investors from down south are flying or driving in to snap up good quality properties and some are buying sight unseen, which is never an ideal strategy.
So, what’s behind this seemingly insatiable demand for Newy?
An influx of new residents and businesses
It’s not as though Newcastle has been one of the country’s best-kept secrets that people are just cottoning on to.
It’s long been popular and is the seventh largest city in Australia. It’s bigger than Canberra!
But the rate of growth in recent times has been phenomenal. Authorities now forecast a 33 per cent increase over the coming 15 years.
For those relocating, there are numerous attractions. For one, the natural beauty, with stunning beaches and the picturesque, whale-filled ocean.
Secondly, it’s a friendly and laid-back place that offers the charm of a small town and the convenience of a city. Thirdly, there’s plenty going on here in terms of lifestyle, leisure, commerce, and industry.
While new residents are coming at a frantic pace, the local council is also trying to woo new businesses to the area by offering the operators of small- and medium-sized enterprises cash grants to relocate.
When it comes to the local workforce, things have certainly changed over the past decade or two.
Newcastle was long known as a resource sector town, thanks to its strong mining and steel links. BHP was once the biggest employer here, which made some investors rightfully nervous. And while the place still benefits strongly from the industry, the economy has diversified significantly.
There’s a strong professional services sector here, including a decentralised state government workforce. Education is a big one, too, with a sprawling university campus. You also have tourism and hospitality, given how spectacular Newcastle is to visit.
Add some aviation and defence, with both a major air logistics hub and the Air Force locally, and you’ve got yourself a significant mix of industries.
The development and construction sectors are also extremely busy of late, thanks to a local infrastructure boom.
The changing face of Newcastle
When talking about the development and infrastructure renaissance taking place locally, it’s almost hard to know where to begin.
You have the continuing $200 million transformation of The Store mixed-use site in West End. There’s the five-star Kingsley Hotel development, repurposing one of the city’s most iconic buildings, opening this month.
A Costco is about to open its doors in Boolaroo, and the $49 million development isn’t just good news for bargain-hunters. The 14,000 square-metre warehouse and service station will employ about 250 people.
There’s also the East End development, comprising luxury apartments, a boutique hotel and new retail, which will revitalise that part of the city.
And, of course, the big one – a $66 million upgrade of Newcastle Airport’s runway, which the Federal Government says will generate thousands of jobs and spark a mammoth long-term economic boom.
The works, announced in May, will accommodate longer range domestic and international passenger services and significantly increased freight capabilities to benefit local exporters.
Solid long-term prospects
A number of things immediately jump out at me in terms of Newcastle’s property investment fundamentals.
There’s no question that it is – and will remain – a desirable location for people to move to. There’s the ‘town change’ aspect, or the yearning for city dwellers to get out of Sydney and Melbourne and find a slower and friendlier pace, while not sacrificing convenience and lifestyle.
There’s also the strong local economy, which supports a large and diverse workforce that continues to grow. Long gone are the days when this was a one-horse mining town.
Governments at all levels, in partnership with business, are making huge investments in Newcastle’s transformation. You only need to wander around the city to see scaffolding up and cranes in the air. But beyond that, in places that might not be readily visible, large-scale projects are brewing in critical sectors like aviation and logistics.
For property investors looking for a location that offers strong long-term fundamentals, Newcastle is well worth exploring.