A new report outlining the state of Wollongong's property market has revealed the local government area will have a shortfall of new apartments in 2021, but it will help the property market recover.
The New Apartment Market Update released by Colliers International Wollongong on Thursday also showed the number of new units listed for sale was at levels below that of the Global Financial Crisis (for the year to April 2019).
However, prices for apartments have continued to see a slow and steady increase in value compared to house prices which have risen sharply then fallen.
The report analysed real estate statistics, data from Core Logic, the Australian Bureau of Statistics and Wollongong City Council.
Everyone says 'there's cranes everywhere', 'there's thousands of apartments being built', 'there's too much on the market' but this year we're only going to have another 220 finished - and of those, 77 per cent are sold.Simon Kersten
Managing director Simon Kersten said it was created to see whether Wollongong would indeed suffer "oversupply" of apartments like many people currently believed.
At its peak, he said there were around 800 new apartments on the Wollongong market in 2016. That number has steadily declined since with a "dire shortage" expected in coming years.
"Everyone talks about this stuff, but there was never any data behind it," he said.
"Everyone says 'there's cranes everywhere', 'there's thousands of apartments being built', 'there's too much on the market' but this year we're only going to have another 220 finished - and of those, 77 per cent are sold.
"Then we'll have a market with very high demand and very little supply. By the end of 2020 to 2021 there will be a shortage in the market."
In 2021 it was predicted just over 200 would be complete - though the majority were "still under assessment". Mr Kersten said these "uncertain" apartment blocks may get pulled altogether, built purposely to rent only, or delayed.
The number of approvals - for new apartments and new houses - has dropped considerably compared to last year, as well as 2014 to 2016.
The blame was "developers lacking confidence, deferred commencements are high and limited new launches in the market".
"Nobody wants to pay more than they should for something, so you're at this part of the cycle where everybody's standing back waiting," he said.
"The other thing that happens is investors and everyone else disappear in this time and it's only the first homebuyers that are coming in. They kick the market along and make it recover and then get everybody interested after that."
But it's not all doom and gloom.
He believes the shortage will actually stimulate the property market by encouraging developers to get moving, while increasing demand and in turn push prices up.
"There's a lot out there that can be built but no-one's really making moves ... all it will do is just escalate the bounce back," he said.
Other factors the report outlined will improve the market include interest rate drops making loans more affordable, authorities relaxing mortgage servicing regulations and incoming government incentives for first homebuyers.
The report was unveiled to a selection of leaders in the Illawarra property and finance industry from lawyers and lenders, to developers, builders and investors.