Deer Park - Write Up

Hi- Great stats by both Jake & JP (though conflicting views were expressed)!

To repeat myself, my only point is that with a budget of $450k, I would not have many choices and will be forced to look at suburbs such as Deer park, Ardeer etc.,

Any other areas to consider?
 
To repeat myself, my only point is that with a budget of $450k, I would not have many choices and will be forced to look at suburbs such as Deer park, Ardeer etc.,

Any other areas to consider?
$450k I would strongly consider a 3-bed new townhouse in Sunshine, Braybrook, Albion for CG (Braybrook had 12% CG in 2014, for example...which followed 2012 drop and 2013 small gain)

I would look in Maidstone or West Footscray for 2-bed Units for $450k

I'd also consider apartments in Kingsville, Yarraville, Seddon for around $450k (2-bed...I'd look at $350k for 1-bed)

That's just me, I like those suburbs ahead of Deer Park.
 
As I mentioned in another similar thread today, have a look at Flemington, Kensington, Ascot Vale, Brunswick and Coburg. You're obviously not going to get a 3 bedroom detached house but what you buy will have better prospects IMO. I'd lean towards an established property that you can add value to rather than a brand new place.
 
A couple of transport points not mentioned is that though Melton rail electrification is a long way off, there's Regional Rail Link starting later this year. This will likely provide many more trains and make Deer Park more.

Also a revamped bus network for the area started last year. Details at http://ptv.vic.gov.au/assets/PTV/PTV docs/Proposed-Brimbank-area-bus-network-information-flyer.pdf

Areas near Station Rd were the biggest winners with more direct and more frequent buses to Sunshine and Watergardens.

Deer Park (especially Deer Park North) seems to have a high older population. We know death rates increase with age and there may be a high turnover of properties and demographic change. Younger and/or migrant families may be the area's future.
 
$450k I would strongly consider a 3-bed new townhouse in Sunshine, Braybrook, Albion for CG (Braybrook had 12% CG in 2014, for example...which followed 2012 drop and 2013 small gain)

I would look in Maidstone or West Footscray for 2-bed Units for $450k

I'd also consider apartments in Kingsville, Yarraville, Seddon for around $450k (2-bed...I'd look at $350k for 1-bed)

That's just me, I like those suburbs ahead of Deer Park.

I wouldn't be buying a townhouse in sunshine or deer park. Why spend 450k on a townhouse when the same money buys an affordable family home in the area?
For 450k I would buy a townhouse in an area with greater demand for such, like pascoe vale or coburg.

Better strategy if buying a house is what you want and 450 is all you can afford, land bank here until the figures do stack for you to develop on. There may well be better cg elsewhere but maybe it is worth doing any opportunity cost analysis of buying now for 450k with X est cg, vs the time to save additional deposit to buy property worth say 550k and then cg on that. It may only be a year and a half and you would be in front by waiting. Very much an academic exercise but food for thought none the less.

Myself when I was 23 bought my first IP in deer park at the peak of boom in 2009/10 I was getting priced out of too many areas and it was all I could afford as a grad. I had it revalued last month and fast forward 4.5 years it's gone up 10%.
Would I have bought it again, prob not.. But it was a step in the right direction anyway.
 
Jake the Hake...I must respectively disagree.....look at what has happened to Sunshine.

In 2005 you could buy for 180k for a 3 brm home...10 years later you struggle to get in for 450k.

I see Deer Park going down that route...

Unfortunately....a lot of buyers agents just want to buy in the blue chip suburbs...they are missing the wood from the trees.:confused:

Hi Guys,

Mentioned this in another thread thought I'd post it front page for future searches.

Investing in Deer Park.


Let me first say, I'm personally not a fan of Deer Park as an investment area but I understand that you, as an investor will come to your own conclusions and as such I'll attempt to present to you some facts and thoughts for your consideration so that you can, at the very least, make a more informed decision.

New to investment introduction:
For me and many investors, capital growth is the main prerogative for investing in real estate as it's the only aspect that compounds over time and thus is the most powerful form of wealth creation.

With growth being considered first and foremost it's important to note that it's not "land" that appreciates over time it's the peoples', or the market's perception that appreciates in any given area more (or less) over time.

