Wollongong December 2017

The month in review: Wollongong

By Herron Todd White
December 2017

At the beginning of the year we made a prediction that the residential property market in the Illawarra would continue to strengthen until there were some significant events such as a rise in interest rates or tighter lending regulations. As we push towards the end of the year we can review the market happenings for 2017. The Domain State of the Market report for the September 2017 quarter has the Wollongong, Shellharbour and Shoalhaven annual growth of median house prices at 13.9%, 16.7% and 19.5% respectively. These are the three largest growths experienced in regional NSW.

Dig a little deeper though and for the September quarter the Wollongong median house price decreased 1.9% from $754,000 in June to $740,000. Shellharbour and Shoalhaven had smaller growth than in other recent quarters of 2.3% and 3.7% respectively. Many local agents have advised that the number of people at open homes has decreased and auction clearance rates have dipped. So there has been a noticeable shift in the market in the past two to three months, mainly around Wollongong but also in the Shoalhaven.

In late March 2017 APRA imposed tougher lending restrictions, particularly on interest only loans. Since then, interest rates on interest only loans have increased. While the official cash rate and general mortgage interest rates have remained stable, the tightening lending controls have dampened the market.

New unit construction is continuing in the Wollongong CBD although agents have advised that the rate of off the plan sales has slowed down. That said, developers are still showing confidence in the market with a strong development site sale of 1,938 square metres for $2,244 per square metre. Construction has also recently commenced on 50 units on Flinders Street.

Our early year prediction seems to have been accurate however the crystal ball game will continue to be difficult to play and we will have to get our thinking caps on at the start of 2018.