A Million Dollar Median For Melbourne!

[grand dad]

July 2014 has to be one of the best months in Melbourne's 137 year property history. According to RP Data, last month's price increase of 3.7% (in just one month!) is a sign of more good things to come. If it can be sustained, this equates to a potential 44% gain for the oncoming year.

http://theage.domain.com.au/real-es...llar-median-for-melbourne-20140801-zzjr9.html

With record low interest rates and no mining boom/bust to contend with, it seems as if Melbournites are headed for perfect conditions for Capital Gain for the next year or so.

Before skeptics disclaim this as another case of Dow 30,000 insanity, do consider that these sorts of economic events have occurred in the past. I can personally attest to seeing huge annual gains back in the late 80s, at a time when the Aussie economy was a lot less healthy than it is now. My elderly parents say the same of the 50s and 60s, when it was not unusual for sought-after suburbs to double every 3-5 years.

(For those who are interested, the Valuer Generals Office in Melbourne has an excellent library and is the first stop for corroboration if you want more retro information If someone manages to access the hard data online, please PM me).

 

[see_change]

In Sydney in late 80 's prices where we were living ( concord West ) doubled in little over a year .

Part of the reason I roll my eyes when they talk about the reason 15 % gains in Sydney as being a bubble ....


They doubled and they didn't come back.

Cliff

 

[BayView]

I don't believe the economy is as good as it gets reported by the media. Those blokes need to get out and about and talk to the wider community of Joe Blogses, and look at other factors such as jobless rates, comm vacancies, inflation levels, interest rate levels, small business lending and so forth.

How can houses double in a year if the majority of folks's wages are not going up and the jobless rate is on the increase? Of course; I'll be more than ecstatic if it occurs and make a few hundred Grand or so equity in a year...yay!

No doubt there will be some properties that will do it from one sale to the next, but across the whole community, the majority of homebuyers are mostly yer average Joe Blogs, who can barely make ends meet. They can't miraculously pay double or even 50% more for the same house in a few months than they can pay today

There will no doubt be areas which will do well - and mostly the in demand areas which will skew the figures upwards.

Then the media and the REIV - who always grab an opp to talk up property to stellar levels - will report the unbelievable boom.

 

[grand dad]

In Sydney in late 80 's prices where we were living ( concord West ) doubled in little over a year . Part of the reason I roll my eyes when they talk about the reason 15 % gains in Sydney as being a bubble ....They doubled and they didn't come back.[/B
Cliff

During the 80s, the Australian economy was a lot worse off than it is now. Unemployment and inflation were a lot higher and stickier than what they are today. Didn't stop the property market from rocketing to new (and sustainable) highs.

I don't believe the economy is as good as it gets .

Somewhat perversely, a slowing economy is good for property - particularly the lower end of the market. Why? Because it means interest rates will most likely stay the same or fall further. One needs to carefully look at historical precedents to see this ring true in the past.

I'll be more than ecstatic if it occurs and make a few hundred Grand or so equity in a year...yay! .

You have seen some hard times of late and I think any capital gain that you get will be well deserved.

 

[Deltaberry]

Actually the economy in Victoria is quite resilient, and I can only see positive trends for now. Government with strong budget, good infrastructure plans which will generate more economic value, relatively cheap land prices relative to most regions of this part of the world (except maybe Japan), faster than expected transition from long-dead industries (alumina, cars, refineries) to the future (education, tourism, health sciences, agriculture, professional services).

Obviously depends on what part of the city you look at. There's a booming population in the Melbourne CBD (population increased by 23% last year). 4 years ago, people thought $8000/sqm for prime CBD land is expensive. Today it sells for $25000-30000/sqm in prime locations. $20000/sqm in fringe locations. Naturally people think it's even more expensive today, even I do. But I see it at $40000/sqm in 3 years.

Different story out, for example, in the west where unemployment is highest (because people there tend to be manufacturing/blue-collar based, an industry which will all but disappear in 20 years), and apartments cannot sell.

Inner east is cheap. Hawthorn at $3.5k/sqm? If we people think this is expensive, they will be in for a big globalisation surprise. The only way Hawthorn won't hit $7000/sqm in 10 years is if Australia turns Nazis and goes to war with Indonesia, China, Vietnam etc, or they turn Nazi and go to war.

