Home values in Newcastle and Lake Macquarie have dipped for the second consecutive month, signalling a clear cooling trend across the region's property market.
According to the Cotality Home Value Index (HVI) released on Wednesday, home values in the region fell by 0.4 per cent in June.
The decline wiped about $3700 off the median dwelling value since May.
"It is a continuation of the trend that we have seen since last year where, essentially, we have had this deterioration in demand," Cotality's head of research Gerard Burg said.
"It is almost the perfect storm with a broad range of factors driving it.
"From late last year, before the RBA started lifting rates, affordability was becoming constrained and we have since had three rate rises, the impact of the Iran conflict on oil prices, and a lower level of consumer sentiment.
"More recently we've had the changes in the budget around investors, so all of these factors combined have driven this outcome."
Despite the recent slip, the region's overall median dwelling value (combining houses and units) remains above the million-dollar mark at $1,042,616.
House values in Newcastle and Lake Macquarie led the monthly drop, falling 0.4 per cent to a median of $1,084,207.
By comparison, unit values showed resilience, ticking up slightly by 0.1 per cent to hit a median of $810,808.
Overall, Newcastle and Lake Macquarie home values are up 9.2 per cent over the past year.
Revised data from Cotality reveals the market actually peaked in April before turning downward in May with a 0.2 per cent decline.
"At a time where there is a lot of movement happening in the market, these revisions can tend to be a bit larger," Mr Burg said.
"In the Newcastle and Lake Macquarie region, there was a 0.2 per cent decline in May as opposed to a 0.2 per cent increase.
"At the national level in May, the data showed a modest increase in values, which is now showing a decrease, so we have already started the national downturn."
Prior to May, the region's last property downturn occurred between May and December 2022, tracking alongside a broader national slump.
"It was during the rapid increase in interest rates from the RBA across that period when we saw a peak to trough decline of 8.7 per cent for dwellings in the Newcastle and Lake Macquarie market," he said.
In the Hunter Valley (excluding Newcastle), home values recorded a slight drop of 0.1 per cent in June, bringing its median to $832,847.
House values in the Hunter Valley declined by 0.1 per cent (median $859,796) last month, while regional unit values fell more sharply by 0.8 per cent to a median of $600,085.
Cotality's national HVI dropped 0.4 per cent in June, marking the largest month-on-month fall since December 2022.
A 1.2 per cent decline in Sydney home values served as the most significant drag on the national result.
As the market rapidly decelerates, the HVI has seen recent months revised lower.
The June update now indicates the national measure peaked in March, with values down 0.7 per cent through the June quarter.
"The downward revision reflects a market that is changing rapidly," Cotality's research director Tim Lawless said.
"Most regions have seen values revise lower over recent months, with the largest downgrades occurring in Perth and Brisbane, where the May index has been revised 88 and 53 basis points lower with the June update."
Capital city home values have fallen by 1.3 per cent over the quarter, with Sydney leading the pace of decline at 3.2 per cent.
Regional markets continue to outperform the capital cities.
Broadly, the combined regional index was up 0.3 per cent in June and was 1.1 per cent higher over the quarter, although Mr Lawless said the pace of gains is clearly slowing across regional Australia as well.
Values were flat across regional NSW over the month.
