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Here's Why Investment Property In Newcastle and Lake Macquarie Remains Strong

29/9/2021

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Here's Why Investment Property In Newcastle and Lake Macquarie Remains Strong - Carnelian property management newcastle

Back in September 2020, we wrote a number of articles sharing data specific to Newcastle and Lake Macquarie investment property, which showed how people were relocating to regional areas away from capital cities. Those changes were cited at the time as resulting in driving house price growth and low rental vacancy rates in regional areas.

Now, a full year later, fresh research continues to emerge showing that this trend is lasting - great news for investors in the Newcastle and Lake Macquarie region!

In this post we summarise the latest research and data highlighting the impacts of regional migration on rental vacancy rates and housing affordability across the Newcastle and Lake Macquarie region. The findings are remarkably similar to our article 12 months ago.

Rental Vacancy Rates Remain Low Across Newcastle and Lake Macquarie

As we discussed just two weeks ago, rental vacancy rates have remained low across most of Newcastle and Lake Macquarie over the past 12 months.

Low vacancy rates generally indicate tight supply vs demand for available properties, and are generally accompanied by rent increases on the market. As vacancy rates begin to increase, we see a softening of the high asking rents experienced in times of tighter availability, and also an increase in time on market for those wishing to obtain top-of-market rent.

Examples of these low vacancy rates across the region as at the end of August 2021 include:

Charlestown, Dudley, Gateshead, Hillsborough, Kahibah, Mount Hutton, Redhead, Tingira Heights, Whitebridge (Postcode 2290) - 0.2% vacancy rate
Merewether, Merewether Heights, The Junction (Postcode 2291) - 0.2% vacancy rate
Adamstown, Adamstown Heights, Garden Suburb, Highfields, Kotara (Postcode 2289) - 0.4% vacancy rate
Cameron Park, Cardiff, Cardiff Heights, Cardiff South, Edgeworth, Glendale, Macquarie Hills (Postcode 2285) - 0.4% vacancy rate
New Lambton, New Lambton Heights, Kotara East (Postcode 2305) - 0.4% vacancy rate

Data is obtained from SQM Research.

Newcastle and Lake Macquarie Rental Vacancy Rates Are Massively Lower Than Sydney

OK, so rental vacancy rates around Newcastle and Lake Macquarie are ranging around 0.2% to 0.4% across the above examples. But what exactly does that mean? How does that compare to a sample of Sydney suburbs as a reference point?

By comparison, following were the August 2021 rental vacancy rates for a selection of suburbs within close proximity to Sydney CBD:

Randwick, Clovelly, Clovelly West (Postcode 2031) - 2.4% vacancy rate
Balmain, Balmain East, Birchgrove (Postcode 2041) - 2.5% vacancy rate
Bondi, Bondi Beach, North Bondi, Tamarama (Postcode 2026) - 3.0% vacancy rate
Darling Point, Edgecliff, Point Piper (Postcode 2027) - 3.4% vacancy rate
North Sydney, Waverton, Mcmahons Point, Lavender Bay (Postcode 2060) - 3.6% vacancy rate

To put that in perspective, the rental vacancy rate in the North Sydney postcode of 2060 is nine times greater than in the New Lambton postcode of 2305, and 18 times greater than in the Merewether postcode of 2291!

The rental vacancy rate in the North Sydney postcode of 2060 is nine times greater than in the New Lambton postcode of 2305, and 18 times greater than in the Merewether postcode of 2291

So in short, rental properties in the Newcastle and Lake Macquarie region are in much shorter supply than for our neighbours south of the Hawkesbury.

These references are supported more broadly by national rental vacancy rate data showing that:

Vacancy rates decreased nationally in August
The total number of rental vacancies Australia-wide stands at 58,856 residential properties in August, down from 61,313 in July
Rental vacancy rates have fallen across many of the regions, while CBD rental vacancy rates have increased over August

The Impact Of Regional Migration On Housing Affordability

Of course, we've all seen property prices skyrocket since COVID kicked off in 2020.

The migration to regions such as Newcastle and Lake Macquarie is real, and continuing. Research released by realestate.com.au on 29 September 2021 showed that Newcastle and Lake Macquarie region was the 14th highest in the nation for average views per property, based on August 2021 data.

Putting some more data behind "the vibe" of what we've witnessed, the Housing Industry Association (HIA) measures housing affordability with its HIA Affordability Index, which is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates, and wage developments.

Recent findings highlight that:

Since the pandemic began, areas outside of Sydney and Melbourne have seen a faster deterioration in affordability than those capital cities
This is not surprising given the rapid exodus of the population out of Sydney and Melbourne to other states and regions
Regional NSW saw the biggest deterioration in affordability in the nation, down by 22.8% over the year.

Regional NSW saw the biggest deterioration in affordability in the nation, down by 22.8% over the year

Why Are So Many People Relocating To The Regions From Capital Cities?

Anecdotally, it seems likely that recent COVID lockdowns have triggered a continued wave of interest in regional living as many seek freedom away from harsher lockdown measures closer to CBDs.

Recent research into Australians relocating has indicated that:

Australians are looking for cities and regions with lifestyle, affordability, amenities, and safe communities where time can be saved with reduced commute times
1 in 2 Australians responding in a McCrindle 2020 survey said that they were thinking of relocating in the next year or two
Analysis of social trends shows we long for quality time with our loved ones in beautiful locations

Additionally, and top of mind for many these days is the significant increase in people working from home. A major review by the Productivity Commission found that:

The percentage of Australians working from home had jumped from 8%to about 40% over the past two years, staying high even when previous lockdowns have ended
The main advantage, according to people surveyed, was saving time and money on their daily commute
Other reasons why workers preferred to be at home included the ability to have more time and control over their day, to sleep, exercise or cook nutritious food

The Strength of Investment Property In Newcastle and Lake Macquarie

Summarising the above, we can conclude that:

Rental vacancy rates in Newcastle and Lake Macquarie are some of the lowest in the country
The Newcastle and Lake Macquarie rental market is significantly tighter with less vacancy / availability than Sydney and many other regions
These low vacancy rates are driving asking rents and property sale prices higher and in a shorter period than typical rental and sales growth trends

Are you investing in Newcastle and Lake Macquarie? We specialise in residential property management in the region and love looking at the data behind the success of your investment.