Melbourne purchasers beware!

From Property Observer 25-10-2012:

The Melbourne unit market remains the weakest capital city market for both house and units, down 6.1% year-on-year.

It registered a 1.4% drop over the September quarter – the sixth consecutive quarterly fall – taking the median Melbourne unit price down a median of $381,154.

This follows APM revised the June median Melbourne unit price down from $392,862 to $386,678.

On average, a Melbourne apartment is $24,000 cheaper to buy now that it was a year ago.

Wilson attributed the continued to decline of Melbourne unit prices to a “surplus of new supply in the marketplace” negating an increase in activity from first-home buyers.

Wow $24k in one year...no need to hurry here folks!
 
Settlement defaults ensuing.............

It's not a market I follow, however this doesn't surprise me. Indeed, I envisage more pain to come to this sector. The softening is most likely contibuted to by the plethora of inner city Southbank and Dockland periphery stock coming onto market and perhaps only just beginning.

Those who have bought off the plan, will likely be delivered some pain when they are upside down on settlement value. There will be a significant number that don't settle in the next year or two, ala the Gold Coast (new) unit/apartment sales. The receivers will be busy.

BTW, I was recently in Melbourne and hadn't taken the Tulla/Bolte route into town since we moved over 18 months ago. I don't remember seeing so many cranes in the sky. It does not augur well for an already over-supplied market.

Did I mention, the receivers will be busy?................mortgagee in posession auctions will be in flavour there in a year or two :(
 
Yet my boring 2, 1, 1 70s brick unit just got revalued 40k up on what it was 20 months ago.

So stay away from OTP, you can still do well if looking at the right stock.
 
Who actually makes their property investment decisions based on 12months growth?

I mean it a good indicator but isn't property a long term investment?
 
There are over 14,000 1,2 and 3 bedroom units due to come through the development pipeline in the inner city areas of Melbourne across the next 2 years. It's a lot of supply, but a city of Melbourne's size will absorb it within a few years... so yes, we will see downward pressure on inner city values in Melbourne during that time, but don't let that fool you into believing Melbourne isn't still Australia' second largest city, population and immigration magnet.

Unless you are considering inner city off the plan, or planning to buy today and sell within a couple of years, there's no risk with Melbourne whatsoever. Suburban prices wont be affected like city prices will.

Some of the negativity is pretty astounding. This is just the property market coming off a 20 year hot streak. It cant keep climbing and climbing forever. Every city has had bumps. Those with smaller populations and too much stock have had the bigger issues- Adelaide and Perth and Hobart and Brisbane for example. But those with the growing populations are going to hold up pretty well. Perth now has extremely tight vacancy rates so is looking like its price slides are over...it will hold up reasonably well now. Melbourne, whilst slightly oversupplied will soak it up pretty quickly because of its sheer size of population. There will be a dip for a while but it will be temporary. Sydney has the population demand and the supply constraint but is so expensive its just treading water. Just proves that supply v demand only matters until credit runs out, or prices reach unaffordable levels. The western suburbs and sub 500K suburbs are the best performers because they are still relatively affordable, but everywhere else its been flat for a long while and will remain flat, because the affordability is maxed out.
Brisbane - horror show, still.
 
Weasil

Absolutely disastrous 12 months, median prices off 6%.

When would you rush in, how do you pick the bottom?

I can't pick the bottom, no one can, but....I 'd rather pay and additional 5% in purchase cost from a proven bottom than buy in say 10% prior to the actual bottom of a cycle. We are not there yet and talk of rushing should not be bandied about in this market :)
 
I can't pick the bottom, no one can, but....I 'd rather pay and additional 5% in purchase cost from a proven bottom than buy in say 10% prior to the actual bottom of a cycle. We are not there yet and talk of rushing should not be bandied about in this market :)

Agree, we can't pick the bottom.

How do you, without hindsight, pick the proven bottom?
 
There are over 14,000 1,2 and 3 bedroom units due to come through the development pipeline in the inner city areas of Melbourne across the next 2 years. It's a lot of supply, but a city of Melbourne's size will absorb it within a few years...

Seen it before in Melbourne during the late 90's - and Sydney around 10 years ago ... oversupply then absorbed within the next 2-3 years ... then undersupply and prices rocket ... the ideal would be to buy in around 18 months, when things seem desparate and oversaturation has caused prices to become giveaway, and then hold on for the ride.
 
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BTW, I was recently in Melbourne and hadn't taken the Tulla/Bolte route into town since we moved over 18 months ago. I don't remember seeing so many cranes in the sky. It does not augur well for an already over-supplied market.

Did I mention, the receivers will be busy?................mortgagee in posession auctions will be in flavour there in a year or two :(

You would have noticed it even more on the other side of town - Richmond & South Yarra are absolutely exploding with new apartments!
 
Like I've been saying the new apartments are just saturating the market. So many developers I know are having difficulty selling their projects.
 
BTW, I was recently in Melbourne and hadn't taken the Tulla/Bolte route into town since we moved over 18 months ago. I don't remember seeing so many cranes in the sky. It does not augur well for an already over-supplied market.

To be fair, there is significant commercial/office building construction across Docklands and in parts of the CBD.
 
they also got plans to increase the CBD to include suburbs like carlton. it's a pretty good suburb as it is but if they're gonna build massive towers over there... it would spoilt the suburb.
 
I would argue most of Carlton is already not a suitable to invest in due to the fact that residential 1 zoning is hard to come by.
 
Like I've been saying the new apartments are just saturating the market. So many developers I know are having difficulty selling their projects.

But with a population the size of Melbourne the issue will be temporary- probably about 18 months of valuers being ultra conservative. Generally speaking they have already priced the oversupply in for existing stock and I'd expect it will start to plateau now.

Unfortunately, those purchasers who paid early 2012 prices for Off The Plan have to wait until completion to get valuations done, and will find themselves needing to come up with anywhere from 5-15% to cover the inevitable on completion shortfalls headed their way. If it's only 5% they'll be fine- if it's at the 15% end, it may lead to some distressed sales coming onto the market around that time. But I wouldn't expect much more by way of prices falling - the valuers are well ahead of the game on this and are already valuing in anticipation of the over supply. If you can buy new today in Melbourne and get the val to work, you can be pretty confident you are buying well.

Just be glad you arent invested into the Gold Coast and its surrounds http://www.brisbanetimes.com.au/queensland/gold-coast-tower-in-receivership-20121026-289ts.html

http://www.smh.com.au/business/building-firm-in-230m-collapse-20121026-28acl.html
 
Agree, we can't pick the bottom.

How do you, without hindsight, pick the proven bottom?

This is impossible. I earlier explained to you I would rather pay an additional 5% from the bottom. You need hindsight to actually recognise when you have transpired the bottom of the cycle. I believe we earlier agreed neither of us could pick the bottom. If it will help you out i'm happy to let you know when i decide the time is right ;)

I don't know that there's much more I can do to help you with this :confused:
 
My guess is never. He/She is too busy finding the next negative headline to post on Somersoft ;)

Cheers,
Oracle.

Yes, that's what I have noticed too as if it's intentional? Is is just me, after some time away from the forum, or what.....?:confused:
 
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