THE Newcastle housing market is expected to boom over the next two years with a 15 per cent spike in prices outstripping Sydney.
The Australian Housing Outlook, by QBE Insurance Group, predicts the median house price in Newcastle will increase by 7 per cent next year and 8per cent the year after, with a further 2 per cent growth tipped after that.
Only Brisbane will enjoy a similar market surge.
Buyers fed up with Sydney’s high prices are fuelling the Newcastle market, the report said.
Newcastle prices have already enjoyed significant growth with an 8 per cent jump in the median house price last financial year.
Real Estate Institute of NSW Hunter chairman Wayne Stewart said the number of Sydneysiders buying Newcastle property had increased ‘‘dramatically’’.
‘‘A rate of 15 to 20per cent is very sustainable growth over the next three years,’’ Mr Stewart said.
Affordability and lifestyle were the main factors that drew people to Newcastle, he said.
In June, the median house price in Newcastle was 52per cent of the $811,800 Sydney median.
Growth in the Sydney market is expected to slow from a rate of 17per cent in the past financial year to a total of 9per cent over the next three years.
Sydney’s median house price is forecast to peak at $915,000 by June 2016.
Other regional cities expected to experience double-digit growth in the next three years include Wollongong, Cairns, Ballarat, Bendigo, Gold Coast, Townsville and Sunshine Coast, the report said.
Leigh Mather, a director of property valuers Herron Todd White, said talk about housing bubbles and potential interest rate rises could stall growth locally.
‘‘A growth rate of 17per cent over three years would be a bit optimistic,’’ Mr Mather said.
Mr Mather said his gut feeling was that Newcastle house prices were reaching a peak, although a lack of stock on the market was keeping them high at the moment.
‘‘I would have thought growth could stall or stagnate in Newcastle [in the next couple of years],’’ Mr Mather said.
‘‘Rental returns are not quite there at the moment for investors.’’
Mr Mather was unconvinced that Sydney’s lack of affordability was luring people to Newcastle.
But Property Council Hunter chairman Edward Crawford said the QBE figures were ‘‘spot on’’.
‘‘There would be Sydney people at most residential house auctions,’’ Mr Crawford said.
‘‘People will say I can spend $600,000 on a house in western Sydney or I can spend $600,000 or less in Newcastle and have a better lifestyle ... we are certainly starting to see that.’’