Brendan Crabb Local News
The real estate boom in the Illawarra over the past several years appears to be coming to an end, an academic says.
He also believes the weakening in property markets is bad news for the construction boom and the Illawarra economy.
The latest house price data from CoreLogic indicates that the value of real estate in the Illawarra for the first four months of this year increased by 0.8 per cent.
This is in comparison to the same period last year, when prices increased by 4.8 per cent.
“This is the weakest result in many years,” Alex Frino, Professor of Economics and deputy vice-chancellor at the University of Wollongong said of the latest figures.
“Over the past five years, the first four months of each year have yielded house price increases averaging 3.5 per cent.”
The same data also shows that unit prices in the Illawarra fell by more than two per cent in the first four months of the year.
“This is also in sharp contrast to the previous five years, which experienced an average increase of more than two per cent for the first four months of each year,” Prof Frino said.
“All this data points to one thing. It seems that the real estate boom experienced by the Illawarra over the past five or six years – which delivered house price increases of 70 per cent and unit price increases of 57 per cent to December 31, 2017 - is coming to an end.”
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However, despite this Prof Frino said house prices in the Illawarra are still holding up relative to NSW and Australia, which experienced falls in house prices in the first four months of 2018.
Meanwhile, the Illawarra’s April unemployment figures released by the Australian Bureau of Statistics showed unemployment at 5.2 per cent.
Alex Frino, Professor of Economics and deputy vice-chancellor at the University of Wollongong. Picture: File image
“This is the second lowest April unemployment rate reported for the region in 10 years, and continues to underscore that there is an economic boom in progress in the Illawarra region,” Prof Frino said.
“This economic boom in the Illawarra since at least 2011 has been underpinned by a construction boom, which has been fed by the fast rising house prices and historically low interest rates which have provided property developers with the motive and opportunity for bringing on property projects.
“Consequently, we have observed very strong growth in building approvals over the past five years which have increased from less than $150 million per quarter in 2011 to almost $300 million per quarter over the past 12 months.”
Prof Frino said the weakening in house prices and the predicted increase in interest rates over the next 12 months will likely result in a weakening of the region’s construction sector and the end to the economic boom.
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