Newcastle house prices continue their upward trajectory, climbing 0.9 per cent in December and 3.7 per cent in the past three months.
CoreLogic figures also show apartment values started to show signs of life in the Newcastle and Lake Macquarie local government areas, rising 0.4 per cent in the month.
The median house price in Newcastle still sits 4.8 per cent below its 2018 peak, and unit prices are down 9.4 per cent.
But the last-quarter revival pushed the combined performance of house and unit prices in Newcastle into the black in 2019 at 0.1 per cent.
In the rest of the Hunter, CoreLogic says house prices rose 0.7 per cent in December and 1.7 per cent for the quarter. Unit prices fell another 0.8 per cent and have had 22 per cent wiped off their value in two years.
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Across Australia, residential property values rose 4 per cent in the December quarter, the fastest rate of national growth in any three-month period in 10 years.
Newcastle's quarterly result was better than in any capital city outside Sydney and Melbourne, which both sustained 6 per cent growth in the last three months of the year.
The two dominant cities are tracking for 24 per cent annual growth, but CoreLogic analyst Tim Lawless expected affordability pressures to slow the turnaround in 2020.
"Housing values are expected to rise through 2020 across most regions, however, the year may bring about a change in the growth dynamic with the larger cities seeing a slowdown in the rapid rate of growth recorded through the second half of 2019," he said.
"In contrast, smaller capitals such as Brisbane and Perth, as well as key regional centres and lifestyle markets, could see an improvement in conditions as buyers are attracted to affordable prices coupled with job opportunities and lifestyle factors."
He said mortgage rates were forecast to fall even lower in the first half of the year, but a rise in the number of properties going on the market would be a "counterweight to this stimulus".
"Worsening housing affordability is likely to deliver a slowdown in activity across price-sensitive segments of the market, especially in Sydney, where dwelling values were already 8.2 times higher than gross annual household incomes halfway through the year.
"A rise in investors attracted by prospects for capital gains and a positive spread between mortgage rates and rental yields should help to offset a reduction in activity from more price-sensitive buyers."
Mr Lawless said capital city dwelling values had fallen 3.8 per cent over the first six months of 2019 then rebounded by 7 per cent in the second half of the year.
"The housing value rebound was spurred on by lower mortgage rates, a relaxation in borrower serviceability assessments, improved housing affordability and renewed certainty around property taxation policies post the federal election.
"Lower advertised stock levels persisted, providing additional upwards pressure on prices amidst rising buyer activity."
