Holiday Home Hotspots: Illawarra vs. South Coast — Where Should You Park Your Beach Towel (and Your Investment)?

Sunscreen, Surf... and Solid Returns?

Picture this: You're sipping a flat white on a balcony overlooking turquoise waves, but instead of just being a holiday-goer, you're earning passive income while watching pelicans glide past. That's the dream of owning a holiday home in NSW—and the Illawarra and South Coast are fighting for the top spot on your "must-invest" list.

But which one offers better bang for your beach buck? Is it the booming Illawarra with its surfer-town glow-up? Or the laidback charm of the NSW South Coast, where kangaroos outnumber neighbours and Wi-Fi is (sometimes) optional?

Let's take a sunny side-up look at the stats, pros, cons, and long-term potential of both regions to help you decide where to drop your deposit—and your deck chair.

Illawarra: Where Coastal Meets Capital Growth

🏖️ Hotspots: Wollongong, Thirroul, Austinmer, Shellharbour, Kiama

The Illawarra region has been on fire (property-wise, thankfully not literally) over the past five years. What was once a commuter belt is now a lifestyle-first investment magnet, driven by Sydney buyers seeking beachside bliss with train-line convenience.

📈 Investment Snapshot (2025):

• Kiama: Median house price ~$1.45M | Holiday occupancy ~67% | Avg nightly rate: $410

• Thirroul: Median ~$1.6M | High weekend demand | Boutique Airbnb appeal

• Shellharbour Village: Emerging star with long-term growth & lifestyle fusion

💡 Pros:

• Strong capital growth thanks to infrastructure, train access, and café culture

• Year-round demand—surfers, families, retirees, and Sydneysiders escaping the city

• Established amenities: hospitals, dining, events, and high-speed NBN

😬 Cons:

• The entry price is higher than that of the South Coast.

• More regulation in short-term letting zones (mainly in Wollongong LGA)

• Less secluded = less "escape factor" for some buyers

South Coast: Peace, Privacy, and Potential

🌿 Hotspots: Berry, Mollymook, Huskisson, Vincentia, Narrawallee

The further south you drive, the more relaxed the property market—and the locals—feel. But don't mistake serenity for stagnation. The South Coast is quietly becoming one of NSW's most lucrative holiday investment zones, offering lower entry prices and increasing demand from families and retirees.

📈 Investment Snapshot (2025):

• Mollymook: Median house price ~$1.25M | Holiday occupancy ~71% | Avg nightly rate: $390

• Vincentia: ~$1.15M | Close to Jervis Bay, booming in summer

• Narrawallee: A rising gem with off-grid appeal and strong word-of-mouth bookings

💡 Pros:

• Lower purchase price with strong yield potential

• Peak summer demand pushes Airbnb nightly rates above $450

• Nature-focused getaways: bushwalks, beaches, whale watching = year-round attraction

😬 Cons:

• Seasonal vacancy risk—many towns go quiet mid-winter

• Distance from Sydney = fewer spontaneous bookings

• Infrastructure can be patchy (say goodbye to Uber Eats and speedy Wi-Fi)

Head-to-Head: Illawarra vs. South Coast

Feature	Illawarra	South Coast
Median Entry Price	$1.3M–$1.6M	$950K–$1.3M
Holiday Yield Potential	4.5%–5.5%	5%–6.5%
Distance from Sydney	1.5–2 hours (train-friendly)	2.5–4 hours (car required)
Infrastructure & Cafes	Excellent	Growing but limited
Short-Term Letting Rules	Regulated zones (Wollongong LGA)	More flexible (Shoalhaven, Eurobodalla)
Off-Season Appeal	High (events, beach + culture)	Moderate (unless whale season)
Wow Factor	High-end lifestyle luxe	Rustic charm + Insta nature goals

Investor Insight: What's Your Holiday Home Personality?

Choose Illawarra if:

• You're after dual use (invest now, retire later)

• You want high growth + great lifestyle amenities.

• You prefer solid infrastructure and steady bookings year-round

Choose South Coast if:

• You're budget-conscious but aiming for strong holiday returns.

• You love the idea of a secluded weekend escape or digital detox retreat.

• You're targeting summer seasonal spikes with max short-term rates.

Future-Proofing: Where's the Long-Term Promise?

With both regions experiencing improved transportation, growing populations, and government investment, there is no wrong answer—just a matter of strategy.

• The Illawarra may soon become NSW's next Byron Bay, with tighter restrictions but premium pricing.g

• The South Coast is like investing in Byron ten years ago—lower prices, rising tourism, and that coveted "untouched" feel.

And with climate migration and remote work trends driving regional demand, both regions are poised to remain in high demand (even in winter).

Conclusion: Buy Now, Surf Later

Whether it's the cool café culture of Kiama or the bush-meets-beach escape of Mollymook, NSW's coastline is having a moment—and your holiday home could be the smartest investment you make this decade.

So… Illawarra or South Coast?

Either way, bring a towel, a spreadsheet, and a solid Airbnb listing title—because your holiday home is ready to pay its way, and then some.

FAQs

Q: Is Airbnb still profitable in 2025?

A: Yes, especially in regional holiday hotspots. Both Illawarra and South Coast homes can net $25,000–$55,000/year in gross holiday rental income, depending on size and location.

Q: Can I still use the home for my holidays?

A: Absolutely. Many owners block out school holidays or long weekends for personal use, then list them for the rest of the year.

Q: What are the tax perks of owning a holiday home?

A: You may be able to claim depreciation, maintenance, and loan interest—speak to a property-savvy accountant.

Q: Is demand for holiday homes still growing?

A: Yes. Post-pandemic travel habits, flexible work, and cost-of-living escapes are keeping regional short-stays popular.

Q: Is it better to buy an established one or build a new one?

A: Established homes often offer faster returns, while new builds can be more tax-efficient. It depends on your budget, timeline, and vision.