Illawarra house prices falling during the past 12 months could be positive news for first home buyers, but not so good for current homeowners, an expert says.
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The region's biggest price fall has been units in Wollongong - down by nearly 12 per cent over the year to December 2019.
"I think that is due to the construction pipeline," Domain's senior research analyst, Dr Nicola Powell told the Mercury.
"And I think when you have a look at the construction that's in the pipeline for 2020, the level of supply is still going to weigh on that price growth."
Domain's House Price Report for the December 2019 quarter includes figures for the Kiama, Shellharbour and Wollongong LGAs.
It reveals the median price for houses and units.
Dr Powell said the region was seeing prices fall, with a slight increase in Kiama units bucking the trend.
"Houses and units in all of those three LGAs are declining, but that being said, the five-year growth is still pretty robust," she said.
"I think it's really a reflection of the point of the property cycle that these markets are currently in.
"We have to remember that these markets recorded strong price growth, and it's now going through a period of softening."
Findings at December 2019:
*Kiama houses had a median price of $850,000; down two per cent from a year earlier, but up 37.1 per cent from 2014.
*Kiama units had a median price of $650,000; an increase of 0.8 per cent from a year prior, and up 29.4 per cent from December 2014.
*Wollongong houses had a median of $700,000; a price change of -3.4 per cent from a year earlier, but a five-year price change of 37.3 per cent.
*Wollongong units had a median price of $505,000; this was down by 11.9 per cent from December 2018, but up by 16.1 per cent from 2014.
*Shellharbour houses had a median price of $595,000; a drop of 5.9 per cent from a year earlier, but a growth of 33.7 per cent from 2014.
*Shellharbour units had a median of $527,000; down five per cent from December 2018, but a growth of 44.4 per cent from 2014.
Dr Powell said Wollongong "reacts off the back" of the Sydney market.
"I think we have seen a rebound in those major capital city markets," she said.
"Last year we saw three interest rate cuts, and we have seen a slight relaxing of those lending standards.
"That's helped to reignite buyers in some of these capital city markets, particularly in Sydney and Melbourne.
"Perhaps that's not trickling down into some of these LGAs - Kiama, Shellharbour and Wollongong - as yet."
Dr Powell said for those looking to get onto the property ladder, when markets are falling it "presents opportunity for buyers".
"For first home buyers it is improving affordability, because we have seen a pull back in price. It means what they need to save for that lump sum deposit technically is reducing.
"Perhaps it's not so good for current homeowners, as they see capital growth in their homes decline."
According to the report, Sydney's rebound continued to gain momentum, posting the first annual gain in two years.
It also found that house prices regained almost two-thirds of the value lost during the downturn, while units recouped half of the value lost, and the current pace of growth could see prices reach new highs in 2020.
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?
