Nothing drives property values like infrastructure spending and Wollongong is in overdrive
About 18 months ago I started including Wollongong in some of the Hotspotting reports which identify markets expected to out-perform in the future.
This was at a time when the Illawarra was generally expected to be a non-performer. Indeed, some had predicted recession and a collapse in the property market there, because of recent economic bad news.
But Wollongong is a quality regional centre and I’ve been charting real estate markets long enough to know that good regional centres always fight back.
Newcastle did so after BHP shut down operations in the 1990s, reinventing itself and coming back stronger than before. I expected Wollongong to do likewise (just as I am confident Geelong will survive industry shutdowns and thrive in the future).
Earlier this year I wrote on Property Observer: “Wollongong has defied predictions that it would lapse into recession following economic reversals such as downsizing by Bluescope Steel. One hysterical headline suggested property values would fall 50%.
“But the Illawarra is the latest example of a regional community fighting back from adverse circumstances. A lot of infrastructure and property development money is pumping into Wollongong and real estate markets are rising.”
Much of Wollongong’s improvement is due to its inherent qualities as a regional centre and the extent of new investment there.
Now we have seen price data published which confirms that Wollongong has defied the dire forecasts made a couple of years ago.
Australian Property Monitors’ quarterly housing report credits Wollongong with a 7.5% rise in its median house price in the June quarter and an annual rise of 14%. The median has risen from $439,000 to $500,000 in 12 months.
Nearby markets also delivered solid annual increases, including Shellharbour (7%) and Kiama (12%).
I attribute part of the increases to a ripple effect from Sydney. As expected, regional centres close to the state capital have caught the Sydney wave.
But much of Wollongong’s improvement is due to its inherent qualities as a regional centre and the extent of new investment there.
The place has a lot going for it. There’s a substantial and growing population (the Illawarra region has around 275,000 residents), the proximity to Sydney, the seaside location, the strength of spending on infrastructure (including $1 billion on hospital facilities and $500 million at Wollongong University), and the significant investment in new property projects by national development entities like Lend Lease and Australand.
Australand’s Shell Cove is a $1.5 billion project. The total value of all the infrastructure and property developments on our lists for Wollongong is almost $5 billion.
Nothing drives property values like infrastructure spending, which generates economic activity, jobs growth and ultimately demand for accommodation.
The Wollongong has that factor working for it on overdrive.