Newcastle property prices have started bouncing back after a year-long slide shaved 10 per cent off the value of the average home.
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CoreLogic data show the median price of a house or unit across the Newcastle and Lake Macquarie local government areas increased 0.3 per cent in June.
It is the first monthly price rise in a year and mirrored a 0.1 per cent gain in the Sydney property market and a 0.2 per cent turnaround in Melbourne.
CoreLogic research analyst Cameron Kusher said he expected a slow and bumpy recovery.
"It's only one month worth of data, so we're not getting too excited, but certainly the trend has been that the rate of decline has been slowing, and you're certainly seeing that in the Newcastle and Lake Macquarie region as well," he said.
"As Newcastle and Lake Macquarie followed Sydney down, it's reasonable to expect that it will follow the recovery.
"I'm a bit surprised that it was actually stronger this month than Sydney.
"But, again, wait and see what the next couple of months hold."
The monthly result in Sydney was the state capital's first rise since July 2017, and Melbourne's market peaked in November 2017.
Newcastle prices started falling much later, in mid-2018, but have started to rebound at the same time.
The median house price in the Newcastle and Lake Macquarie council areas is now $539,000 and the median unit price $463,000, according to CoreLogic's monthly report for June.
Another CoreLogic analyst, Tim Lawless, said lower interest rates, strong population growth, the passing of the federal election and the end of uncertainty over Labor's negative gearing and capital gains tax proposals had lifted housing demand.
"Overall, it looks like the tide may have turned for the housing market, however, we aren't expecting a rapid recovery phase," he said.
"Aided by the housing downturn, we have also seen an improvement around housing affordability, although dwelling values remain high relative to household incomes in Sydney and Melbourne," he said.
Mr Lawless said tighter lending rules were the "new normal" for banks and would continue to "dampen market activity".
"Lenders are progressively becoming less reliant on average household expense benchmarks, and prospective borrowers should expect some scrutiny of their balance sheets during the loan application process.
"Borrowers applying for debt that is greater than six times their income may find it increasingly difficult to secure a loan."
He said another factor influencing demand would be "higher supply" of high-rise apartments in Sydney and Melbourne.
"These markets are moving through the peak in an unprecedented number of off-the-plan unit sales, many of which are receiving valuations at the time of settlement that are lower than the contract price."
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