The month in review: Wollongong
By Herron Todd White
June, 2010
During the past 12 months there has been a significant
shift in the property market, from a ‘buyers’’ market to
a ‘sellers’’ market throughout the Illawarra region. Due
to rising interest rates and uncertainty throughout the
economy in 2008 and into early 2009, this has made the
market thinly traded and has limited values achievable in
the area. However, in recent months there has been an
injection of confidence back into the property market,
which is having some positive results.
Throughout 2010 the Illawarra property market has
generally been dominated by owner-occupiers,
predominantly Mum and Dad buyers looking to secure
the family home in the mid-tier price range. This has not
always been the case during the past 12 to 18 months. In
2009 there was strong market dominance by first homebuyers
in the ‘lower’ tier price ranges. The suburbs and
property type that most benefited from the first home
buyer demographic throughout 2009 were older units
in Wollongong CBD and the more affordable Southern
suburbs such as Dapto, Unanderra, Berkeley and Lake
Illawarra areas. With the focus changing to the mid-tier
price range in 2010 the benefits have been seen generally
across the board, from Helensburgh through to Kiama.
This mid-tier price range is made up of families looking
to upgrade their homes as a result of the flurry of first
home-buyers purchasing their previous properties, thus
changing the dynamic of the market.
This change in market dynamic has meant that vendors
are achieving stronger prices for their properties in
shorter periods of time and more stock is coming onto
the market. This trend has kept local agents rather busy
of late.
The strengthening of market conditions has encouraged
many investors back into the market over the past six
to 12 months. Renewed confidence in the economy,
coupled with strong rental returns, has seen investors
coming back to the area. They have predominantly
focused on the inner CBD areas of Wollongong and fringe
suburbs of the CBD such as Gwynneville, Keiraville and
Fairy Meadow. This is due to the close proximity of these
suburbs to the university, which allows a strong tenant
profile for investors, good rental returns and low vacancy
rates in these areas.
The strengthened demand throughout the Illawarra
region has also encouraged a number of developers to
return to the market and/or bring projects back on-line
that they had previously been shelved.
Sales of development sites have been scarce throughout
2006-2009, as developers have not had enough demand
for their projects to undertake any new developments
on a large scale. This is particularly the case with new
units in Wollongong CBD. The lack of demand coupled
with oversupply of new prestige units over the past few
years has seen this market sector really soften from 2005
to 2009. However, this oversupply appears to have been
absorbed of late and the few new unit developments
that are being offered for sale in Wollongong CBD appear
to be going strong. Now that the over supply has been
absorbed, it is hoped that the prestige unit market will
continue to strengthen and there will continue to be
buyers returning to this market sector.
It has also been evident that the prestige property market
throughout the Northern Illawarra suburbs is starting to
enter a phase of recovery. Although this market sector is
still volatile, there are more buyers entering this market
sector. Beachfront properties over the $1 million mark
are starting to see higher turnover and stronger prices
being achieved than that of the past few years. There was
recently a sale of a beachfront property in Wombarra,
bordering Thirroul, for $3 million.
So what will the next 12 months hold, I hear you ask? This
is always a tricky question to answer, especially when we
have been in such a volatile property market for the past
few years. I imagine that if interest rates stay on hold and
the global economy continues to stabilise, we will see
more recovery and stability return to the property market
throughout all market sectors in the Illawarra area.
However, if interest rates rise or the economy sees any
more major hurdles, this may just dampen any hopes of
immediate market growth and will likely have a plateau
effect on market values.
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