Property Hotspots: The Best Areas to Invest in This Year

Property investment is one of the most effective ways to build long-term wealth. However, choosing the right location can mean the difference between substantial capital gains and an underperforming investment. In 2025, certain suburbs are set to boom thanks to a mix of infrastructure projects, population growth, and high rental demand.

This guide will break down the hottest property hotspots, focusing on the Illawarra region, which remains a prime location for capital growth and strong rental yields.

So, let's dive in and explore the best suburbs to invest in this year!

Why Invest in the Illawarra? 🌊🏡

The Illawarra region—which includes Wollongong, Shellharbour, Kiama, and surrounding areas—has become a property powerhouse in recent years.

Key Reasons to Invest in the Illawarra:

✅ Proximity to Sydney – Just an hour south of Sydney, making it a popular spot for commuters priced out of the city.

✅ Affordable Compared to Sydney – While Sydney's median house price is well over $1.5 million, you can still find excellent properties in the Illawarra for under $1 million.

✅ Ongoing Infrastructure Upgrades – Better transport links, new schools, and commercial developments make the region even more attractive.

✅ Lifestyle Appeal – Beaches, national parks, great cafés, and a relaxed atmosphere draw in young professionals, families, and retirees.

✅ Strong Market Growth – Median house prices in Wollongong have increased by 8.9% annually since 2020, showing consistent appreciation.

Now, let's zoom in on the suburbs you should look at in 2025.

Top Investment Suburbs in the Illawarra

If you're looking for great returns, here are the top areas in the Illawarra that should be on your radar.

1. Dapto – The Fastest Growing Suburb in Illawarra 🚀

📍 Location: 14 km southwest of Wollongong

💰 Median House Price: $791,000

📈 Annual Growth: 7.6%

🏡 Rental Yield: 3.9%

Dapto has transformed dramatically over the past decade. Once known as a quiet, suburban area, it has boomed with new developments, shopping centres, and transport upgrades.

Why Invest in Dapto?

✔ Affordability – One of the cheapest suburbs near Wollongong, making it accessible for first-time investors.

✔ New housing developments – Large modern homes at reasonable prices attract young families.

✔ Strong rental demand – Commuters love Dapto's proximity to Wollongong and Sydney.

🚀 Hot Tip: Look for modern townhouses—they're in high demand and low maintenance for investors.

2. Kiama – The Luxury Coastal Hotspot 🌊

📍 Location: 20 minutes south of Wollongong

💰 Median House Price: $1.5 million

📈 Annual Growth: 8.9%

Kiama is a stunning coastal town that attracts wealthy buyers and high-end investors. With beautiful beaches, boutique cafés, and a relaxed coastal lifestyle, Kiama has become a highly desirable location for retirees and professionals looking for a sea change.

Why Invest in Kiama?

✔ Tourism appeal – A thriving holiday rental market thanks to beaches, scenic walks, and great dining.

✔ Limited land supply – Property values consistently increase with no space for significant developments.

✔ High capital growth – Luxury homes with ocean views appreciate faster than average.

🚀 Hot Tip: Investing in holiday rentals or Airbnb properties here can generate considerable returns in peak seasons.

3. Port Kembla – The Next Big Thing for Investors 🔥

📍 Location: 6 km south of Wollongong

💰 Median House Price: $870,000

📈 Annual Growth: 7.2%

🏡 Rental Yield: 4.1%

Port Kembla is undergoing a massive transformation. Once a working-class suburb, it's now attracting young professionals and investors thanks to affordable housing and proximity to the beach.

Why Invest in Port Kembla?

✔ Up-and-coming area – Expect house prices to rise quickly as more buyers move in.

✔ Beachside suburb – Stunning beaches make it a lifestyle hotspot.

✔ Strong rental returns – Affordable prices mean higher rental yields than Wollongong CBD.

🚀 Hot Tip: Renovation projects are gold here! Many older houses are being flipped for massive profits.

4. Albion Park Rail – Family-Friendly & Affordable 👨‍👩‍👧‍👦

📍 Location: 20 km south of Wollongong

💰 Median House Price: $750,000

📈 Annual Growth: 6.4%

Albion Park Rail is a top choice for families who want a quiet lifestyle with great schools and parks. It's also one of the most affordable suburbs for investors looking to buy in the Illawarra without breaking the bank.

Why Invest in Albion Park Rail?

✔ Great schools & community feel – Perfect for long-term family tenants.

✔ Solid rental demand – Families are long-term renters, meaning fewer vacancies.

✔ Growing infrastructure – New shops and road upgrades are boosting property values.

🚀 Hot Tip: Look for houses with granny flats—they're gold mines for rental returns!

5. Figtree – Wollongong's Hidden Gem 🌳

📍 Location: 5 km west of Wollongong

💰 Median House Price: $980,000

📈 Annual Growth: 5.3%

Figtree is one of the best-kept secrets in the Illawarra. It's close to Wollongong CBD, has excellent schools, shopping centres, and transport, and offers a leafy, suburban feel.

Why Invest in Figtree?

✔ Excellent location – Only 5 minutes from Wollongong CBD.

✔ Strong capital growth – House prices are rising steadily.

✔ Popular with professionals – High rental demand from commuters and young families.

🚀 Hot Tip: Townhouses and duplexes are smart investments here—they sell quickly and attract quality tenants.

Final Thoughts: Where Should You Invest? 🤔💰

The best investment suburb depends on your budget and goals:

Want affordability? Dapto & Albion Park Rail.
Looking for capital growth? Kiama & Port Kembla.
Need strong rental yields? Figtree & Port Kembla.
Do you love a coastal lifestyle? Kiama & Port Kembla.

🚀 Hot Property Investment Tip for 2025:

🔹 Act fast! With interest rates expected to stabilise or drop, demand will skyrocket in these suburbs. Don't miss out on these prime investment opportunities!

💡 Thinking of investing? Research, check government development plans, and talk to local agents before moving.

Market Outlook

The Illawarra property market is expected to continue upward, driven by infrastructure projects, population growth, and the region's inherent lifestyle appeal.

Investors are encouraged to conduct thorough research and consider engaging with local real estate professionals to identify opportunities that align with their investment goals.

In conclusion, the Illawarra region presents diverse investment prospects, from coastal towns like Kiama to burgeoning suburbs like Dapto.

Investing in Illawarra property this year could be rewarding with its strategic location, robust growth, and quality of life.

Property markets are subject to fluctuations, and past performance does not indicate future results.

Before making investment decisions, it's essential to seek personalized advice based on your financial situation.