NSW Illawarra and South Coast

Hi, wondering if anyone has any thoughts on Illawarra and the south coast for an IP? I see some fairly decent (possibly undervalued?) prices in suburbs 15-20 minutes or so past Wollongong (beach side of Port Kembla, Warilla, Barrack Heights etc.) which historically have shown quite decent price growth and ride the Sydney wave each time it booms. Looks like some nice gentrification is happening around these areas too (new Shellharbour Marina and Albion Park bypass also a consideration?). There also seems to be a change in demongraphics from the older residents who are moving out, to the young families (possibly taking advantage of first home owner grant) and baby boomers leaving Sydney. Kiama and Shellharbour have been on my radar for a while due to their 'retirement' appeal, though after doing a bit of exploring there seems to be some hidden gems (above) in the surrounding areas that are just waiting to ride any future price growth from Sydney/Wollongong and are already going through the gentrification process.

I know there's no crystal ball, and if we're completely honest very few of us really have a clue what will happen in Sydney over the next 12 months (I've read the experts talk about recession, slow and steady for a few year and mega booms - who knows!), though if anyone has any thoughts on the Illawarra/South Coast in terms of an investment option at this point I'd love to hear your thoughts!!

Cheers!

 

Hi @Investaholic

I have lots of thoughts. If you search you will find a good number of discussions and post about this area. Gentrification is happening but faster in some areas than others, and there are streets with very high percentage of public housing which will resist gentrification until govt. sells off to private owners. There area also a few pockets with some backfill of coal slag which I don't think are such a good idea to purchase in (just my opinion). But yes essentially I believe the area has great potential and am actively purchasing around the lake, have been for a number of yrs for clients. As always... do your research and manage your cash flow carefully. If you plan on developing or adding value there is an extra opportunity for profit but more layers of due dilligence needed.

 

Thanks Matt!! Appreciate your views.How do you feel about Shellharbour currently? Where do you see it on the property clock at the moment? Still a buyer's market down there? I'm currently looking at older apartments as we don't have a huge budget - around 400,000. Currently considering whether an older apartment in Shellharbour/Wollongong would trump an older house with reno potential in, say, Warilla/Lake Illawarra/Barrack Heights etc.

 

Shellharbour had a run up along with much of the coast north and south of Sydney, then pulled back a little over the last 12 months, and appears to have basically bottomed out now (although individual property sales are still patchy some selling much higher and some lower than expected)

Overall I love the infrastructure boost of the marina as a $2b project bringing money, tourism, relocaters, and trades into the area. Shellharbour village is slowly gentrifying into a little coastal paddington, (slowly) the cheaper suburbs nearby that you have mentioned and around the lake do represent great value for medium term in my opinion (and I am actively buying in them for clients) especially if you get an older place in the sub $550k mark on a good size block with potential for a granny flat or dual occupancy development or even just cosmetic renovation to manufacture equity.

Your budget is a tad low for freestanding homes in that patch, either you can find a few extra $ (in the mid $400's you can possibly scrape in... or go 40 mins south to Nowra/Bomaderry/North Nowra where the road expansion is currently underway or as you said buy a smaller property in Shellharbour. I do prefer freestanding homes for capital growth but if you found a cheap apartment in a small complex in a great spot you will still have excellent demand from tenants. If it is close to the water you could even explore short term letting one day if you wish.

 

Thanks Matt! Appreciate your time and words of wisdom. Do you prefer any area in particular around the lake? If I can get to the 600K mark I would prefer to go for a freestanding home, and have been hunting around Barrack Heights, Warilla, Lake Illawarra etc. (areas neighbouring Shellharbour who will really benefit from the marina and, hopefully, show gentrification in the medium term). What do you think? Or would it be smarter to get something older/smaller in somewhere like Shellharbour, or even Kiama/Kiama Downs?

 

Horses for courses and it depends on your personal goals of course. But yes in general for investing I do like freestanding most of the time if budget allows and big enough yards for redevelopment in the future which stacks the odds for capital gains (or a granny flat as a backup). Being close to future marina is one option, of course proximity to water, shops, water views, quick access to highway, train stations and other infrastructure also add their own desirability factors. All the suburbs you mentioned have good pockets and not-so-good pockets, with some streets that should be avoided if at all possible.

You won't get much of good quality for $600k in Kiama on its own bit of dirt.

 

Awesome, thanks Matt! Truly appreciate the advice and insight.

 

did you manage to buy something?

 

+1

 

Would also be interested where/if you decided to buy?

I’ve travelled down from Sydney a few times recently and the new Marina area is quite impressive but all the new blocks around it look small. I am way more tempted to look at buying in one of those older surrounding suburbs.

 

@Nicho shell cove has been chopped down to the very limit of block size. Some love it, others really don't. No choice but to get in line if you want a place on the marina. I prefer trees and space and older suburbs personally. I feel the better value is all in the larger infill blocks in Warrilla, Barrack Heights, Lake Illawarra and Mount Warrigal. Good potential renovators, which can also be dual occ and triplex sites long term. As earlier posts some street are MUCH better than others in there but if you are careful the gems exist. All the best with it.

 

By the way, how has this area been going in the past couple of months? Are we seeing crazy prices like elsewhere in the country?

 

Many years ago i thought "One day they gonna bulldoze all those fugly housing commission places near the beach"... It's happening. Finally.
Been down there a few times looking for a potential new PPOR.
And seems to be quite a few potential IPs with room for improvement.