Port Kembla, Woonona and Dapto have become hubs for new families and savvy property investors, new research suggests.
The research from real estate agent comparison service OpenAgent says market growth in these suburbs has been significantly better in the past five years compared to the period before then.
For example, in the past five years, units in Port Kembla have had an average annual growth rate of about 12.5 per cent, whereas from 2010 to 2014 it had been -9.8 per cent.
Carson Teh, data analyst from OpenAgent said units have been performing particularly well in these three suburbs.
"Units in Port Kembla, Woonona and Dapto have performed better than houses in the past five years, all with an average increase in the median price of about 10 per cent or more every year," Mr Teh said.
As of the beginning of last quarter, the average annual median price for units in Woonona had risen by 11.9 per cent in the past five years, whereas houses have only risen by about 8.8 per cent.
The report also indicates that those looking at investing in the Illawarra might want to turn their attention to Dapto, where there is a high rental yield compared to neighbouring suburbs.
Both units and houses in Dapto have had a rental yield of 4.5 per cent this year, with median asking rent over the past 12 months for units just under $400 a week and for houses of about $460 a week.
Mr Teh said when comparing Census data from 2011 to 2016, increases in household income in all three suburbs have surpassed the rate of inflation, suggesting that there is growing affluence in these areas.
"Port Kembla in particular is undergoing rapid change and gentrification with Wentworth Street now home to trendy cafes, art hubs and new businesses," he told the Mercury.
"As younger buyers move into more affordable markets, these regions will start to change culturally and demographically, likely continuing to drive up buyer demand and property prices.
"Those looking to buy or invest in Illawarra areas that are on a high growth trajectory should definitely see if Port Kembla, Woonona or Dapto is right for them."