‘Opportune time’: Illawarra suburbs targeted by investors as rents continue to rise

Multiple Illawarra suburbs have been highlighted as real estate investor ‘hot spots’ in a new report. Find out which suburbs made the list.

An Illawarra real estate expert has signalled it’s an “opportune time” for investors to jump in and take advantage of plummeting housing demand and an explosion in rents.

The latest data from the Make Your Move report analysed price movements, rents, yields and tenant demand in every suburb in the country to determine the “best” locations for investing.

Suburbs deemed favourable for investors had higher rental returns, soaring demand from tenants and a history of strong growth in local property values.

The algorithm which used data from realestate.com.au picked out five Illawarra suburbs that were in the top 20 in NSW, outside of Sydney, for housing while one suburb featured in the top 20 for units.

The lakeside suburb of Koonawarra ranked ninth, and 194th nationwide, with an annual price growth of 27 per cent leaving median house prices at $716,000.

Koonawarra is one of the top suburbs for investors according to a recent report. Picture: realestate.com.au

Investors looking to buy in Koonawarra would be encouraged by a median rental yield of 3.9 per cent and a 175 per cent rental demand relative to the rest of the Illawarra.

Neighbouring Kanahooka ranks 12th in regional NSW while Mangerton (11th), Cordeaux Heights (15th) and Warrawong (18th) are also in the top 20 for houses.

Houses in both Mangerton and Cordeaux Heights fetched for a median price of $1.29 million with the suburbs the only two inside the top 20 to break seven figures.

Albion Park is the only suburb featuring in the top 20 for units with investors spurred on by 24 per cent annual price growth and median rental yields of 4 per cent.

Colliers Real Estate Wollongong’s managing director Simon Kersten said the tables highlighted some in-demand suburbs, but potentially didn’t “tell the full story at the coal face”.

“I believe this data is ranking capital growth and buyer inquiries more heavily than rental returns and for some investors rental returns are a more important factor,” Mr Kersten explained.

“Some investors try to make a capital gains play in the same way some people buy shares with no returns, but expect capital growth.

“If you re-ranked based on rental return, this would change the table drastically because places like the Wollongong CBD would come back to the fold.

“It seems the reason Wollongong is not on there is because there is a long history of sales there and the prices are already high so it wouldn’t have escalated quickly.

“They’re still getting a 3 to 3.5 per cent return and the rental demand is still massive for Wollongong.”

Regardless of how the data is arranged, Mr Kersten said the time was right for wannabe investors and pointed to opportunities in similar suburbs to Koonawarra and Kanahooka.

“Suburbs like Berkeley, Lake Heights, Fairy Meadow and Unanderra are similar to Koonawarra and Kanahooka in that you can get an affordable house with a good rental return,” he said.

“The heat in the market was causing owner-occupiers to buy at inflated prices. Now the market has settled, but rents are still high and that means it’s a great time for investors.

“Investors will always be circling and waiting to make a decision on when is the most opportune time to buy, but this is the time in the cycle when investors come back in.”