Property analysts CoreLogic said on Friday that Redhead had joined the growing list of suburbs and towns with a median house price topping seven figures.

The median price in the seaside suburb was $1.151 million in May, up from $924,000 a year earlier.

Redhead was one of 30 suburbs or towns in NSW and 218 in Australia to join the list since May 2020 but the only newcomer in the Hunter.

It is the first suburb outside Newcastle's inner core to register a median above $1 million.

Merewether led the way in the Hunter last month with a median price of $1.638 million, up almost half a million dollars from $1.154 million in May 2020, when COVID-19 was affecting the housing market.

Cooks Hill was the second most expensive suburb in the region at $1.426 million, well above the $1.137 million median value a year ago.

Hamilton South was third at $1.279 million, up $242,000 on last year.

Prices across the city jumped 21.6 per cent in the year to May as record low interest rates fuelled demand.

A record one in 10 house sales in NSW were above $1 million in May.

CoreLogic researcher Eliza Owen said the housing market presented mounting challenges for young buyers.

"For first home buyers, who tend to be more price sensitive, higher house prices and the volume of suburbs becoming million-dollar markets are likely building on the challenges already faced by these prospective buyers around home ownership," she said.

"The latest ABS finance data reinforced this, showing April marked the third consecutive month of decline in finance secured for the purchase of property by first home buyers."

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