The median house price in Newcastle and Lake Macquarie at the end of July was $757,000 according to Core Logic data - an increase of 1.8 per cent from a month before and up almost 26 per cent in 12 months.

Unit prices also climbed slightly to $587,000, a 0.2 increase for the month and 13.4 per cent for the year.

The Herald has previously reported that Sydney residents could leave the city to travel to regional areas for open homes, despite the current COVID-19 lockdown.

But Spillane Property principal Donna Spillane said a lot of interested buyers were choosing to inspect Newcastle homes virtually, while others were waiting to come out of lockdown to make the move north.

"There are definitely buyers that aren't purchasing now that are just waiting until they can get through properties again, but having said that there still is a lot of buyers that are inspecting virtually and still participating in auctions," she said.

It comes as new ABS data shows that Sydney lost 31,600 residents to internal migration in the 12 months to March 2021.

"This shift in population is the main driver of the tight rental market that exists across the country," Housing Industry Association chief economist Tim Reardon said.

"Regional areas have seen a greater increase in building approvals than capital cities as the population shifts toward lower density areas.

Ms Spillane said demand for local properties was also continuing to outstrip supply.

"I think while ever that's the case, the market will track along nicely," she said.

"The market has had phenomenal growth over last three to six months.

"Whether we see the huge gains that we've had over last few months, I don't think that's sustainable, but I think Newcastle is in a really good position.

"There's still a lot of people moving to the area, it's a lot more affordable than cities, and employers are happy for people to work from home, so people are choosing that lifestyle."

She expected a further spike in demand for property in Newcastle once the current Sydney lockdown comes to an end.

"I think until international borders open, the Newcastle market is going to have really steady growth," Ms Spillane said.

Core Logic head of research Eliza Owen said she also expected to see a bit of a boost in demand in the Hunter region when the lockdown finishes in Sydney.

"The virus has made quite a dramatic structural change in the way we approach housing," Ms Owen said.

"I think regional Australia is going to be amplified as Sydney comes out of the COVID lockdown and we can expect to see a flurry of migration activity."

Ms Owen said while prices were still rising in Newcastle, the growth rate was slowing from the peak earlier this year.

"Which is a reflection of affordability," she said.

Similar to Sydney's high prices boosting interest in Newcastle, Ms Owen said rising prices in Newcastle could now be putting pressure on the rest of the Hunter.

The growth rate in the Hunter Valley has outstripped Newcastle and Lake Macquarie. Median prices rose 2.5 per cent to $570,000 in July, which followed a 2.4 per cent increase in June. Annual prices have grown 21.9 per cent.

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