Melbourne purchasers beware!

[Weasil007]

Auction clearance rates to me measure the pulse/mood of the market, it does not necessarily have direct causal relationship to prices. And yes, the measure in itself is not perfect, but the trend is, which is clearly above last years rates and maintaining. In all likelihood, the clearance rate will be adjusted downwards as all results are submitted, as has been the reality for the past few months, but maybe a couple of % points.

http://www.rs.realestate.com.au/cgi-bin/rsearch?a=ars

Why not use RP Data results at 57.5% ? Different results from different sources on supposedly the same events (auctions). If there is a discrepancy then which source do you use? For such an important indicator I would have thought we have one regulated provider who works on a standard reporting method each week. Take the REIV figure of 1053 auctions with 690 selling and 363 being passed in. Of the 690 sold 99 were sold before even GOING TO AUCTION. But these 99 sales count toward the auction results
How can you take an auction result report and effectively judge it on it's merits or compare week to week or month to month when a variable like pre-auction sales is included in the overall result

 

[euro73]

With a population of that size, its only going to be the inner city areas that are going to see volatility, and thats because of a huge over supply of units coming to the market between now and 2014. Besides that, Melbournes not being heavily oversupplied in other areas so the market should stay fairly stable

 

[gronk007]

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.

Same here my boring 2 bedroom unit in the Eastern Suburbs as re-valued $40K in the last 18 months.

If you take out CBD, Docklands, South Wharf glut, I think it's a different story.

 

[euro73]

A tale of two cities....

A completed 24 Unit NRAS development in Rosehill (near Parramatta) had the first open inspection yesterday. Between 1pm-2pm , 20 deposits taken! Only 4 Units left.

 

[TMNT]

just thoguht id share, is this a typical case of OTP buyer beware?

http://www.realestate.com.au/property-apartment-vic-south+yarra-107382246

1bdr from $375k, OTP 77 River south yarra

yet on the same page

http://rexapp15.rexsoftware.com/external/listingdetail.php?id=67835&oid=283&type=sale

$279k for 608/77 River st, with no car park?

$100k loss! even if $375k includes a $50k carpark, ouchy!

 

[Aaron_C]

South Yarra and Richmond are pretty crap right now for apartments. Just too many.

 

[TMNT]

South Yarra and Richmond are pretty crap right now for apartments. Just too many.

im not too familiar with that type of market, but are we comparing apples and apples???? $375k OTP which agents are STILL selling OTP as we speak to a completed one for $275k is absolutely mind boggling!!!

 

[Aaron_C]

im not too familiar with that type of market, but are we comparing apples and apples???? $375k OTP which agents are STILL selling OTP as we speak to a completed one for $275k is absolutely mind boggling!!!

Problem with Victoria is that all the OTP are sold to the overseas investors who have no clue what they are doing and overpay. Now when the apartments are completed they are no longer new, can no longer be sold to foreigners so the local market gets saturated. Can see this from a mile away.

 

[S.T]

im not too familiar with that type of market, but are we comparing apples and apples???? $375k OTP which agents are STILL selling OTP as we speak to a completed one for $275k is absolutely mind boggling!!!

I think there's some very small studio's in that developement that have wall fold-out double beds even. Maybe it was one of them? They're tiny.

 

[strongy1986]

There's 2,500 apartments going up in Victoria st Abbotsford as we speak.

I think land is the way to go in Melbourne these days. With the ratE everything is going upwards I see apartments as a high risk investment! Even more so than a mining town.....!

Maybe just have to wait until they have built up every bit of available land and then it's off to the races

 

[one world]

Problem with Victoria is that all the OTP are sold to the overseas investors who have no clue what they are doing and overpay. .

Plenty of people have been diddled, its a disgrace.

 

[Deltaberry]

Like all things there are niches within niches. If all you're doing is buying apartments off realestate.com.au, you won't get a good deal.

That said, recent friend of mine was offered 2 floors of apartments in the CBD at a cost marginally above development cost (note building is already finished, just missing interiors). Developer needed to recoup costs quickly. That's where there's profit to be made. He bought the shops at the bottom instead.

A good friend of Aaron_C's once offered us a deal to take his apartments in inner city at cost, which is obviously some 20% yield (again already built). The flipside was he needed us to bail him out of a development that hits the newspapers every now and then. We didn't want the development so he wouldn't give us the apartments.

 

[BayView]

Plenty of people have been diddled, its a disgrace.

How so?

No one holds guns to folk and makes them buy any property.

Those O/S investors or would-be future residents don't need to buy here; there are plenty of other Countries to invest in, or they can rent when they move here and buy later when they know the area better if they wish.

The onus is on the purchaser to make sure they are paying the correct price...this applies to all purchases in life.

 

[dog]

I must say, very nicely said...

It amuses me on reflection, that the same accusation of those so-called 'perma bulls' is that they negate, devalue data or evidence to suggest the flat or falling markets. The same applies to the 'perma-bears', if I can use the clumsy non-descript collective noun.

The reality is Melbourne market is still fragile, and from mid 2010 to mid this year was heading south. However, what is also clear is there here has been a definite change in the numbers on the ground for the past 2-3 months. That does not imply a booming market, but it does provide a clear point of difference in the overarching doom mood/status that has been attributable to property in the mainstream media for the past 2 years.

Auction clearance rates to me measure the pulse/mood of the market, it does not necessarily have direct causal relationship to prices. And yes, the measure in itself is not perfect, but the trend is, which is clearly above last years rates and maintaining. In all likelihood, the clearance rate will be adjusted downwards as all results are submitted, as has been the reality for the past few months, but maybe a couple of % points.

I will listen to the evidence provided by all parties, irrespective of their bias. But will dismiss emotionally charged advice from technocrats, self-appointed experts and those who generally repeat a paragraph or smart sentence they picked up from some blog, internet article that sounded 'right' to them.

So in response to Melbourne purchasers beware, I would counter, Melbourne purchasers & sellers, be alert not alarmed.......

 

[euro73]

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.

The credit environment was much different then, and prices were coming off a lower base than in 2013. So while the concept you are suggesting is sound in principle, it's unlikely the "ride" will be the same... we all need to realise that the credit boom is over, and because of that, compounding high single digit or even double digit growth isn't likely to coming back anytime soon. You'll get growth, but it will be more constrained, less consistent, and slower to happen.