As prices rise, a leading property commentator says 2021 could be a tougher year for first home buyers looking to gain a foothold in the market.
"In the Illawarra region, affordability will be more of a constraint for first home buyers in 2021, compared to last year," Eliza Owen, head of research Australia at CoreLogic said.
Ms Owen was among the speakers at the 'Illawarra Outlook' event on Friday.
It took place at Villa D'oro, Wollongong as part of the Property Council's 'Outlook' series of events.
Ms Owen said while numbers of first home buyers grew significantly over 2020, she believed they would struggle more and fall away as participants in the housing market in 2021.
"Prices are rising, so it becomes harder for first home buyers," she said.
"But we're also going to see the winding back of policies like HomeBuilder, and some of the additional stamp duty discounts that were available across NSW are ending in August.
"As those policies wind down, I think first home buyers will struggle more over the year as a result."
According to Ms Owen, houses in the Illawarra were up 11 per cent in value in the year to February, and units were up six per cent.
By comparison, in Sydney during the same period, house values were up by four per cent, and units fell by one per cent.
The Mercury asked Ms Owen whether the ceiling for Illawarra house price growth had already been reached, or if prices could continue to grow.
"For what I'm seeing at the moment, momentum is continuing to rise," she said.
"So not only are we seeing positive growth rates, but those growth rates are getting larger, month after month.
"The only thing that's going to slow that down is higher levels of supply, or potentially a change to the mortgage lending space.
"We are seeing indicators in the Illawarra that listings might increase, which could ease price growth. We are seeing indications that listing volumes might rise in the next month or so, so that might take a bit of the heat out of the growth rate."
Other speakers on Friday included Esther Cheong, director of Atlas Urban Economics; Michael Comninos, founder and director of the Astrolabe Group; and Lexia Wilson, principal lawyer at Lexia Wilson Lawyers.
Ms Cheong said in the current, COVID-affected climate, regional areas such as the Illawarra would be energised.
"Regions will seem like an attractive location for people who were once flirting with the idea of moving to the regions - now they're going and doing it," she said.
"So with the influx of new population, that brings with it opportunity for more businesses, more services and for the Illawarra to grow."
Ms Cheong said the outlook for the Illawarra was a positive one, as the region has good infrastructure and lifestyle appeal.
"I think generally as a region, the Illawarra suddenly becomes on the radar of people for whom normally the Illawarra would be at the back of their mind," she said.
"I think suddenly the Illawarra region is front of mind, and people think, 'wow, there's actually a labour force and a population base in the Illawarra that's skilled and young, and maybe it's an opportunity for our business'."
In terms of internal migration, Ms Cheong believed the "city exodus" to regional areas will continue.
However, it may be somewhat constrained by some workers still needing to commute to their Sydney office a day or two per week.
"For people moving from large cities like Greater Sydney, because there's still a link to their office in Greater Sydney, that would probably put a lid on everyone leaving Greater Sydney," she said.
"However, it is (the city exodus) still going to continue throughout 2021 I believe.
"A lot of people who were already thinking of the move will lock it in."
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