Although Sydney property prices have fallen, the typical house in the city is still 50 per cent more expensive than in Wollongong.
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However, Domain economist Trent Wiltshire said many "secondary cities" in Australia have experienced stronger house price growth than their nearest capital city.
For instance, Domain figures say that the median house price in Wollongong was $585,000 in 2015, $718,000 in 2017 and $705,000 in 2018.
This was an increase of 21 per cent from 2015 to 2018.
Meanwhile, in Sydney the median price was $1,015,559 in 2015, $1,180,024 in 2017 and $1,062,619 in 2018.
This was an increase of five per cent from 2015 to 2018.
Mr Wiltshire said prices had stagnated in Wollongong at the end of 2018.
"I think that'll continue, and there will maybe even be some modest price falls over the year ahead - that's based on the fact that the Wollongong market is closely linked to the Sydney market.
"It seems to follow the Sydney market in some cycles, and it looks like that's happening now."
Mr Wiltshire believed the Illawarra property market would be further boosted by growing links to the Sydney jobs market, and increases in the number of workers commuting to Sydney.
"While prices are likely to remain fairly stagnant in Wollongong over the next one to two years, the city’s improving job market and growing links to Sydney should support its property prices in the medium term."
CoreLogic data for January indicated Sydney and Melbourne prices were now 12.3 per cent and 8.7 per cent down from their 2017 peaks.
Some economists believe Sydney and Melbourne house prices could fall by up to 25 per cent this year, and may eventually fall by half.
Mr Wiltshire said such reports should be read with caution, as the chances of such a drastic drop happening are low.
"(Such stories) are often saying there's a small chance of a big crash, and I suppose that's the case," he said.
"But our forecast is for prices in Sydney and Melbourne to keep falling in 2019, but then turn around and flatten out, or grow modestly over the next year or so.
"That's from things like low interest rates and strong population growth in Sydney and Melbourne.
"However, If prices did fall further in Sydney, that's probably going to drag down Wollongong prices."
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?
