Newcastle housing more unaffordable than every capital city, except Sydney

The time it takes to save for a deposit today and the percentage of household income to pay off a new mortgage is higher in Newcastle than all capital cities except Sydney, according to the latest ANZ-CoreLogic Housing Affordability report.

New borrowers could expect to be saving for 12.1 years to get together a deposit for a median priced dwelling in Newcastle according to the report for the March quarter.

While paying off a new mortgage for a median priced dwelling, could expect to take up a whopping 57.3 per cent of a household's income.

Only Sydney was more unaffordable according to the report, with an estimated 12.6 years to save for a deposit and 59.9 per cent of a household income to pay off a mortgage.

The high cost of housing in Newcastle and Lake Macquarie came as the area is a lifestyle market where values rocketed in response to the rise of remote work trends during the pandemic according to CoreLogic Head of Residential Research Australia, Eliza Owen.

"Values are currently sitting 38.4 per cent higher than at the onset of the pandemic in March 2020, while incomes have only increased around 20 in per cent the same period," Ms Owen said.

And affordability is expected to be a challenge going forward.

"Unlike more remote regional centres, Newcastle is very likely to maintain its popularity as a market that benefits from 'spillover' demand from Sydney, and other regional areas, as sea-changers and retirees look to their next property purchase," Ms Owen said.

It also takes longer to save for a home deposit in Newcastle than Melbourne, Brisbane, Adelaide along with Perth, Hobart, Darwin and Canberra.

Of those Adelaide has the next longest period to save for a deposit for a median priced dwelling, with borrowers estimated to have to save for 10.9 years, while in Brisbane it is a period of 10.2 years.

In Melbourne it take 9.4 years.

Likewise it's more affordable to pay off a mortgage in these cities compared to Newcastle.

In Adelaide 51.4 per cent of a household income is needed to pay off a new loan for a median sized home.

And there is not expected to be any relief in affordability.

"As Sydney home values have also recovered from a short, sharp decline in home values, it's likely that migration trends will push values higher across the market once more," Ms Owen said.

"The growth trend in Newcastle accelerated slightly through the month of March (with values up 0.9 per cent, compared to 0.5 per cent in the previous month), suggesting a tide of demand is rising, especially among prospective family home buyers who may realise more value for money in this lifestyle region," she said.

Within the Newcastle and Lake Macquarie area, the Lake Macquarie East area which includes suburbs such as Belmont, Charlestown and Dudley, is the most unaffordable.

Here it is estimated it would take 12.5 years to get a deposit together for a new loan on a median priced dwelling and 59.3 per cent to pay the mortgage.

In Lake Macquarie west it would 12.4 years to save for a deposit and 59.1 per cent of a median household income to pay the mortgage.

Newcastle meanwhile saw a period of 11.6 years to save for a deposit and 55.3 per cent of a household income to cover the mortgage.

Covering the rent today is also more unaffordable with renters looking at having to spend more than 30 per cent of a household income to put a roof over their heads.

The March quarter was the fifth consecutive quarter that rents have taken taken up more than 30 per cent on household incomes nationally, and this is also reflected in Newcastle and Lake Macquarie.

The median weekly rent is now $631 in Newcastle and Lake Macquarie, and accounts for 33.7 per cent of income.

The report is based on median income households servicing a mortgage if they were to purchase in March 2024.

It assumes the owner has borrowed 80 per cent of the median dwelling value and is paying the average discounted variable mortgage rate at that time for a term of 25 years.