Wollongong property predictions: growth suburbs and where to invest in the Illawarra in 2018

Property management

Is Wollongong or the Illawarra on your property investment radar?

Then it is crucial you know where the hot growth suburbs are if you want to maximise your ROI and get into this market. A decade ago you may have received a bewildered look for contemplating an investment here.

How times have changed as Sydney’s southern cousin emerges out of its shadow, with a hotter market in 2017 and some 1,100 people moving into the region every week.

With this in mind, let’s take a look at where the market is, where it’s heading and what suburbs and towns have the greatest growth potential heading into 2018

Reasons to invest in Wollongong and the Illawarra

Not surprisingly the Illawarra Mercury sings the praises of the region, calling the local housing market, ‘a sure thing’ and a ‘hot pick by property experts’.

It’s not difficult to see why, the region has a lot going for it besides the rising Wollongong house prices, including:

  • A good range of job opportunities and industries
  • Proximity to Sydney
  • Strong educational assets
  • A relaxed lifestyle
  • A growing local tourism sector

As a distinct regional hub it also mirrors the development of once derided cities like Newcastle, which has reinvented itself thanks to a rebranding that highlights the areas lifestyle credentials.

They are also both being touted as emerging ‘global cities’, with education and tourism as the primary drivers of a self sufficient local economy.

Current state of the Wollongong real estate market

In many ways you can’t look at the Illawarra housing market without analysing what is happening up the highway in Sydney.

Its market was characterised by a strong start in the first quarter of 2017, followed by a lull. The question on everyone’s mind is will Sydney house prices fall? Currently there is no sign of a drastic correction, though all signs point to a slowdown into the new year. This is primarily due to tighter lending requirements and the elephant in the room – affordability or rather a lack of it.

Wollongong and the Illawarra have actually benefited from this phenomenon, which is driving people to invest in its relatively affordable market. Not only do you get more bang for your buck in regional property hotspots like Wollongong, you also get a bigger backyard and a better overall standard of living.

If you’re commuting from Wollongong to Sydney, it’s one train all the way to Central, and with Sydney Trains focusing on express services, some would argue that the hour and a half commute is relatively relaxed.

This has seen the region post very respectable growth figures, with the Illawarra Mercury reporting that units in the suburb of Fairy Meadow posting gains of 40.6 per cent, an increase of 75.9 per cent over the past five years.

This may not continue into 2018. Property data and analytics service provider CoreLogic believe Wollongong and the Illawarra are set to mirror the slowdown in Sydney, citing a fall in overall sales volumes, though homes are currently still selling quicker than they did in 2016.

Should you invest in Wollongong houses or apartments?

Deciding to invest in a Wollongong house or apartments is ultimately going to come down to what you can afford in conjunction with your long term investment strategy.

Apartments are generally cheaper than houses, so are an affordable entry point, particularly if you are a first time home buyer with not much wiggle room in terms of budget. If you start to look at ongoing expenses if you buy a house you will generally pay higher council rates, though if you buy into a strata scheme with a unit you will have to budget for quarterly strata fees and any special levies that need to be raised. From a capital growth perspective houses tend to offer a better return, while units win out when it comes to rental yields.

Current house and unit prices across Wollongong and the Illawarra

Realestate.com.au lists the median property price for the Wollongong postcode at $850,000 for a house in November, 2017. Houses for sale in Wollongong will cost you in the region of $655,000 (2 bedroom house), $818,000 (3 bedroom house) and $985,000 (4 bedroom home).

Units are more affordable with a median price of $570,000, with a 1 bedroom in the region of $395,000, a 2 bedroom unit $527,000 and a three bedroom $849,500. Further south Dapto-Port Kembla currently has a median dwelling value of $549,664, while Kiama-Shellharbour has a current median dwelling value of $640,479.

As a benchmark Domain reports that the median price for a unit in Sydney is $732,321, while a house stands at $1,167,516, which explains why Sydneysiders and investors have been flocking south.

The Wollongong rental market

In terms of Wollongong rentals realestate.com.au lists a median weekly rent of $500 per week (houses and units).

Houses for rent in Wollongong go for $450 per week for a 2 bedroom, with a 3 bedroom at $520 per week and a 4 bedroom house at $610 per week. The median weekly rent for a unit in Wollongong is $420 per week, with a one bedroom at $300 per week, a 2 bedroom at $410 per week and a 3 bedroom unit at $580 per week.

The best Wollongong and Illawarra suburbs to invest in 2018

So what suburbs should you target for purchase in Wollongong and the greater Illawarra?

If you are looking to invest in a unit in greater Wollongong then you should consider:

  • Fairy Meadow
  • Woonona
  • Corrimal
  • North Wollongong

All of these areas were listed as the top selling suburbs in the six months to March 2017. Unit prices jumped a phenomenal 40.6 per cent in the six months to March in Fairy Meadow, an increase of 75.9 per cent on the previous five years.

Fairy Meadow and North Wollongong are both popular suburbs for university students, making them a smart area to invest in. The areas are both serviced by the popular Gong Shuttle Bus which is used extensively by university students, ferrying them to classes, Wollongong CBD, both Wollongong and North Wollongong train station and the beach. Corrimal and Woonona are two suburbs to watch, with property prices increasing steadily over the past few years.

For investors looking to purchase houses, you should consider the following areas:

  • Kanahooka
  • Figtree
  • Dapto
  • Helensburgh
  • Horsley
  • Berkeley
  • Woonona
  • Lake Heights

All of these areas are top performers, with Dapto’s median price up 12.9 per cent for the year up to March 2016. Two local postcodes also featured in Domain’s top regional markets for value growth, with Dapto, Port Kembla and Wollongong posting gains of 89.7 per cent and 77.8 per cent respectively over the last decade.

Kiama and Shellharbour, which are popular with lifestyle buyers, have posted 61.5 per cent growth over the same period. We can expect house prices to increase in Shellharbour and its surrounds with construction of a multi-million marina currently in progress.

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