Anyway, analyses are interesting, like Steve Keen used to make, but the guy is probably poorer than most average Gen Ys who punted on some Sydney housing in last 2 years. That's my view on too much education.

 

[china]

I don't believe the economy is as good as it gets reported by the media. Those blokes need to get out and about and talk to the wider community of Joe Blogses, and look at other factors such as jobless rates, comm vacancies, inflation levels, interest rate levels, small business lending and so forth.

How can houses double in a year if the majority of folks's wages are not going up and the jobless rate is on the increase? Of course; I'll be more than ecstatic if it occurs and make a few hundred Grand or so equity in a year...yay!

No doubt there will be some properties that will do it from one sale to the next, but across the whole community, the majority of homebuyers are mostly yer average Joe Blogs, who can barely make ends meet. They can't miraculously pay double or even 50% more for the same house in a few months than they can pay today

There will no doubt be areas which will do well - and mostly the in demand areas which will skew the figures upwards.

Then the media and the REIV - who always grab an opp to talk up property to stellar levels - will report the unbelievable boom.

I think the economy is actually better than reported.

The average Joe is wealthier and has more disposable income than ever before.

Restaurants are always full.

House prices in Sydney are shooting up and when you see the frenzy at many Sydney auctions, you would think that money was being handed out.

Travel by aussies overseas seems to be a regular weekly activity.

And I can't see why these phenomenon wont continue.

 

[grand dad]

That Melbourne property will rise is fait accompli. . We don't need the boffins at RP Data to tell us that. But what suburbs will outperform? That's the hard question. Earlier this year RP data listed 10 suburbs - mostly unfashionable low-end laggards - that they claimed would outperform.

Personally, IMHO, I think that the sub $500,000 market will outperform the broader market. I refer here to older, established houses rather than units. Again, that's just my own opinion - others may well disagree. And before anyone claims I am a spruiker, be assured that I have plenty of "skin in the game" and am looking to accumulate rather than reduce.

I think the economy is actually better than reported.
The average Joe is wealthier and has more disposable income than ever before. .

In real terms, the average Melbournite is wealthier today than at any time in the city's 137 year history. And unlike the mineral rich states, there is no cyclical mining boom/bust mentality in Melbourne. The city is not dependent on China; it is awash with new immigrants, all of whom seem to be buying houses. The Chinese immigrants choose the more expensive suburbs, the Indians seem to prefer the cheaper sub $500,000 end.

Restaurants are always full. .

This is always a useful barometer.

 

[Spades]

I don't believe the economy is as good as it gets reported by the media. Those blokes need to get out and about and talk to the wider community of Joe Blogses, and look at other factors such as jobless rates, comm vacancies, inflation levels, interest rate levels, small business lending and so forth.

How can houses double in a year if the majority of folks's wages are not going up and the jobless rate is on the increase?

+1.

Unemployment is on the rise and jobs are being outsourced overseas,softening in the rental market etc is a useful barometer.

I remember walking off the streets in the 80's and getting a job,no problem.

Try doing that today

Cheers Spades.

Ps.Wait for alot more mortgage auctions as people lose employment and rates rise.

 

[grand dad]

I remember walking off the streets in the 80's and getting a job,no problem. Try doing that today .

You and I were a lot younger in the 80s!

Usually, the best jobs tend to go to youngish, energetic people. I have some highly talented friends who work in IT. They are in their 50s and struggle to find work when their younger compatriots are highly sought after.

 

[Spades]

Even in the 80's gd,older folk had no problem finding a job compared to today.

Cheers Spades.

 

[Deltaberry]

That's just a function of the place being more competitive. But employed people as an actual number (eg 2 million) is a lot more people than the 80s. Has the supply of housing in desired areas grown as much?

 

[TMNT]

That Melbourne property will rise is fait accompli. . We don't need the boffins at RP Data to tell us that. But what suburbs will outperform? That's the hard question. Earlier this year RP data listed 10 suburbs - mostly unfashionable low-end laggards - that they claimed would outperform.

