Wollongong April 2017

The month in review: Wollongong

By Herron Todd White
April 2017

With the residential property market in the Illawarra performing at strong levels of sustained growth, it is difficult to pin down exactly where the hottest market is. We know there is currently strong demand throughout the Wollongong, Shellharbour, Kiama and Shoalhaven LGAs. Auction clearance rates remain high and properties selling by private treaty are typically selling within a month. Sale periods of less than two weeks are common.

The strong demand is being driven by a number of factors including low interest rates, the media, and the flow-on effect from Sydney, down to Wollongong, down to the Shoalhaven. As buyers miss out on purchasing properties they become increasingly desperate and get to the point where they’ll pay whatever it takes to get a listing off the market to secure a property. This occurs mostly amongst first and second home buyers, especially where they are competing with cashed-up investors.

A property type that appears to be getting a premium is a house in an established area that has nothing to spend on it, for example a relatively new build or a recent full renovation. The property presents really well and the buyer will not have to spend any extra money on it. This market is usually aimed at the second-home buyer, typically a couple with children. First home buyers are usually happier to buy at a lower price point and are willing to complete renovations on older dwellings.

It is hard to imagine that the strong price growth can be sustainable. History tells us that the property market is cyclical and strong growth is followed by flatter periods or prices going backwards. Unfortunately, we do not have an accurate crystal ball so all we can do is speculate. Our opinion is that growth may slow towards the end of the year if interest rates rise. We don’t imagine that prices would go backwards unless there is a dramatic financial crisis.

Southern Highlands
The Southern Highlands residential property market is running hot! Strong price increases and quick selling periods have been evident across the entire region. The main driver is the trend of second and third-home buyers and retirees relocating for a tree change from Sydney and for the affordability. The townships of Moss Vale, Bowral and Mittagong have been the stand-out performers. Fully renovated or new properties with nothing left to spend are sought after. The strongest activity is under $1.5 million. Price brackets above this level are also increasing.

There has been strong activity from first home buyers seeking affordable housing options across the fringe suburbs in the Southern Highlands, essentially the villages such as Robertson, Bundanoon, Colo Vale, Hill Top and Tahmoor that are removed from the three major towns of Bowral, Mittagong and Moss Vale. Properties still sell under $700,000 in these perimeter suburbs.

If interest rates were to dramatically rise, then pricing levels will decline. If interest rates remain at low levels, then we anticipate that pricing levels will plateau.

Southern Tablelands
There are similar trends evident in the Tablelands, with good land sales and new home construction activity in the new and modern residential estates on the fringe of Goulburn including the Belmore Estate, Merino Country Estate and the Mistful Park Estate. New land releases are trading for $200,000 to $250,000, with house and land packages ranging from $500,000 to $600,000. Likewise, some of the villages between Sutton Forest and Goulburn, such as Marulan, have seen an uptick in first homeowner activity, with new land releases being quickly absorbed by the market in the $160,000 to $190,000 range for 1,000 square metre blocks. The Crookwell village is also seeing good buyer activity and price growth. We see strong buyer activity from first home buyers, second and third-home buyers and retirees. We are also seeing strong interest from Sydney investors in Goulburn. Part of the attraction here aside from lower entry price is ease of access to the Sydney-Canberra freeway. Many buyers will commute to Goulburn, Canberra or back up to Moss Vale and Bowral.

 

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