Fewer properties in Newcastle and Lake Macquarie are changing hands according to a new report, with the region recording one of the largest declines in property sales in regional Australia.
A new CoreLogic report on 25 of Australia's largest regional markets found that the number of house and unit sales in the region declined by 9.1 per cent in the 12 months to May 2022.
The drop was even sharper in the unit market, where sale volumes were down by 18.6 per cent during the same period.
In the Hunter Valley, annual dwelling sales were 2.4 per cent lower than a year ago.
The figures come as rising interest rates and inflationary pressures start to weigh on regional markets.
All non-capital regions recorded an increase in house values over the year to July 2022, according to CoreLogic, although regional markets have weakened in recent months.
CoreLogic economist Kaytlin Ezzy said a number of the regional areas that previously saw some of the strongest growth over the COVID period are now showing weaker selling conditions as consecutive rate hikes, affordability constraints, falling consumer sentiments and high non-discretionary inflation put further downwards pressure on demand.
While most markets are still recording faster selling times compared to this time last year, median days on market and vendor discounting figures have been creeping up in the past two quarters, Ms Ezzy said, suggesting buyers were starting to reign back some control.
The median value for homes in the Newcastle and Lake Macquarie regions came in at $892,239, with a steady average of 21 days on the market.
Units held a median value of $677,534 and spent an average of 23 days on the market compared to 32 days one year ago.
Vendors selling houses in the Hunter Valley (excluding Newcastle/Lake Macquarie) region offered the lowest discounts to secure a sale with a median discount rate of 2.1 per cent.
The median price in the Hunter Valley was $723,516 for houses and $514,692 for units.
"Vendors are now offering slightly larger discounts in order to secure a sale, while regional properties are now taking slightly longer to sell as selling conditions start to shift back in favour of buyers," Ms Ezzy said.
"While inventory levels remain low across the combined regional areas, the trend in newly listed properties is starting to normalise.
"As more properties come onto the market, vendors will potentially have to make more concessions when trying to secure a sale."
As interest rates move higher and affordability pressures mount, Ms Ezzy said it's likely the decline in values witnessed in capital cities will become more widespread and impact regional areas.
"Value declines are already being seen across more expensive regional markets, while the pace of growth has eased considerably across the combined regions' broad middle and lower quartile markets," she said.
"However, as Australia's housing market moves further into the downwards phase of the cycle, it's possible the regional areas will be slightly more insulated than the capitals, thanks to these markets' relative affordability and low advertised supply levels.
"Additionally, the strong growth that's occurred over the past two years should help cushion regional homeowners from the most extreme effects of the cycles downturn."
