The month in review: Wollongong
By Herron Todd White
There were no standout performers in 2015 in the residential sector. All sectors benefited from the low interest rate environment and more importantly for growth, the closeness of the Sydney market influencing prices. Notwithstanding the broad overall rise in market prices, we did see residential land values strengthen sharply, particularly in the latter part of the year, where it appears supply has not caught up with demand. This has generally been in the southern parts of the region where greenfield sites were in demand and developed lots sold up quickly.
New CBD units were also apparently a big hit with owner-occupiers and investors, with many being snapped up off the plan. The strong prices being paid for these units also tended to drag the old 1970s and 1980s walk up models along as well and it is now difficult to find these under $350,000 in the inner ring.
With a large number of new vacant lots and new CBD units coming to the market it will remain to be seen whether prices hold their current levels moving into 2016. Banks are predicting a low interest rate environment so perhaps prices will steady. Some of the Sydney frenzy is now dying down so that is likely to affect our Illawarra region market.
Weak sectors of the market were few but perhaps we didn’t see as much growth in older units in outlying areas, although these are not a big part of the market and it may be a reflection of the choice available in other more attractive products in the inner city area.
In many ways we did predict a lot of this in our early 2015 edition of the Month in Review. We stated that major infrastructure such as GPT’s new Wollongong CBD shopping centre, the bypass infrastructure works taking place and the Shellharbour Marina would be beneficial to employment prospects in the area and keep investors in the market. This influx of employment and confidence has surely had some impact on the buoyant real estate residential market.
We also predicted that this trend would continue till at least mid 2015 and after that, continued growth although at a slower rate. However we did not really see a slow down until the last month or so. Local real estate agents were claiming that the past two to three years was simply the catch up that was needed . Whether that is true is debatable. In our view we can simply attribute the strength of the local market to a continued low interest rate trend, continued relatively strong employment statistics and of course our proximity to Sydney, the largest real estate market in the nation.
For 2016 to continue the same trend or at least retain the values of 2015, interest rates must remain relatively low. These low interest rates are crucial for investors, first home buyers and renovators and extenders to maintain confidence.
Buyers and lenders should also still be cautious about not extending themselves in this low interest rate period to avoid financial stress when interest rates inevitably do rise.
The employment climate in 2016 in the Illawarra will also be a key factor in determining the strength of the local market. Employment security in the mining and manufacturing sectors is still uncertain with BlueScope discussing closing the Port Kembla base with a resultant lay-off of 500 workers. This appears to have been averted for now.
In the northern suburbs closest to Sydney we have seen many trophy properties change hands and several sales over $3 million have taken place, a phenomenon not seen in seven years. A modern 3-level house at 5 Garaban Court, Bulli changed hands in July for $3.175 million, a record for the area, and right up north at Stanwell Park, an ultra modern property with direct beachfront access at 49 Lower Coast Road fetched $3.69 million.
Overall we predict the market to continue reasonable growth at least for the first half of 2016. In the latter part of the year, we believe sales will slow and no longer be a seller’s market but rather a more steady environment.
Tips for best localities are much the same as always.
Inner ring and northern suburbs up to Bulli offer the best value for money in our opinion and postcodes such as 2519, 2517 and 2518 rate highly. Look for flat blocks, beach and train access. Sea views are becoming less valued as closeness to shops, schools and transport take priority.
In the southern areas, we look to Shellharbour and Kiama as our picks. Shellharbour’s Marina is well underway and will really boost this seaside village, particularly now that the new train station has opened at Shellharbour Junction. Kiama is a well preserved seaside location, with relatively low rise development and that special village feel.