The month in review: Wollongong
By Herron Todd White
In the Illawarra, fringe areas tend not to be too far from the main centres of Wollongong, Shellharbour and Kiama. These include Cringila, Port Kembla, Unanderra and Dapto, Barrack Heights and Lake Illawarra. While seen as fringe areas, they still command strong prices and below $400,000 is now rare.
In Shoalhaven the fringe areas are essentially the small coastal towns based around Nowra. These include Shoalhaven Heads, Culburra and Callala Beaches, Greenwell Point, Sanctuary Point, St Georges Basin and Sussex Inlet. All have local shops, local services, parks and schools, but do miss out on high street shops, discount departments stores, modern conveniences and good public transport. Most of all they lack a deep job pool. Typically there is a commute to jobs in the larger towns for these services and employment opportunities (usually a 20 to 60 minute drive). Real estate prices reflect this lack of services but can be somewhat buoyed by tourism and out of area buyers seeking that holiday house dream.
Buy in prices in the Shoalhaven fringe areas are typically around $250,000 in Nowra for which you will pick up a 50 year old 3-bedroom fibro in fair condition perhaps with a single garage. Rents are in the order of 5% to 6% of purchase price per annum in the lower levels.
In the Illawarra region the entry level market is limited at the sub $450,000 price point to older style houses in southern suburbs such as Unanderra, Cringila, Berkeley, Warrawong, Dapto, Warilla, Mount Warrigal and Barrack Heights. These will generally be 1950s to 1960s brick or fibro 2- and 3-bedroom dwellings in fair condition and without major updates.
Look for those closer to the beach where better long term capital growth is achievable.
Rental returns will be around 5% gross. Cringila, close to the steelworks, is generally priced under $350,000, but long term capital growth is likely to be pegged back due to location.
For units, our pick in the lower price range fringe CBD areas are 1- and 2-bedroom units close to the CBD in West Wollongong and Keiraville. These will be older 1960s to 1970s walk up style units generally with off street or single car parking. Stock is running out though in the sub $350,000 market. To the northern fringe, Corrimal and Fairy Meadow still have units under $350,000 and are well located near shops and transport routes.
The market in these areas is dictated by the other more valuable sectors and therefore over time the prices will move with these, whether up or down. In our experience these areas are the last to have price rises in any period of uplift and generally the last to see a fall.
Interestingly the Wollongong area overall may be viewed as a separate fringe area for Sydney, a 45 minute drive to the north. As discussed in previous issues, prices here have been tremendously boosted in the past two years by the unprecedented growth in the general Sydney metropolitan area. Helensburgh to the north of the Illawarra is a fringe Sydney location, with good rail and road links to the CBD and Parramatta. In recent years we have seen market values increase as buyers in the southern parts of Sydney are priced out.
As in all markets there must be base product to buy and demand dictates where this is. As mentioned above the main drivers for stronger prices in the real estate sector are jobs, accessibility to public transport and public services availability. Easy to say but get these right and the rest will follow.