In all economic cycles there are winners and losers

Investors too have also been able to multiply their wealth in record time.

But the party is coming to an end and we now know it is not a case of if but when rates begin to rise.

Reserve Bank Governor Philip Lowe advised Australians this week to build up buffers so they are ready for when interest rates inevitably increase.

He argued that most households are paying off more than is required by the current level of interest rates or they are keeping money in offset accounts and redraw facilities.

"So there's a lot of capacity for many borrowers to keep their current level of spending even with higher interest rates because they've built up the buffers," he said.

While those with manageable mortgage repayment plans will agree with Dr Lowe's analysis, the next generation of new home buyers will be cursing their luck.

The unprecedented run of record low interest rates has fueled record house prices across the Hunter and elsewhere.

According to data from property analysts CoreLogic, the median house price in Newcastle and Lake Macquarie hit $882,000 in January, up $300,000 since October.

A "rambling old home in old condition" in Mayfield, traditionally one of Newcastle's more affordable suburbs, has just sold for $1.47 million before auction.

It's a similar story in Medowie, a long-time magnet for young families. The baseline price for entry-level properties has risen from $450,000 to $600,000 in about six months.

Significantly, the Lower Hunter's housing bubble is not just being fueled by local buyers. Real estate agents across the region have many Sydney-based clients seeking to enter into the Hunter's more 'affordable' housing market.

In addition to spiralling prices, the unrelenting demand is also putting pressure on councils and the state government to open up more land for housing.

This in turn puts pressure on already fragile areas of bushland on the fringes of Newcastle and Lake Macquarie.

In all economic cycles there are winners and losers; behind the headlines of property booms and record prices are the dreams and struggles of thousands of people seeking a foothold into the market.

And those who can't afford to buy are seeking to rent in an increasingly competitive sector.

Governments, which have reaped billions in stamp duty in recent years, need to put in place policies to ensure the legacy of record low interest rates is not a market where future generations are unable to afford a roof over their heads.

Issue: 39,788

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