The Newcastle Herald understands a local family has purchased the heritage-listed, beachside property known as Barrymore at 44 Kilgour Avenue in Merewether.

The spectacular home was built in 1873 and features five bedrooms, four bathrooms and a floor space of 488 square metres. It sits astride a 1698 square metre block of land on the cliff overlooking Bar Beach and the Pacific Ocean.

It was sold by PRD Newcastle and Lake Macquarie's Mark Kentwell, Natalie Tonks and Chasse Ede. The sale smashed the city's previous record result of $7.25 million, which was paid for a contemporary residence opposite Merewether beach at 38 John Parade in September last year.

The John Parade residence was also sold by PRD and secured by a local family. The $7.25 million result was the first time a home in Newcastle had exchanged for more than $7 million since 2008, when that amount was paid for historic Jesmond House at 10 Barker Street on The Hill.

Mr Kentwell predicted bigger sales to follow as the region's property worth continues to grow.

"I've got no doubt that there will be some other properties that will eclipse this and it could be less than 12 months," Mr Kentwell told the Herald.

"It took 12 years to break that $7 million mark and 12 months to break the $8 million mark. How long now until it's into the $9 millions and $10 millions?"

The Herald reported this month that Newcastle median house prices were flying towards $800,000, only three months after crashing through the $700,000 barrier.

House price data from CoreLogic showed the median value of a freestanding house in Newcastle and Lake Macquarie was $781,000 at August 31, up 2.2 per cent on the previous month and 28.3 per cent in a year.

"It's clear now that Newcastle is no longer a well-kept secret," Mr Kentwell said.

"The strong and diverse employment base, amazing lifestyle and property performance is proving Newcastle is gaining momentum, especially since COVID has become a part of life."

Barrymore was last sold in May 2017 for $3.7 million and has since been enhanced.

The property's features include marble fireplaces, entertaining rooms, patterned ceilings, polished floors, leadlight windows, timber windows and doors, beautiful carved staircase, Italian tile floors, formal lounge and dining rooms, wraparound verandahs, an in-ground pool and a wine cellar.

The sale was negotiated in five days through PRD's database of buyers.

Mr Kentwell said demand still outstripped supply in the Newcastle property market.

The $8.7 million sale continues a trend of significant results for Newcastle and Lake Macquarie this year. Ceilings have been raised in numerous suburbs.

The latest ground-breaking results include an out-of-town buyer paying a Wallsend house sale record of $1.78 million for a four-bedroom residence on 1847 square metres of land at 8 Corio Close last month.

The $1.2425 million auction sale of four-bedroom house on a 1213 square metre block of land at 21 Falster Ridge in Cameron Park this month was also suburb record price.

According to CoreLogic data, Boolaroo joined the $1 million club with the $1.025 million sale of a four-bedroom home at 42 Milburn Circuit last Friday.

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