Expensive houses cop biggest Hunter property price hit

Buyer's agent Chad Dunn expects a flood of houses on the market in the next two months as borrowers reach the end of their fixed-rate periods.

Expensive houses in the Hunter have taken a much bigger price hit over the past year than properties at the lower end of the market.

A new report on the regional Australia property market from analysts CoreLogic shows the most expensive 25 per cent of houses in Newcastle and Lake Macquarie have dropped 10.9 per cent in value in the past year.

Houses in the bottom price quartile have dropped 5.9 per cent in value.

One real estate agent told the Newcastle Herald that prestige sales in expensive suburbs such as Merewether and Bar Beach had dried up in recent months.

A search of $3 million-plus sales in Merewether shows just five in the past six months, compared with 17 in the previous six months.

Sales over $2 million have fallen from 38 to 20 in the same period.

The two-speed market is even more pronounced in the rest of the Hunter, where top-quartile prices have dropped 4.2 per cent in a year while the cheapest houses are up 8 per cent in value.

The CoreLogic report shows houses in Newcastle are spending an average of 41 days on the market before selling, compared with 18 days a year ago.

Newcastle vendors are discounting an average 5.3 per cent on the advertised price, compared with 3.3 per cent this time last year.

This four-bedroom house in Ridge Street, Merewether, is one of few to fetch more than $3 million in the suburb in the past six months. It sold for $3.75 million in December.

The typical unit is spending 39 days on market, compared with 21 days a year ago.

Buyer's agent Chad Dunn said stock on the market in Newcastle's higher-priced suburbs was "the lowest I've ever seen".

But he expected houses to pour into the market in the next two months as a large cohort of "two per center" borrowers reached the end of their fixed interest periods.

"Vendors' expectations haven't moved with the slight correction in the market," he said.

"They think they can still get what they would have got 12 months ago, but their expectations are not in line with the market, and things are going to change very quickly when the two per centers flood the market with stock."

CoreLogic said on Tuesday that it expected house values to continue declining in regional areas after the Reserve Bank warned more rate hikes were necessary to curb inflation.

"This is a trend we can expect to see playing out at least until interest rates top out," CoreLogic head of research Eliza Owen said.

"Sellers will need to be realistic about their pricing expectations. It may take some time for vendors to adjust their expectations."

The central bank has increased interest rates at nine consecutive meetings.

The cash rate is at a 10-year high of 3.35 per cent and is expected to peak at 4.1 per cent in August after three more Reserve Bank rises of 0.25 percentage points.

House prices have fallen 9.7 per cent in the Newcastle local government area in the past 12 months, 8.5 per cent in Lake Macquarie, 4.6 per cent in Port Stephens and 4.1 per cent in Maitland.

Prices are up 15 per cent in Muswellbrook, 11.1 per cent in Upper Hunter, 3 per cent in Singleton, 2 per cent in Dungog and 1.9 per cent in Cessnock.

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