Wollongong Property Market Update July 2019

Declining residential property prices throughout 2018 and 2019 mean that $500,000 is now back in play in many Illawarra areas. A search on realestate.com.au shows that in the past month, sales of properties under $500,000 include:

• An older three-bedroom home on 643 square metres in Albion Park for $480,000;
• A four-bedroom, two bathroom brick and tile dwelling on 880 square metres in Bomaderry for $455,000;
• A basic updated three-bedroom home in Mount Warrigal for $395,000;
• A 1970s renovated two-bedroom ground floor unit in Kembla Street, Wollongong for $425,000; and
• A partially renovated three-bedroom villa in Bellambi for $420,000.

If you are after volume, $500,000 could purchase two blocks of land such as an 800 square metre block in Bomaderry that recently sold for $242,000 or a 640 square metre split level lot in Calderwood which sold for $220,000.

Investors with $500,000 to spend need to consider factors including the immediate return from rental income along with longer term capital growth. While rental growth has also slowed recently, we haven’t seen too much decline. This means that returns to investors are looking a lot more inviting than 12 to 18 months ago. Consider an older style two-bedroom unit in Wollongong for $400,000 and rented at $375 per week, a gross return of 4.9 per cent. The same unit would have sold for $460,000 just 18 months ago and the return then would have been 4.2 per cent. On the other hand, capital growth is a lot harder to predict. From 2013 to 2017, the market grew across all residential sectors in the Illawarra and it is very difficult to say that one spot will perform better than another.

The property market is cyclical and will return to an upward trend at some stage. Recent indications are that buyer activity has picked up and auction clearance rates are returning to decent levels. These are signs that the market may have bottomed, however, we will need to see a longer-term trend to be confident of this.

Speak with a Wollongong Mortgage Broker today.