An Illawarra analyst believes that while the real estate boom may be over elsewhere in NSW and Australia, it’s not done in Wollongong just yet.
Alex Frino, Professor of Economics at the University of Wollongong said despite indications mid-last year that real estate prices in the Illawarra, and across Australia, may have been slowing down, the latest median house price data from CoreLogic for the Illawarra demonstrates that the house price boom remains in full swing.
The median house and unit prices for the Illawarra hit record all-time highs as of February 2018, coming in at almost $700,000 for houses and $560,000 for units.
Wollongong real estate prices also hit record highs with the median house price for Wollongong coming in at $781,000 and unit prices coming in at $581,000.
The data reveals that median house prices in the Illawarra increased by 11 per cent for the 12 months to February 2018 and 13 per cent for unit prices over the equivalent period.
“These increases are similar to the past three years - all of which have been among the largest increases we have seen over the past 10 years,” Prof Frino said.
“They indicate that the property market is still ‘hot’.”
Prof Frino said that despite the strong numbers, some real estate market commentators suggest that there are indicators that the property price boom is coming to an end.
“The number of properties sold in the Illawarra for the year to February were approximately 7000 houses and 1700 units,” he said.
“These numbers [of properties sold] are down by 25 per cent and 15 per cent, for houses and units respectively relative to the same period last year.
“There’s this market folklore out there that the market’s softening, but all that suggests is there’s less properties being sold, but they’re sold at increasingly high prices.
“It’s not where I thought we’d end up. I thought we were going to see clear price drops, but it’s not happening.”
Prof Frino believed the next trigger point for any market cool-off will be interest rate rises.
“Interest rates are going to rise - that’s the only direction they can take over the next 12 months,” he said.
“And it will be within the next 12 months more than likely. When that happens, that will certainly dampen demand. But the expectation that that’s going to happen has not dampened demand.”
Graph based on CoreLogic data, with statistics calculated for the 12 months to February of that year. Click on the image to view a larger version.
"It's not where I thought we’d end up. I thought we were going to see clear price drops, but it's not happening."
This article originally appeared on http://www.illawarramercury.com.au/story/5315654/is-the-illawarra-property-boom-over/