By John McGrath

The latest Regional Market Update from CoreLogic shows Wollongong and Shellharbour have recorded impressive price growth of late, largely driven by Sydneysiders relocating to the south coast as the post-boom ripple effect gets underway.

It’s very common in the immediate period after a capital city’s boom to see buyers flocking to nearby regional centres within commuting distance back to the city. In the case of Sydney, it is typically the Blue Mountains, Wollongong, the Central Coast and Newcastle that benefit most from the ripple effect. This week, let’s drill down on the south coast.

Sydney buyers are looking south for affordability, lifestyle and investment opportunities. Among the owner-occupier buyers, some are commuting back to Sydney for work while others are seeking a permanent seachange with the hope of local employment to escape the city hustle and bustle altogether.

We’re also seeing more Sydney retirees heading to both Wollongong and Shellharbour. Now that Sydney’s four-year boom is over, they are selling their family homes for impressive prices and finding great value and lifestyle on the south coast, while still being close enough to drive back to Sydney regularly to see the grandkids. 

Here are the stats.

In the Wollongong council area, which includes Port Kembla, Bulli, Thirroul and Helensburgh at the very southern tip of Sydney, median house prices grew by 15.1% to $630,386 and apartment prices grew by 14.4% to $471,037 over the 12 months ending June 2016.

In the Shellharbour council area, which includes Shell Cove, Warilla, Oak Flats, Flinders, Blackbutt and Albion Park, median house prices grew by 13.1% to $532,463 and apartment prices grew up 12.7% to $411,958, according to CoreLogic.

I had a chat this week with one of McGrath’s Principals, Jordan Andonovski, who co-owns three of our south coast offices at Wollongong, Thirroul and a brand new one in Shellharbour. According to Jordan, all three are seeing an influx of Sydney buyers. 

Jordan says: Sydney commuter buyers are primarily coming from the western and southern suburbs and are targeting the northern areas of Wollongong including Thirroul, Bulli, Woonona and Towradgi.

“Those in Sydney’s west, who are already commuting to the CBD, are realising they can buy a home for less in Wollongong and although the commute is a bit longer, they can come home every day to a beachy lifestyle and a good-sized home on a decent block of land.

“Buyers from the Sutherland Shire have always liked Wollongong because it’s not so much of a stretch to go that bit further south for more value. They can buy a house here for the same price as a townhouse in the Shire. So after a long period of price growth in Sydney, they’re seeing an opportunity now to sell high in Sydney and upgrade here while interest rates are still extremely low. 

One of the most interesting trends our south coast offices are seeing is more people from Sydney moving to the coast because their work life has changed, with their employers allowing them to work part-time from home. This means they only have to commute a few days per week, which makes a coastal lifestyle outside the city much more appealing and manageable. 

We’ve been seeing this with semi-retired senior executives in many regional areas close to Sydney for several years, but it’s now becoming more common among young families too. Technology is enabling somewhat of a decentralisation of the workforce and regional areas close to major cities are really primed to benefit from this trend.

The $600,000 to $700,000 price range appears to be the most popular in Wollongong, according to PriceFinder data cited in the October market report of independent property valuation firm, Herron Todd White. This bracket had the highest volume of house sales in the 2016 financial year at 420 sales, according to the report.

Jordan concurs with this, with his personal team selling about 40 homes over the past three months at an average sale price of $650,000.

This sort of budget buys good quality apartments in the Wollongong CBD and older houses in areas like Figtree, which is about 4km south-west of the Wollongong CBD. Figtree has been a hot spot this year as it provides better value for buyers on tighter budgets, has some of the best schools in the Illawarra and is easily accessible to the M1 for the Sydney commute.  

Our Wollongong office is also selling a lot of apartments to investors who are finding Sydney too expensive to buy in now, with yields too low following the boom.

Jordan says: “Most apartments will deliver investors a strong rental yield, that in most cases, makes the investment very close to neutrally geared. This is very appealing to Sydney investors, who are primarily targeting older-style apartments in the late $400,000s to early $500,000s.

“We’re also seeing a lot of Sydney parents buying apartments in suburbs close to Wollongong University such as North Wollongong, Gwynneville and Keiraville. They’re buying with the intention of giving their kids somewhere to live while studying, with a view to holding the apartment as a long-term investment after their child moves on.”