As Sydney prices fall, a leading property analyst says the Illawarra remains strong, but anticipates a “cooling down” period within the next year or two.
Sydney recorded a 0.5 per cent drop in housing prices in the year to February, according to recent CoreLogic data. The median property value is now $880,743, the first 12-month decline since 2012.
The CoreLogic report noted while most individual capital cities recorded declines in values over the past three months, in the regional areas of the country the results were very different; regional dwelling values increased by 0.9 per cent over the three months.
According to CoreLogic, the median house value for the Illawarra is $728,595 and median for a unit is $564,526 as of the end of February.
Cameron Kusher, head of research Australia at CoreLogic said regional markets tended to be led by what happens in the capital cities, and the Illawarra market has had a strong run up in values over the past five years like Sydney has.
He said Illawarra house values were down 0.1 per cent in the three months to February, and were up 4.6 per cent over the past 12 months.
“That’s obviously still quite a bit stronger than the growth we’re seeing in Sydney, but if you look at the five-year average annual rate of growth for the Illawarra region it’s been 10.9 per cent,” he said.
“So probably some signs that the market’s not as strong in the Illawarra region as it has been.
“(This is) probably being led… by what’s happening in Sydney, but also obviously a lot of people have moved to the Illawarra region. It’s still very expensive now, generally speaking.
“It costs about the same to buy a house in the Illawarra region as it does in Melbourne.”
He attributed the slight drop in the Illawarra to “affordability being really stretched”, as well as a clampdown on the investor segment.
“I think mainly it comes down to affordability,” he told the Mercury.
“The big driver of the region was that it was so much more affordable than Sydney.
“The gap is not actually that substantial now between Sydney and the Illawarra, and it’s a lot more expensive than a lot of other bigger cities around the country.”
Mr Kusher predicted the region’s market “might see a few more falls” in 2018.
“I think by the end of this year the market will be pretty flat I’d say… Virtually no change in values by the end of the year in the Illawarra region.
“And you would expect after such a strong period of growth that there is a period of cooling down, and that’s what we expect to come over the next year or two in the Illawarra.”
In the CoreLogic Hedonic Home Value Index for February, CoreLogic’s head of research Tim Lawless noted that interest rates are to remain low, but will eventually lift from their historic lows.
The report said that in terms of the cash rate, the futures yield curve is currently showing financial markets aren’t expecting a cash rate hike until May 2019.
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