Hunter house prices have hit record levels and are poised to fly higher after the Reserve Bank cut interest rates to a new low.
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New figures from property analysts CoreLogic show Newcastle and Lake Macquarie house prices, excluding apartments, rose 1.1 per cent in October.
Prices are up 8 per cent in the past 12 months and have reached a median value of $601,000, surpassing the previous record set in 2018.
In the rest of the Hunter, the value of houses sold jumped 0.9 per cent to reach a record median of $453,000.
The buoyant property scene has prompted a Sydney developer to go ahead with building the inner-city's latest residential high-rise.
Multipart Property said on Tuesday that it would start work in the second quarter of 2021 on Bowline, a 14-storey apartment and commercial building next door to the Newcastle Interchange.
Co-founder Matt Zappia said Multipart had sold half of the 97 units and secured lease commitments for some of the 5400 square metres of office space.
News of the Newcastle and Hunter housing records emerged on the day the Reserve Bank of Australia cut official interest rates from 0.25 per cent to a new low of 0.1 per cent and announced a $100 billion quantitative easing package destined to lower the cost of borrowing.
The RBA had not cut interest rates since March.
CoreLogic head of research Tim Lawless said banks were "highly likely" to pass on interest rate cuts to mortgage holders.
The Newcastle Herald reported in September that the rental vacancy rate in the Hunter was a historically low 1.3 per cent, down from 2.4 per cent in May.
Real estate agents describe the region's rental market as the most competitive they have seen, suggesting pressures on housing supply and prices will continue.
By comparison, Sydney and Melbourne apartment rents are down 5.8 per cent and 6.6 per cent respectively since March as job losses, frozen immigration and high supply take a toll.
Regional real estate price growth continued to outstrip the Sydney and Melbourne markets in October.
The combined regional figure across Australia was up 0.9 per cent, compared with a 0.1 per cent rise in Sydney and 0.2 per cent fall in Melbourne.
The Canberra, Adelaide, Hobart and Darwin markets were up between 1 and 1.2 per cent each.
Mr Zappia said regional areas were becoming increasingly popular with big-city dwellers looking for a better lifestyle and value for money in an age when working from home was the "new norm".
But this shift has not yet played out in internal migration statistics for Sydney.
Australian Bureau of Statistics figures issued on Monday showed slightly fewer Sydneysiders left to live in other parts of Australia in the June quarter compared with the previous two quarters.
Mr Zappia expected the regional shift to be more apparent in the September quarter data as many Sydney residents now viewed regional areas as being virtually virus-free and having fewer restrictions.
"Regional markets are going from strength to strength, but it's not necessarily units," he said. "People are looking for space to run around in."
RBA governor Philip Lowe said the interest rate cut was designed to help Australia recover from the pandemic.
"With Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can to support the creation of jobs," he said.
Inflation rose 1.6 per cent in the September quarter, the biggest increase since 2006.
Nevertheless, the central bank said it would buy $100 billion in government bonds, increasing the supply of money to lenders.
"Encouragingly, the recent economic data have been a bit better than expected and the near-term outlook is better than it was three months ago," Dr Lowe said.
"Even so, the recovery is still expected to be bumpy and drawn out and the outlook remains dependent on successful containment of the virus."
Mr Lawless said higher house prices were an inevitable by-product of the RBA's desire to boost the economy.
"The RBA's primary focus from lower interest rates is to ensure businesses are confident enough and willing to invest, as well as encouraging households to spend.
"With this in mind, the RBA is likely to look through the noise of higher housing prices."
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