Although their borrowing capacity has been reduced, 2019 could be a year of “opportunity” for Illawarra buyers, a leading property analyst says.
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Also, the region appears set to continue to outperform Sydney in terms of price growth.
Domain Group senior research analyst Dr Nicola Powell spoke to the Mercury about how the Illawarra’s property market fared in 2018, while also looking ahead to next year.
Dr Powell said the Illawarra market (in this instance, the Kiama, Shellharbour and Wollongong local government areas) began 2018 where 2017 left off.
Dr Powell said 2017 had been a strong year for price growth in the Illawarra.
“Prices were still growing at the start of this year, which shows there was an element of buyer demand within that market,” she said.
“But I think what we started to see as 2018 unfolded is that the demand did ease, and I think that has played out in terms of the price growth.
“We are seeing a little bit of a negative price growth for houses in Shellharbour and Wollongong, but Kiama is still showing some modest pace of growth.”
According to the Domain Group, median house prices as of October 2018 were as follows: Kiama $903,000, an annual growth of six per cent; Shellharbour $630,000, an annual price change of -2.3 per cent; and Wollongong $730,000, an annual price change of -2 per cent.
Dr Powell attributed much of any slowdown in price growth to a change in lending practices.
She said this lending environment had been changing for a few years, with policy changes directly impacting investor activity.
However, Dr Powell said currently buyers were finding it difficult to secure finance, and if they were able to, most were finding their borrowing capacity reduced.
“I think it’s more the owner/occupier market that has been driving the growth within these three areas,” she said.
“What we’ve seen play out over the past 12 months is the Royal Commission into banking has changed banking practices and the way they lend.
“We’re not going to have the final report until February, but the banks are getting on the front foot and they have tightened their lending criteria, and are being stricter on who they lend to.”
Looking to 2019, Dr Powell expected to see a slower pace of price growth within the Illawarra market.
However, she expected all three LGAs would continue to outperform Sydney in terms of price growth.
She said a lack of affordability in Sydney would drive some of its residents to other regions of NSW, and this flow of population would help support demand for housing in places such as Wollongong.
Also, Dr Powell said supply in all three Illawarra LGAs was rising, meaning there was more stock on the market.
She said this created more opportunities, time and choice for prospective buyers.
“I think buyers have an upper hand in Shellharbour and Wollongong in terms of their choices in the market and that slower pace of growth.
“I think it's about taking their time, and they have choice. So I think for buyers there is opportunity (in 2019).”
As for sellers, Dr Powell said in order to achieve a timely sale, properties need to be priced correctly.
“I think for any new vendor out there it's about having realistic expectations of what you can achieve in terms of price,” she said.
Brendan Crabb
I'm a member of ACM's national property team, covering the Illawarra and South Coast. Based in Albion Park, NSW, I write about exciting, interesting or just downright quirky properties that have been listed for sale, major sales, market trends, auctions and more. One of my favourite aspects of being a journalist is I believe everyone has a story to tell. What's yours?
I'm a member of ACM's national property team, covering the Illawarra and South Coast. Based in Albion Park, NSW, I write about exciting, interesting or just downright quirky properties that have been listed for sale, major sales, market trends, auctions and more. One of my favourite aspects of being a journalist is I believe everyone has a story to tell. What's yours?
