Port Stephens Council area is located to the north and north-east of Newcastle incorporating the Tomaree and Tilligerry Peninsulas. The major centres of Raymond Terrace and Nelson Bay are located about 20 kilometres north and 40 kilometres north east of Newcastle respectively. The Council area features a combination of land uses, although the residential component has grown most significantly over the last twenty years, most notably on the Tomaree Peninsula. The major industrial area is located in the south of the Port Stephens Council area in Tomago, while the Newcastle Airport is just to the north, incorporating the Williamtown RAAF base. The areas to the north and west are more agriculturally focussed, with Raymond Terrace acting as the major agricultural service centre. Tourism and holidaying are very significant to the local economy, especially on the Peninsulas, with about 40% of the dwelling stock in Nelson Bay and 35% in Shoal Bay-Fingal Bay being available for short term rental.
Urban development in the area was minimal into the twentieth century, with Raymond Terrace being the largest centre due to its position on the Hunter River. It was not until the post-war period that Port Stephens became a major holiday destination and tourism became an important contributor to the local economy. From the 1970s onwards, significant growth occurred in permanent dwellings and the population of the area increased substantially. In 1981, the counted population of the area was less than 30,000, growing rapidly to more than 60,000 in 2006. The primary housing market role that the Port Stephens Council area has played in the last thirty years has been to provide home owning opportunities for two distinct markets - young family households and retirees, generally from metropolitan Sydney.
The aesthetics of the local area are a major attractor of people especially from Sydney and are highlighted by Port Stephens, the Tasman Sea, Stockton Beach and the Hunter Valley. There is continued demand for residential development within the Local Government area, catering for both people moving from Sydney and also new households being formed from within the existing population of the Port Stephens Council area. Some of the demand is being suppressed by a loss of predominantly young adults to Newcastle and Queensland.
With the variety of residential areas, natural characteristics and period of development, different areas within the Port Stephens Council area have developed different roles within the housing market. Areas further away from Newcastle on the Tomaree and Tilligerry Peninsulas such as Shoal Bay - Fingal Bay, Corlette, Lemon Tree Passage - Mallabula - Oyster Cove - Tanilba Bay, Salamander Bay - Soldiers Point - Taylors Beach and Nelson Bay are attractive to retirees and to a lesser extent families. Inland areas such as Rural West and Medowie - Ferodale - Campvale tend to attract young and mature families, as the access to employment in Newcastle is better and the areas are more affordable. Anna Bay-Boat Harbour and Rural East tend to attract some retirees, but the families tend to outnumber the older population, a pattern likely to affect Fern Bay - Fullerton Cove, as development in the area increases. Raymond Terrace - Heatherbrae - Nelsons Plains tends to attract retirees and elderly, but its profile will change markedly when the Kings Hill development begins in about 2014, with many more families expected to migrate to the area. The variety of function and role of the small areas in the Port Stephens Council area means that population outcomes differ significantly across the Local Government area.
There are also significant differences in the supply of future residential land within the Council area which will also have a major influence in structuring different population and household futures over the next five to ten years. Significant new development opportunities have been identified in many areas, principally Raymond Terrace - Heatherbrae - Nelsons Plains, Medowie - Ferodale - Campvale, Nelson Bay, Fern Bay - Fullerton Cove, Salamander Bay - Soldiers Point - Taylors Beach and Anna Bay - Boat Harbour - Fishermans Bay - One Mile - Bobs Farm. Little development is anticipated in Rural East and Rural West. Growth in households is also expected to come from the conversion of holiday dwellings to permanent residency as well as the construction of new dwellings.