Rental listings across regional NSW have thinned out like the line-up after the best wave rolls through—everyone’s waiting, boards poised, for the next rare opportunity.
In April the state-wide vacancy rate sat at 1.6%, while Illawarra hovered around 1.3–1.4%—still firmly landlord-friendly. Meanwhile CoreLogic’s latest Home Value Index shows Wollongong prices edged down 0.1% in the March quarter, essentially flat after 2024’s double-digit surge. Tight supply plus plateauing prices equals that rare thing in real estate: a genuine window of opportunity.
Illawarra at a glance
| Metric (Mar–Apr 2025) | Illawarra | Sydney | National |
| Vacancy rate | 1.3% | 1.6 % | 1.3 % |
| Gross house yields¹ | ≈ 4.9 % | 3.1 % | 3.73 % |
| Median dwelling value | $1.051 k | $ 1.19 m | $825 k |
Sources: REINSW April-2025 vacancy survey; CoreLogic HVI & Weekly Rental Review; ABS. ¹ Yields vary by suburb—Woonona sits closer to 3.7%, while parts of Shellharbour push 3.4%.
Three reasons investors are circling:
Rental demand keeps outrunning supply
Illawarra’s population keeps nudging higher, fuelled by sea-change movers, UOW’s student pipeline and a trickle of international migrants. Yet dwelling approvals dropped 9% in 2024 (ABS), so fewer new rentals are entering the pool. The math is simple: more tenants, fewer keys. As asking rents jump, landlords get a rare tailwind against higher interest costs.
Low buyer competition.
Higher rates still spook many would-be investors. Fewer bidders at auctions mean quieter open homes and, occasionally, motivated vendors. Think of it as beating the Saturday bakery rush—you’ll still pay for the croissant, but you won’t elbow five others for the last one.
Infrastructure tailwinds
Two projects worth bookmarking:
| $1.2 bn Princes Highway upgrade—construction underway, promising shorter commutes and construction jobs.
| Port Kembla hydrogen & clean-energy hub—approved late 2024, tipped to create 3,000+ roles during build-out.
Government spend today often means new renters tomorrow.
Crunching the numbers: Investment property loans in 2025
| Loan metric | Typical figure (May 2025) |
| Investor P&I variable – major banks | 6.33 % p.a. |
| Minimum deposit without LMI | 20 % of purchase price |
| Deposit with LMI | Down to 10 % (higher premium) |
| Rule-of-thumb holding costs | ~1 % of property value p.a. |
Tip: Park spare cash in an offset account. Every dollar resting there trims daily interest while you sleep.
Yield versus cost
A rental yield at or above your after-interest cost plus holding costs is what gets you to cash-flow neutral. With rates sitting in the mid-6% range, many investors now target 4.5-5%+ gross (or add value via a cosmetic reno, a second dwelling or dual-key conversion) to bridge the gap.
Risk checks before diving in
| Risk | Practical mitigation |
| Rate spikes | Fix part of the loan for 2–3 years; keep buffers in offset. |
| Vacancy patches | Buy near rail nodes—North Wollongong, Unanderra—where days-on-market are shortest. |
| Repair blow-outs | Budget 1.5% of property value p.a.; add landlord insurance (link to June blog “Do you really need it?”). |
| Regulatory tweaks | Follow NSW tenancy reforms & local council zoning—future granny-flat rules could boost yield. |
Suburb spot-checks (mid-2025)
| Suburb | Median house price | Gross yield | Why it’s on the radar |
| Dapto | $800 k | 4.4 % | Commuter rail + new estate supply; lower buy-in. |
| Port Kembla | $982 k | 3.8 % | Clean-energy hub next door; vacancy 1.1 %. |
| Corrimal | $1.14 m | 3.4 % | Beach lifestyle magnet; steady capital growth. |
Verdict: 2025 isn’t a bargain sale—but it’s still attractive
Illawarra isn’t trading at “COVID-discount” levels, but the combination of flat prices after a big 2024 run, sub-1.5% vacancies, a robust infrastructure pipeline, and an investor-light buyer pool gives the region an investment grade many east-coast markets envy.
If you can line up finance, negotiate shrewdly, and secure a realistic yield buffer above 4%, the numbers stack up.
Remember: Real estate rewards time in the market, not timing the market—yet entering while competition is low never hurts.
Action plan in five quick steps
Get pre-approval – Know your borrowing ceiling before you fall for that Bulli cottage.
Compare loans – Pit the majors against second-tier lenders; a 0.3% rate gap saves thousands.
Run a “stress test” – Model repayments at +1% rate rise—sleep-at-night test passed?
Order suburb reports – Vacancy trend, planned developments, flood/fire risk.
Negotiate like a pro – Fewer investors = more vendor nerves. Use long settlement or early access to sweeten your offer without paying more.
Need deeper intel?
Dimosons tracks every Illawarra sale, lease and DA notice so you don’t have to. Want suburb-specific yields or a second set of eyes on the numbers? Book a strategy chat with our investment team today and turn opportunity into returns.
Because in property—like surfing—it’s all about catching the right wave at the right time. 🏄♂️
Helpful links
Visit the links below for more info on leasing in NSW:
| Step-by-step guide
| FAQs
| Why choose Dimosons
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