NEW data has revealed that Newcastle and Lake Macquarie are among the fastest-declining property markets in regional Australia.
CoreLogic's Regional Market Update, which examines Australia's 25 largest non-capital city regions, shows house values in six of the most popular lifestyle markets that had the strongest value growth through the upswing have recorded falls of 6 per cent or more last quarter.
House values in Newcastle and Lake Macquarie recorded falls of 6 per cent over the last three months while unit values experienced a drop of 1.9 per cent.
The current median price of houses in the region is $841,296.
Units in Newcastle and Lake Macquarie region hold a median value of $654,015.
Other lifestyle regions that recorded significant falls over the last quarter include Richmond-Tweed, the Southern Highlands and Shoalhaven, Sunshine Coast, Gold Coast and Illawarra.
CoreLogic's head of residential research Eliza Owen said a strong uplift in Newcastle and Lake Macquarie during the pandemic has led to a drop in property values in the region.
"We saw a swell in value and population amid record low interest rates and now that those interest rates have rapidly corrected, we're seeing an equally strong and volatile reaction in the housing market which is driving those steeper price declines," Ms Owen said.
"The broad rule of thumb is that across regional markets of Australia we have seen that strong price declines are correlated with more expensive markets."
The data also revealed that dwelling sales in the region dropped 18.7 per cent compared to one year ago.
Houses are spending more time on the market with a current average of 26 days recorded in Newcastle and Lake Macquarie compared to 18 days one year ago, however, units are moving slightly faster than last year.
Units are on the market for 25 days compared to 26 days this time last year.
Ms Owen predicts that regional property values will continue to fall until early to mid-2023.
"It's fair to say that there is a little bit left to this downswing and I would largely just put that back to the trajectory of inflation and interest rates," she said.
"The September reading for inflation had a worse than expected outcome for inflationary pressures in Australia, which has now seen most of the major banks upwardly revise their forecasts for a peak in the cash rate.
"There is a little more pinch, I think, in terms of the housing demand side of things, which is going to continue putting downward pressure on prices and that would probably start to bottom out around early to mid next year when the peak in the cash rate is expected."
House values in the Hunter Valley (excluding Newcastle) fell 3.6 per cent over the last quarter while units recorded a slight drop of 0.6 per cent.
The median house price in the Hunter Valley is $689,980 and units are $505,132.
The region also recorded the lowest vendor discounting rate in regional Australia at -1.9 per cent.
