The month in review: Wollongong

By Herron Todd White
November 2015

Illawarra/Shoalhaven

This region has felt the overflow from the hottest Sydney market in years with investors seeking out good returns for a (relatively) low outlay compared to Sydney. In our opinion, this has been confined to new units in the CBD precinct and entry point dwellings across the northern beaches from Fairy Meadow upwards.

Detached housing in these areas is particularly sought if it is brick or weatherboard, not fibro, and has secure car accommodation or storage, and most important is within easy access of the train line south to Wollongong or north to Sydney. Areas surrounding Fairy Meadow, Corrimal and Woonona come to mind as readily sought after in the under $750,000 value range.

In regard to strata title properties, investor activity has been mostly evident (along with strong owner occupier demand) in taking up new stock in the plethora of new developments in the CBD area and North Wollongong.

Most of this stock is typically 2-bedroom, 2-bathroom, single car space properties, with general price point in the $450,000 to $520,000 range. Prices vary depending on views, access to beaches, public transport and the size of the outdoor living areas. Many of the new developments have been pre-sold prior to commencement or completion of construction, indicating a wider investment market than is thought to exist locally. In some instances overseas buyers have been prominent according to our sources.

There has been strong demand for townhouse and villa properties in established suburbs with record prices being achieved, however these are being acquired in the main by owner occupiers and downsizers.

Rents vary of course but investors are typically overall looking at a 5% gross return – gambling on the future capital gain rather than net income to provide a healthy return.

The Illawarra region is undergoing some economic uncertainty again due to reductions in employment numbers in mining and manufacturing. Currently, there is a very real threat of a substantial scaledown of the Bluescope steel manufacturing facilities at Port Kembla and as the demand for coal is pegged back, many of the mines are shedding employees.

Combined with tightening lending criteria, this would reduce investor activity in our region as rental returns shrink and future capital growth is threatened. Particular investment sectors to be most affected by these events would be the unit market in the inner ring and infill medium density.