Figures supplied by City of Newcastle show the council approved new developments worth a total of $590 million in 2019-20, a far cry from the billion-dollar splurges in the three years before.

Residential DA approvals accounted for most of the drop, falling from $776 million in 2018-19 to $360 million in 2019-20.

Much of the downturn in residential DAs was in the central business district, where the value of approvals, including those for apartments mixed with commercial space, declined from $402 million to $166 million.

The council approved a series of high-value DAs during the boom years in 2016, 2017 and 2018, including 10 which totalled more than $700 million.

These major projects included DOMA Group's $200 million Store redevelopment, a $210 million slab of Iris Capital's big EastEnd residential precinct and a $100 million expansion of the Westfield Kotara shopping centre.

The dramatic fall in the value of residential DA approvals returns the city to pre-2016 levels, reflecting a national drift away from apartment construction and the early effects of the COVID-19 pandemic.

But industry representatives told the Newcastle Herald that housing construction activity remained strong in Newcastle and throughout the Hunter.

Latest monthly sales data from analysts CoreLogic show house prices rose 0.7 per cent in September across the region.

Newcastle and Lake Macquarie house prices dropped in 2019 but are now sitting just one per cent below their historic peak of $581,000 in May 2018.

City of Newcastle said it had issued 947 approvals related to residential development last financial year, only 61 fewer than the year before, despite the steep fall in the overall dollar value of these projects.

The council's manager of regulatory, planning and assessment, Michelle Bisson, said development activity remained healthy.

"While no industry has navigated the COVID-19 pandemic unscathed, the popularity of new residential dwellings and secondary dwellings continues to grow in the Newcastle LGA," Ms Bisson said.

"The construction of secondary dwellings provides the community with a choice of more affordable housing."

The three most valuable development applications approved in 2019-20 were for a 20-storey mixed-use development in Newcastle West ($27.6 million), the boutique hotel in the old David Jones building ($24.3 million) and GWH's eight-storey commercial development on the Darby Plaza site in Hunter Street ($18.9 million).

The top suburbs for development approvals were Newcastle ($110 million), Fletcher ($49.8 million), Broadmeadow ($47.8 million) and Mayfield West ($40 million).

Hunter executive director Craig Jennion said apartment approvals had fluctuated in the inner-city, but the broader region was one of the best-performing areas in Australia for housing activity.

"Even throughout COVID we haven't really seen a drop-back in approvals that I expected to see," he said.

"We're still looking to see what will happen in the second half of this year, but we're expecting to stay up.

"I do suspect that our boom of apartments is slowing, but we don't believe we'll drop the same as Sydney. We don't have that same reliance on international migration."

Mr Jennion said dwelling approvals had risen by 9 per cent across the Hunter in the year to July compared with the corresponding period last year.

Multi-unit approvals had fallen 33 per cent in the last quarter year-on-year but stand-alone house approvals had risen 9 per cent.

The HIA forecasts that immigration limited by government policy and the pandemic will keep national housing approvals below their 2018 peak of 230,000 for the next decade.

The regional director of the Property Council of Australia, Anita Hugo, said the fall in the monetary value of Newcastle's development approvals was not surprising given the "high rate of urban renewal in the CBD in the three years prior".

"It is also indicative of the impacts of COVID-19, but I would suggest that the number of DAs did not necessarily differ as much as the type of DAs that have been submitted since the beginning of this year, which would also impact the dollar value," she said.

"Importantly, though, there is positive sentiment and the industry is geared and ready to lead a post-COVID recovery."

CoreLogic's housing index showed a "striking return to confidence in September", though Sydney (0.3 per cent) and especially Melbourne (0.9 per cent) prices continued to fall.

The other six state and territory recorded a rise in home values.

"Since peaking in March, Melbourne values are down 5.5 per cent," CoreLogic's head of research, Tim Lawless, said.

"With restrictions starting to lift and private home inspections once again permitted, we expect to see activity lift in October."

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