Understanding Rental Yields in Wollongong and Shellharbour: A 2025 Investor's Guide
- Joel Hynes
- 6 days ago
- 3 min read
Wollongong and Shellharbour, nestled along New South Wales' stunning Illawarra coastline, are lifestyle destinations and emerging hotspots for property investors. As demand for coastal living surges, rental yields in these areas have become a key focus for buyers. Let's unpack the trends, opportunities, and challenges shaping these markets today.
1. Current Rental Yield Trends
Wollongong
Average rental yields are 3.3% for houses and 4.03% for units, with yields increasing by 2% in 2024 compared to the previous year.
Prime performers: Units in suburbs like West Wollongong offer yields of 4.5%, while units in Dapto yield 4.0%.
Vacancy rates: Below 1%, reflecting intense competition among renters 13.
Shellharbour
Average rental yields are 2.66% for houses and 3.96% for units, with median rents rising steadily to 49.
Growth drivers: Suburbs like Lake Illawarra saw a 17% surge in property prices over 12 months, driven by infrastructure upgrades and waterfront redevelopment 211.
2. Factors Influencing Rental Demand
Infrastructure Investments
Wollongong's 97.2 million infrastructure spending in 2024, including transport upgrades and flood management, has developed: cite[1]. Shellharbour's $ 97.2 million infrastructure spending in 2024, including transport upgrades and flood management, has boosted property values near new developments. [1] Shellharbour's 229 million 'The Globe' precinct project promises long-term economic benefits 3.
Population Growth
Wollongong's population grew by 1.2% in 2024, driven by overseas migration and remote workers seeking coastal lifestyles. This has tightened rental markets, with rents up 7.4% annually, 111.
Coastal Appeal
Ocean-view properties in Wollongong command a 25% premium over inland homes, reflecting the demand for lifestyle-centric housing. Shellharbour's beaches and urban regeneration projects, such as Shell Cove, attract families and investors.
3. Suburbs to Watch
Wollongong's Standouts
Port Kembla: With an 8.2% house price growth and proximity to industrial hubs, units yield 3.5% 2. Airbnb hosts also report a staggering 16.77% gross yield for 3-bedroom properties 5.
North Wollongong: Units near the university yield 4.03%, driven by student demand 7.
Shellharbour's Hotspots
Lake Illawarra: Median house prices rose 17% in 2024, with rental yields at 3.1% for houses and 3.3% for units 2.
Shellharbour City Centre: Units here saw a 13.4% price increase in 2024, supported by new retail and transport links.
4. Challenges for Investors
Affordability: Wollongong's median house price reached $1.1 million in 2025, making entry challenging for first-time buyers.
Low yields vs. capital growth: While yields lag behind regional NSW averages (4.6%), long-term capital growth remains strong, with Wollongong prices rising by 52.8% over five years.
Regulatory pressures: Rising interest rates and potential tax reforms could dampen short-term gains 11.
5. Future Outlook
Experts predict a 3–7% price growth for Wollongong in 2025, supported by population growth and infrastructure projects. Shellharbour's focus on sustainable development, including hydrogen energy hubs, positions it as a resilient market 2. For investors, units and short-term rentals (e.g., Airbnb) in suburbs like Port Kembla or Dapto may offer higher returns than traditional buy-to-let strategies.
Key Takeaways
Prioritise units: Higher yields and lower entry costs make units attractive in both regions.
Leverage infrastructure: Target suburbs near rail upgrades or urban renewal projects.
Diversify your strategies: Consider short-term rentals in tourist-friendly areas like Kiama or Austinmer.
Monitor affordability: Rising prices may shift demand to fringe suburbs like Warrawong or Dapto.
Explore sources like BambooRoutes or CoreLogic's Illawarra reports 111 for deeper insights.
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