Tighter lending conditions are impacting borrowing power and property price growth in some parts of the Illawarra.
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However, the region continues to outperform Sydney, a leading economist says.
The Domain Group released the Domain House Price Report for the September quarter this week.
It reveals national house prices are down over the quarter and year. Sydney recorded the largest annual fall in house prices of the capitals, declining 6.5 per cent.
Domain senior research analyst, Dr Nicola Powell said the Illawarra region, especially the Shellharbour and Wollongong LGAs was moving away from the growth period it had enjoyed.
She said they were minor declines occurring, but this followed a robust, five-year period of growth in prices.
According to the report, the median price of Wollongong houses at the end of September was $739,000.
This is a decrease of 0.8 per cent compared to 12 months prior, but represents a five-year growth of 65.7 per cent.
Wollongong units had a median price of $572,000.
This is an increase of 1.2 per cent compared to September 2017, and a five-year growth of 54.6 per cent.
Shellharbour houses had a median price of $630,000; a decrease of 1.6 per cent compared to a year prior, but representing a five-year growth of 65.8 per cent.
The median price of Shellharbour units was $535,000; compared to $528,000 as of September 2017.
Kiama houses had a median price of $950,000; an annual increase of 14.5 per cent, and a five-year growth of 75.4 per cent.
“In Kiama, double digit annual growth is a strong performance for that market,” Dr Powell said.
“But we have now started to record a bit of a softening of price growth in Shellharbour and Wollongong.
“It’s marginal, and nothing in comparison to what Sydney has been experiencing.
“But I think overall what we’re seeing is the tighter lending environment, and the more conservative nature of the banks really has impacted the level of buyer activity in the market.
“For buyers it’s harder to obtain finance, and those who can obtain finance and meet those tighter lending conditions will find that their borrowing capacity has been reduced.”
Dr Powell said this means fewer buyers in the market, and those buyers going to market with less money.
“That is what has really driven the downturn in Sydney, and I would say more broadly that’s what's impacting Shellharbour and Wollongong, but to a much lesser extent than how it’s impacted Sydney.
“If you look at the past five years and the level of growth coming out of those three LGAs, it’s been a very significant growth in the Illawarra.”
According to the report, in Sydney, house prices fell 3.1 per cent over the September quarter and 6.5 per cent over the year to $1,101,532.
Unit prices fell 0.7 per cent over the September quarter and 1.3 per cent over the year to $734,775.
