Wollongong house prices will rise over the next few years, according to a new report, but it will be nothing like the peak of the housing boom.
Research released on Sunday by QBE Insurance said the median house price in Wollongong is expected to go up by 6 per cent by mid 2022.
Analysts said that would take the average house price across the region to $685,000.
This modest rise, which follows the recent two year downturn, will be buoyed by Wollongong's "affordability advantage" over Sydney as well as strong commuter ties to the NSW capital, the report said.
But it will be capped by the Illawarra's higher vacancy rates due to new supply, and a higher than Sydney unemployment rate.
"As with Sydney, the improved lending environment should see prices stabilise in 2019/20," the report said.
"However, vacancy rates in Wollongong have edged upward to 2.8% at March 2019 as new supply has increased.
QBE Lenders' Mortgage Insurance CEO, Phil White, said strong employment links to Sydney and population growth were likely to be key drivers.
While lower interest rates and an improved lending environment should also help stabilise local prices over this year, vacancy rates in Wollongong have edged upwards recently as new supply has increased.QBE CEO Phil White.
"Wollongong has seen strong and consistent population growth since 2012," Mr White said.
"A large driver of this has been residents seeking more affordable properties than are available in Sydney. This includes both first home buyers and upgraders seeking a more affordable, larger home.
"Wollongong also attracts retiree downsizers."
The QBE housing outlook report showed that on a national level all capital city prices are expected to stabilise over the coming year, before strong population growth and a sharp downturn in new home completions results in price rises during 2020/21.
The strongest forecast is for Brisbane, where a decade of modest price increases has left the market relatively affordable.
There, house prices will soar by more than 20 per cent by 2022, report said.