As the Sydney property market continues its long slide down, smart investors are looking further afield to regional NSW to find areas that are bucking the national trend.
For some time now, the Illawarra property market, and particularly real estate in Wollongong, has been the answer for many buyers priced out of Sydney. While relatively close to the city for a commute to work, the allure of coastal living in a laid back atmosphere has stirred strong.
But, is the tide changing? Have these markets finally caught up to Sydney on its way down?
With home office setups on the rise and flexible working hours becoming popular, many professionals and young families are joining holidaymakers and retirees further down south and are looking for houses for sale in areas like Shoalhaven to escape the rat-race and get more value for their dollars.
So, what does the current South Coast real estate market look like, and what can we expect to see for the rest of this year?
Let’s take a look at what leading property analysts predict will happen in 2019 and beyond, and what 2018 looked like for these areas.
What did the property market in Wollongong, Illawarra and the South Coast look like in 2018?
The year that was saw property prices fall across most capital cities, largely dragged down by the Sydney and Melbourne markets. There are a few contributing factors to this history-breaking downturn:
- APRA tightened lending conditions, with a crackdown on interest only loans
- There has been reduced investor activity
- Clearance level rates have been the lowest in 20 years
- An increase in apartment supply in many Australian states
Certainly, Illawarra, Shoalhaven and South Coast have begun to feel the effects of this slowdown.
After years of outstanding price growth, 2018 saw the mighty Wollongong real estate market follow in Sydney's steps and take a fall. Even if ever-so-slight.
According to the QBE Australian Housing Outlook 2018-2021, after annual price growth averaging 15.4% over a period of three years to June 2017, the Wollongong property market softened in the year to June 2018, which resulted in median prices falling by 2.8%. The average house price in Wollongong in the middle of June 2018 was $734,900.
"The average house price in Wollongong in the middle of June 2018 was $734,900"
Demand eased over the year as multiple construction projects reached completion. As these properties hit the market the higher stock levels played a role.
Despite this, relative affordability in real estate in Illawarra (compared to the Sydney market) and close proximity to the capital's employment opportunities, means there are still a lot of investment opportunities. Nearly a third of full time workers that live in the Wollongong LGA commute to the city for work.
Kiama experienced some of the best price growth in the nation last year, and Port Kembla and Warilla also continued on an upward trend.
The South Coast performed beautifully with exceptional growth in some areas where the median house prices jumped 18% higher than the year before.
How can we expect Wollongong, Illawarra and the South Coast real estate market to change in 2019?
All across the South Coast from Illawarra to Shoalhaven, the story is the same: stagnation is occuring. Wollongong is not looking as attractive in terms of affordability and there is still a large increase in new dwelling supply about to hit the market, which will further limit price growth. Selling times are increasing and buyer activity is reducing.
According to QBE, Wollongong is expected to have minor price growth over the next three years to June 2021, which is forecast to be just 2%. The median house price for 2021 is forecast to reach $750,000.
Illawarra reals estate agents tip Kiama to stay strong in 2019, while Shellharbour will flatten off like Wollongong.
Further down, Shoalhaven suburbs like Nowra and Bomaderry are affordable for those who don’t need to commute to the city. And although the South Coast also performed well in 2018, many analysts believe it has peaked and will plateau this year, with a lag in price growth already apparent in some key areas.
Best areas to invest in Wollongong, Illawarra and the South Coast in 2019
As we see the NSW South Coast markets begin to soften, let’s explore where there is potential for solid growth and returns.
Wollongong and the Illawarra property market
If you’re looking for houses for sale in the Illawarra region, there are a number of areas that have experienced strong price growth.
In terms of specific locations, the Shellharbour suburb of Warilla still offers a lot of affordability with a median house price of $541,000 and rental yields of 4.1%.
"Gerringong price growth has increased 55.4% over the past five years..."
Port Kembla is just over an hour to Sydney and has an annual growth rate of 13.2%, a median sale price of $650,000 and rental yields of 3.4%.
Houses for sale in Wollongong suburbs are at a median house price of $795,000 with 9.1% annual growth and 3.3% rental yields.
Gerringong price growth has increased 55.4% over the past five years and the Gerringong rental market demand outstrips the availability of houses. The median sale price is $882,000.
Houses for sale in Wollongong region offer the best liveability and regional commute times to Sydney. Get in touch with real estate agents in Wollongong to learn more.
South Coast real estate
Real estate in Nowra continues to offer value. A picturesque town on the banks of the Shoalhaven River, three-bedroom houses for sale in Nowra are an affordable median price of $420,000 and rental yields are quite high at 4.6%.
Speak to real estate agents in Nowra if you want to find out more.
The Shoalhaven property market still has many gems to exploit. Shoalhaven real estate hotspots to check out are Mollymook, Ulladulla and Milton. You can nab a three-bedroom home in Mollymook for $683,000 while annual price growth is 11.1%.
It’s cheaper in Ulladulla, where the median price for a three-bedroom house is $525,000 and annual growth is 10.8%.
Other areas with solid growth on the South Coast are Bermagui, Merimbula, Narooma and Tuross Head - all with median house prices under $500,000.
Speak to South Coast real estate agents for more information.
What should buyers and investors be wary of in Wollongong, Illawarra and the South Coast?
Oversupply is one of the largest concerns for Wollongong and Shellharbour, especially apartments. Building approvals have more than doubled over the past four years.
"Wollongong rentals are already in oversupply, especially for two-bedroom units."
As a result, Wollongong rentals are already in oversupply, especially for two-bedroom units. Realestate.com.au lists 115 available currently. This will affect the price of apartments for sale in Wollongong, and with the university in the process of building their own student accommodation, demand will lower again.
How to identify an area with high growth potential
If you haven’t had much experience with property investing before, there are a few things you need to remember when searching for regions or suburbs with strong growth potential. Consider these four things and you’ll be headed toward a better ROI:
- Large infrastructure projects planned or under construction, including shopping centres, transport upgrades, schools, hospitals, etc. These developments will not only increase housing prices, but will improve the local job market and the lifestyle of the area.
- High rental yields that are on the rise indicate there is high demand for rental accommodation
- Tight vacancy rates will drive higher property price
- A growing population and signs the area is gentrifying, such as lots of renovations in the area and more retailers popping up.