Personally, IMHO, I think that the sub $500,000 market will outperform the broader market. I refer here to older, established houses rather than units. Again, that's just my own opinion - others may well disagree. And before anyone claims I am a spruiker, be assured that I have plenty of "skin in the game" and am looking to accumulate rather than reduce.



In real terms, the average Melbournite is wealthier today than at any time in the city's 137 year history. And unlike the mineral rich states, there is no cyclical mining boom/bust mentality in Melbourne. The city is not dependent on China; it is awash with new immigrants, all of whom seem to be buying houses. The Chinese immigrants choose the more expensive suburbs, the Indians seem to prefer the cheaper sub $500,000 end.



This is always a useful barometer.

When will the median of Frankston hit $1million??

A) 2 mins
b) 2 days
c) 2 weeks
d) 2 months
e) 2 years
f) what do you mean?? It already is!

 

[grand dad]

When will the median of Frankston hit $1million?? !

Don't mock our beloved bechside Frankie. It's lagged so far behind its only possible direction is up. Those who laugh last laugh the hardest.

 

[Spades]

That's just a function of the place being more competitive. But employed people as an actual number (eg 2 million) is a lot more people than the 80s. Has the supply of housing in desired areas grown as much?

Hiya Deltaberry,

Eg:2 million,can you give me an actual figure on people employed fulltime in realtime?

Btw figures are skewy as gubberment input people working casual,contract,part time,contract etc are only working what there given EG:10-20hrs pr week.

Has the desired areas grown as much?

Maybe yeah but hey let's forget the blue collar worker that builds a nation and are now shafted

 

[WattleIdo]

uh oh ....
Have you got Saturday night fever again?

 

[Fifth]

I remember the 1 million median being plugged for Melbourne years ago. I can't see it happening any time soon.

I never pay mind to monthly data or even yearly in some cases. Short term price fluctuations can result from a range of factors and sometimes the statistics simply do not reflect the reality. Many different figures can be given depending on who you ask eg. RP Data, APM, REIV etc. and the only way you can really judge prices is by following a submarket closely and taking into account all the various boring but real life factors that don't exist in the world of a Fairfax writer.

 

[Deltaberry]

Hiya Deltaberry,

Eg:2 million,can you give me an actual figure on people employed fulltime in realtime?

Probably not because I just enjoy high level discussion, not digging around data to post.

But from what I understand, we have roughly 4.3 million people. Approx 65% participation rate and 96% employment rate. 4.3m x 0.65 x 0.96 = 2.7m people (so I actually understated the number of people employed). In the 1980s, there were roughly 2.9 million people.

So my question is, has housing increased in line to keep up with this extra 1 million employed people?

Anyway these discussions are interesting, but doesn't matter whether I'm right or you're right. I'm just interested in making money, which is what real estate has allowed me to do last 24 months.

 

[Spades]

uh oh ....
Have you got Saturday night fever again?

No fever,just a celebration-the stars are aligning

Cheers Spades.

 

[Ausprop]

from long-dead industries ....to the future (education, tourism, health sciences, agriculture, professional services).

sounds like what we were doing in the 80s future industries because the rest are dead

 

[Intrinsic_Value]

Hiya Deltaberry,

Eg:2 million,can you give me an actual figure on people employed fulltime in realtime?

Btw figures are skewy as gubberment input people working casual,contract,part time,contract etc are only working what there given EG:10-20hrs pr week.



Maybe yeah but hey let's forget the blue collar worker that builds a nation and are now shafted

The reality is their nations are getting wealthier and they are spreading that wealth into other countries.

Some end up becoming 'locals' but still with those international contacts and monetary base.

Its a fact of life.

Whilst the west has been spending, the East has been saving.
Put that equation over a long enough time frame and their is a lot of money available to invest.

Its not Delaberrys fault
Its ours. Why? because our society is too dumb on the whole to understand that the underlying essential issue long term is wealth creation.

Wealth creation is not presented as 'cool' in western cultures. It is in Eastern cultures.

But Wealth creation fixes many problems. Because part of that wealth can be extrapolated for other causes. But you need wealth in the first place.