Melbourne market-your thoughts
- Thread starter tgan
- Start date
What can you get for under 350k these days in melb?
http://www.realestate.com.au/property-house-vic-ferntree+gully-116507667
Sold today in front of 200 - well above expectations.
Either some of us made a lot of money today, or this guy is going to lose a lot of money. But nothing to fear since it's probably the people's money anyway that he's losing.
HaHa ! sad, but prob true.
Its been a while forum friends!,
its nice to see this discussion still going.
Since I first posted, I have assessed my 3 units, and decided to hang on. I have done the numbers to sell, and after paying selling costs and capital gains tax, I am not left with life changing figures! Yes, good money, but not enough to put my kids through secondary education.
I am noticing that the melb market is picking up again and now need to remind my self that to get any real value out of my property, best I keep them for at least 1 full cylcle, ie 7-10yrs. In 3 years, I will assess the invesmtn 2, as I would have had it by then for 10yrs. Hopefully this will have grown more and thus assist with putting kids through education as originally planned.
Would love to know how I can buy a cash flow property interstate, to help out with my neg cash flow..but that's requires another thread!! Pls feel free to advise however!
A friend of mine tried to purchase in thornbury today and was totally blow away with the final sale price of a 2 brm 70's style unit that sold for well over $500k. They were banking on it selling about $480. So, things are happening in mel.
OC1, what suburbs are you trying to buy in? Just curious about whats happening in terms of growth.
Thanks guys & gals.
Tegan
It was Northcote a few years back and now Thornbury is becoming another spillover buyers suburb. Looks like the North and Inner North is going to have a good run.
I really don't understand the fascination with those areas but oh well.
Not my area of interest, but I remember reading earlier this year that there were a lot of newer millionaires moving into the Inner North, that weren't traditional blue chip and/or wealthy areas, which I thought was interesting, either moving there priced out from elsewhere, or because of close location, or both.
I went along to few open for inspection properties in Ringwood, Heathmont yesterday and no shortage of people attending them.
Also, there was an open for inspection for a rental. Just an average looking house. I'd say there were about 20 people queued up. I thought it was a party or something
Also, there was an open for inspection for a rental. Just an average looking house. I'd say there were about 20 people queued up. I thought it was a party or something
Hawthorn is an absolute bargain, compared to garbage like Glen Waverley, Burwood, you name it.
I won't call it "garbage", if in reality they are well performing !!
The reality speaks itself..
Ah true that's a good point. They're good performing suburbs so not garbage from an investment perspective. I should qualify garbage as being overvalued, due to these suburbs being:
- far from key social infrastructure and employment opportunities (CBD, MCG, universities, key hospitals)
- not having good access to schools (why are people paying millions for a house so they can be close to a public school is beyond me)
- in general, far (last time I had to drive that far during 6pm, I was very angry as the traffic on freeway really builds up at that 15km-25km middle ring)
- not sufficiently mainstream (the niche community they've built up there is good, but it can't attract the top executives/businessmen - while some Chinese nationals are wealthy, the local price movers are still in Hawthorn/Sth Yarra etc)
- far from key social infrastructure and employment opportunities (CBD, MCG, universities, key hospitals)
- not having good access to schools (why are people paying millions for a house so they can be close to a public school is beyond me)
- in general, far (last time I had to drive that far during 6pm, I was very angry as the traffic on freeway really builds up at that 15km-25km middle ring)
- not sufficiently mainstream (the niche community they've built up there is good, but it can't attract the top executives/businessmen - while some Chinese nationals are wealthy, the local price movers are still in Hawthorn/Sth Yarra etc)
It is the reputation of a very few public schools that attract the home buyers to get into that school zone. McKinnon is another such area. The scores their students are getting in their final year are comparable or better than many private schools. Think of the cost difference for one or two or more children over 6 years at a private school.
I would suggest Glen Waverley has a strong Chinese population mainly for this reason.
Main issue with Melbourne for IP's is low rent yields. For reasons I am not sure I have seen an adequate explanation for, it has been the capital city with the lowest rent yields. So for years where little capital growth is occurring, investor activity dries up but Melbourne folk are reluctant interstate investors, so there is always some activity.
I would suggest Glen Waverley has a strong Chinese population mainly for this reason.
Main issue with Melbourne for IP's is low rent yields. For reasons I am not sure I have seen an adequate explanation for, it has been the capital city with the lowest rent yields. So for years where little capital growth is occurring, investor activity dries up but Melbourne folk are reluctant interstate investors, so there is always some activity.
My first ever Melbourne property, 2505/668 Bourke Street, is back on the market, and serves as a reminder (if any needed) that mass produced CBD apartments are anything but an investment
http://www.realestate.com.au/property-apartment-vic-melbourne-116238663
Bought by me OTP Nov 2000, $423,000 (at Central Equity UK sales presentation)
Sold by me Aug 2007, $430,000
On the market Nov 2011, $589,000 (don't know if sold)
Back on the market now, $540-580,000
So assuming the vendor gets $560K, that's a CG of around 2% a year over 14 years ignoring buying and selling expenses. And while I owned it the net yield was about 3%.
http://www.realestate.com.au/property-apartment-vic-melbourne-116238663
Bought by me OTP Nov 2000, $423,000 (at Central Equity UK sales presentation)
Sold by me Aug 2007, $430,000
On the market Nov 2011, $589,000 (don't know if sold)
Back on the market now, $540-580,000
So assuming the vendor gets $560K, that's a CG of around 2% a year over 14 years ignoring buying and selling expenses. And while I owned it the net yield was about 3%.
The people making money from selling Melbourne apartments are:
1. Prime landowners (with an influx of developers/hotel groups, CBD land prices are so hot that the alleged "Wolf of Collins St" told a gathering the other day there are no land available and foreign listed developers can't get enough of them)
2. Real estate agents (0 risk, $20k per apartment sold. If you can sell 10 apartments per year, you've just made the average doctor salary probably with no university education)
3. Developers (slightly higher profit than agents, but with risk and headaches, usually heavily indebted; immensely low IRR if you can't get 30 storey+. Just heard a major developr [think major] needs to be bailed because of weaker sales than expected)
The people subsidising them are
1. Buyers (why pay $10k/sqm for "air" when you can buy land for $3-10k/sqm in the same suburb that can be built up)
2. Government (not collecting stamp duty on OTP)
1. Prime landowners (with an influx of developers/hotel groups, CBD land prices are so hot that the alleged "Wolf of Collins St" told a gathering the other day there are no land available and foreign listed developers can't get enough of them)
2. Real estate agents (0 risk, $20k per apartment sold. If you can sell 10 apartments per year, you've just made the average doctor salary probably with no university education)
3. Developers (slightly higher profit than agents, but with risk and headaches, usually heavily indebted; immensely low IRR if you can't get 30 storey+. Just heard a major developr [think major] needs to be bailed because of weaker sales than expected)
The people subsidising them are
1. Buyers (why pay $10k/sqm for "air" when you can buy land for $3-10k/sqm in the same suburb that can be built up)
2. Government (not collecting stamp duty on OTP)
Some perspective from a first time buyer on those suburbs: it's close to the city and not as expensive as other close in areas (kensington/north melb/fitzroy/armadale and so on). Most first time buyers can completely disregard the suburbs that they want to live in. It's about a suburb they can afford to live in that ticks other important boxes (in my case train access, proximity to CBD etc.)
