Expensive markets such as Austinmer in the northern suburbs have been drastically outperformed over the past 12 months by suburbs in the middle to bottom end of the market. Photo: Region.
November saw the Illawarra property market growth easing its pace compared to October when the region saw its strongest monthly gain in two years.
While national home values rose 1 per cent in November (marking the third consecutive month of strong growth, but down on October’s 1.1 per cent gain), regional properties saw a slightly softer rise of 0.9 per cent, and the Illawarra softer still at 0.7 per cent.
Cotality Head of Research Asia Pacific Tim Lawless said the trajectory was unsurprising given the market position.
“The Illawarra is an expensive market, and across the board we are seeing growth conditions skewed to more affordable areas of the marketplace,” he said. “With median house values above $1 million, I think price might be a barrier to faster growth across the region.”
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According to Cotality’s November HVI, record-high dwelling value-to-income ratios and expectations of longer rate holds point to tougher conditions ahead for affordability, housing sentiment and credit access.
Zooming out to the past 12 months in the Illawarra, the Dapto/Port Kembla area — one of the region’s most affordable with a house median of $905,000 — has led the charge in growth.
“That’s clearly where values have risen fastest over the year, 8.8 per cent,” Mr Lawless said.
Huntley in West Dapto led the charge with a staggering increase of 25 per cent to $1.1 million.
In second place was Bulli, a fairly expensive northern suburbs market with an almost 14 per cent rise to a median of just under $1.6 million.
Coming in third was Russell Vale, which saw values rise 12.9 per cent to a $1.5 million median.
“It looks to me like the middle to bottom end of the market is performing well, which is consistent with results in cities.”
At the other end of the value growth spectrum, high-value suburbs such as Gerringong saw only 0.5 per cent growth in the same period, Kiama Downs 0.7 per cent, and Austinmer and Coledale tied for third lowest growth with 1.4 per cent.
“None of these markets have seen values fall, however,” Mr Lawless pointed out.
Mr Lawless said it was likely we had seen “the best of the borrowing capacity” for the foreseeable future.
The November HVI report pointed to affordability constraints putting a ceiling on growth, as well as record levels of housing unaffordability and a rebound in inflation.
“With inflation once again above the RBA’s target range and rates potentially on hold for the foreseeable future, it’s likely housing sentiment will suffer,” he said.
“With housing affordability already stretched and worsening, it stands to reason that fewer borrowers will be able to access credit as serviceability barriers become more prominent.
“The trouble is, the benefit of the improvement to rates has been eroded by the market simply because housing prices have risen just as much, if not more.”
