Ask Margaret: Should I invest in a one-bedroom apartment in North Wollongong?

Hi Margaret,  

I just wanted to ask if North Wollongong is a good suburb in which to invest in a one-bedroom apartment?  

Thanks,

Enrique

Hi Enrique,

There are many things which make a good investment – demand, infrastructure development, population growth and a good price to name a few.  Areas which display strong drivers in many areas, and are priced well, are usually those which see the greatest future demand and become good investments.  

North Wollongong has been fairly rapidly developed and it’s the unit market where we have seen most of the building.  There are quite a few spruikers actively selling there too, which means that some of these properties may well be overpriced.  

In this area there is a huge disparity between the prices of the newly built, stunning apartments and the older, established ones – up to $300,000 difference within a few streets.  This is telling me that many units are selling off-the-plan or as just completed and there has not been a true test of their value yet.  While people may well be buying them, we will not know the value of these new units until we see secondary sales. For those buying them first, there is a huge risk that the value will not hold up.  

If we add to that the fact that the demographics would suggest that demand in Wollongong is coming quite firmly from families, then we now see several alarm bells – an oversupply of units being presently sold well over market value to a demographic group not well represented in the area.  To me this does not bode well for the ability of these units to either hold their value or see suitable rent return.  

It’s vital that if you find an area which has the growth drivers, you buy the right kind of property there. Wollongong is an area where families live and so you should have families in mind when purchasing an investment.

Margaret Lomas is a best-selling author and writes and hosts the popularProperty Success With Margaret Lomas and heads up the panel onYour Money, Your Call, both on Sky News. She is the founder of Destiny.

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