Properties sold in the Kiama Local Government Area rose in value by 2.8 per cent in 2011 compared with the 2.1 per cent state average.

It ranked third behind Lake Macquarie (3.7 per cent) and Bellingen (3.1 per cent) and most other coastal locations, which experienced limited or no growth.

Kiama also had the second highest median residential land value at $293,000 behind Byron Bay at $315,000.

Kiama real estate agent Anthony Langlois said property prices reflected supply and demand. "We had 200 less sales in the past 12 months compared to 2010," he said.

"In 2008 the GFC hit so prices had to go up, they couldn't stay there."

He said Kiama was in demand because it still had a small population compared to other seaside towns.

"That will keep the prices growing as well as the fact that we don't really have any blocks of land left at the moment," he said.

"If people want to buy, they have to buy on the existing market."

Fellow Kiama real estate agent Michele Lay agreed, saying houses formed 94 per cent of sales to July 2011.

She said, with the low availability at the moment, buyers had to pay more.

"When something goes, it's highly contested and the price reflects that," she said.

Ms Lay said Kiama would always have a buffer from negative impacts on the property market for that reason.

“It’s a niche market and it’s landlocked,” she said.

Land is due for re-evaluation later this year to help Kiama Council calculate its rates. The current 6.5 per cent special rate variation will remain in place until the end of the 2012-13 financial year.