Newcastle property prices continued to stabilise in August, but the market in the rest of the region is still on a downward trajectory.
Latest figures from CoreLogic show the median price of a house in the Newcastle and Lake Macquarie local government areas did not change last month.
The median apartment price grew 0.7 per cent after a year of decline in the two council areas.
The Sydney housing market bounced back in August, jumping 1.6 per cent, closely followed by Melbourne's 1.4 per cent increase.
"Evidence of growth returning to areas such as Newcastle, Lake Macquarie and Geelong may well be a hint that the value growth occurring in Sydney and Melbourne is already beginning spillover into nearby regions," CoreLogic analyst Tim Lawless said.
"Looking at these results annually rather than quarterly shows much stronger growth trends."
The Newcastle and Lake Macquarie property market has fallen 8.8 per cent since its peak last year but has risen 0.4 per cent overall in the past quarter.
The coastal market might have levelled off and started to recover, but prices in the rest of the Hunter continue to fall.
The CoreLogic data for the Hunter, excluding Newcastle and Lake Macquarie, showed prices down 0.8 per cent in August and 2 per cent in the past three months, suggesting trends in the non-metropolitan districts are lagging behind.
The Sydney and Melbourne recovery pushed the national property market to a 0.8 rise last month.
"The significant lift in values over the month aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low," Mr Lawless said.
"It's likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well lower interest rates, tax cuts and a subtle easing in credit policy."
National dwelling values reached their largest year-on-year falls in May at minus 7.3 per cent, but by the end of August the annual decline in dwelling values had risen to minus 5.2 per cent.
"While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities," Mr Lawless said.
The falls in Newcastle and the Hunter over the past year have been considerably greater than in other regional areas in Australia.
Combined regional market values are down 2.9 pert cent in the past year, but the annual falls in Newcastle (7.3 per cent) and the rest of the Hunter (4.5 per cent) are sharper.
Housing values increased across five of the eight capital cities over the month but slipped lower in Adelaide, Perth and Darwin.
