Newcastle first home buyers have plenty of room to move under the federal government's new loan deposit scheme.
The First Home Loan Deposit Scheme, which begins in January, will give first home buyers access to mortgages with only a five per cent deposit.
The government's National Housing Finance and Investment Corporation will guarantee the rest of the deposit with the yet-to-be-announced lenders participating in the program.
The government announced last weekend a draft of the scheme which includes price caps for properties in different areas, including $700,000 for Sydney and "regional centres" in NSW with populations of more than 250,000.
Everywhere else in NSW will have a $450,000 limit.
First home buyers in the Newcastle and Lake Macquarie local government areas will be able to use the scheme to buy houses up to the higher limit, which is $169,000 above the median value of houses and units ($531,000) in the city.
The $450,000 cap in the rest of the Hunter is $17,000 above the region's median house price, excluding Newcastle and Lake Macquarie.
Newcastle's $700,000 cap is far higher than in Melbourne, where the cap is $600,000 and the median house price $634,000.
It is a similar story in Canberra, where the cap of $500,000 is well short of the $658,000 median.
Brisbane has a cap of $475,000, lower than its median house price of $492,000. The same cap applies on the Gold Coast, where a typical house costs about $630,000.
In Sydney, the $700,000 cap is well below the median house price of $875,000 and about the same as the median unit price.
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Even the Hunter regional price cap is above the limits set for Perth, Adelaide and Hobart ($400,000).
Real Estate Institute of NSW chief executive Tim McKibbin said the scheme was a of "little or no value" in inner Sydney and Melbourne suburbs.
But it could encourage Sydney first home buyers to look at places like Newcastle.
"The reality is people need to be able to find employment, and their accommodation choices are around where they can get work," he said. "But that is changing, and changing quite rapidly now, where people are able to work remotely quite effectively.
"For somebody who wants the benefits of being able to live in a higher-density environment, similar to Newcastle and Wollongong, where there is comparable facilities and services and the like, then being able to afford to live there and work remotely will look very attractive."
The other regional centres under the deposit scheme are Gold Coast, Sunshine Coast, Wollongong and Geelong.
The scheme is open to the first 10,000 people in the queue each year. Applicants must earn less than $125,000, or $200,000 as a couple.
Hunter house prices have started climbing after a year of decline, rising 0.6 per cent in Newcastle and Lake Macquarie last month and 1 per cent in the rest of the region.
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