The month in review: Wollongong
By Herron Todd White
July, 2010
In an attempt to maximise growth in the short, medium
and long term the Wollongong investor who has a lazy
half million still has a choice in this market. Last year we
predicted the following would be good buys:
- A new residential dwelling in an establishing outer suburb such as Flinders, Gerringong or Shell Cove.
- A block of flats.
- A unit in the CBD with ocean views.
- Or an older home close to the beach in the northern suburbs around Corrimal, Woonona and Bulli.
These all stand once again as good buys, with the most
price movements seen in the latter two, once again
proving that location is the key to investing in property.
There has been some improvement in prices for the
first two, but in the long term it is our view that value is
attributed to land where there is going to be a shortage,
and where it is desirable for people to live, close to
beaches and employment hubs or transport links.
With further land releases being mooted in the southern
areas of Wollongong and Shellharbour, the concomitant
rise in land prices will be pegged back, and growth in this
sector is not expected to match the more sought after
northern areas.
There are smaller pockets of course in the southern
areas, particularly around Shellharbour Village, Kiama,
Minnamurra and Werri Beach, which will show good
capital growth, but the market for the northern beaches
still seems to be influenced by what happens closer
to Sydney, where prices have picked up in the past 12
months.
This time last year we talked of the attractiveness in
purchasing a new two-bedroom, two-bathroom unit
in a larger development close to the CBD, with some
ocean views. In the range of approximately $450,000
to $500,000, such properties are attractive to both local
and interstate investors. In the past 12 months some
consumer confidence has returned to the investor sector
of this market.
The stock is drying up and there is lag time before new
projects can start let alone be completed, so we may
see some increased demand for this type of property.
However, there have been several projects completed in
the last year at North Wollongong and Towradgi where off
the plan sales were strong and projects were completed
almost fully sold. Once again, location was the key and
sensible pricing met the market.
Up north, there are many pockets of older dwellings
within easy walk to the beach, which, whilst needing
some TLC, are well located for rental return and future
capital growth. Streets such as Murranar and Marlo in
Towradgi and Aldridge and Thalassa in East Corrimal are
close to the ocean, shops and trains, but older houses can still be picked up for around the $500,000 to $550,000
mark. We predict strong growth in these localities over
the medium term. The closer to the beach the better.
This time last year there was little new land available
as you go north in the Illawarra and these beachside
suburbs have historically been well placed for future
capital growth, or redevelopment at a later stage. This is
much the same in 2010 with a few blocks coming on to
the market, but with a price tag starting around $400,000,
it doesn’t really suit the lazy half mill investment scheme.
Future capital growth is safer however in these areas.
We are also starting to see some growth and interest in the
lower priced suburbs around Port Kembla. For your half
million here you can pick up two older houses in need of
refurbishment, some with lake or ocean views. Albeit on
smaller blocks with limited development potential, they
should return you over 5% gross.
We also think there is still good buying in Kiama under
$500,000, and this area should appreciate above the
norm given its amenity and lack of new estates planned.
Nearby Minnamurra also continues to become a valuable
pocket, but soon strata tile will be the only thing you
could get under $500,000.
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