Market perception is the only thing that moves prices up or down.

Supply and demand is the fundamental mechanism that turns market perception into quantifiable house prices. The more people that want a particular area/street/house/unit the more they'll have to pay to secure it.

Market perception can be manipulated too. For example interest rates are a way of controlling how affordable people perceive properties to be at that time.

When investing it's important to understand whether an area is genuinely growing due to a good market perception or if there are other factors manipulating the capital increments.

Many people now think that they've bought in a great area as their properties have grown well since 2011 when coincidentally interest rates started dropping at the same time. When rates go back up, will those areas still be desirable enough to sustain growth or will they be stunted or even go backwards?

So what does Deer Park have going for it that the market will perceive to be desirable?

First we need to understand who lives there... Who makes up that market?

Demographic
  • 45% Australian born
  • 70.4% Both parents born overseas
  • 59.7% Work Full-Time
  • 43.9% Are blue collar workers
  • 67% Drive
  • 4.5% Catch the train
  • 45.7% Have children
  • 66% Live in 3BR Houses
  • 22% Live in 4BR Houses
  • 67% Own/Buying Houses
  • $384/wk median mortgage
  • $270/wk median rent

Source: http://www.censusdata.abs.gov.au/ce...11/quickstat/SSC20380?opendocument&navpos=220


From this we can ascertain that the majority of people here find this area desirable if they:
Have immigrated;
Are blue collared workers;
Don't need to commute into the CBD;
Want a good sized house;
Want somewhere to raise children (consider schooling, parks, children activities);


So what are the types of things that will make this area more desirable to existing residents:

Local blue collar jobs;
Good schools;
Safe environment for children;
Stable area for family;
Supermarket for family food;
Cafes/Restaurants;
Adult activities;
Good roads;
Access to services such as hospitals;
English learning services.

Also consider, what would everyone else (outsiders) want in an area?
I won't list these here as there are many things.

What does Deer Park have now to ensure that desirability stays?
One Secondary College
Four Primary Schools
Jobs at nearby factories/industrial areas (e.g. Orica)
Coles Supermarket
Restaurants/Cafes (Ballarat Rd & Brimbank)

Source: http://en.wikipedia.org/wiki/Deer_Park,_Victoria , http://www.brimbank.vic.gov.au/Homepage_Links

What is happening to increase desirability?
Please note this is for all of Brimbank:
  • $16.9 million on road works
  • $5.28 million on sports facilities
  • $2.1 million on sustainability projects
  • $1.3 million for playgrounds, parks and gardens
  • $1.76 million on traffic management
  • $23.75 million on community facilities
  • $4.94 million for walking and cycling pathways
  • $0.89 million on town centres
  • $0.23 million for drainage rehabilitation


What is working against desirability?
  • Maximum security female prison
  • Chemical production and storage
  • Pacific/Australia/Deer-Park
  • Crime (Prisons mean prisoner's families may move close by):
  • Low population growth: 3.48% Growth from 2015 - 2045
Sources:
http://en.wikipedia.org/wiki/Dame_Phyllis_Frost_Centre
http://www.abc.net.au/news/2014-01-27/man-found-dead-on-road-in-melbourne/5220018
http://www.abc.net.au/news/2014-12-14/fatal-crash-linked-to-discovery-of-body-in-deer-park/5965966
http://www.police.vic.gov.au/content.asp?a=internetBridgingPage&Media_ID=72178
http://www.orica.com/Locations/Asia-Pacific/Australia/Deer-Park#.VRlAPfmUeVo


What else will effect future house prices?
Zoning and planning
Land Supply
Housing Supply: http://profile.id.com.au/brimbank/building-approvals / http://forecast.id.com.au/brimbank/residential-development
Job creation
Infrastructure & development: http://www.heraldsun.com.au/leader/...-melbournes-west/story-fngnvmj7-1226928478665


GROWTH SUMMARY
If future projects go ahead there may be a glimmer of hope for great growth in Deer Park. There's been talk of an electric rail line but the area is such a safe labour seat it's unlikely that will move forward. Also gentrification of industrial areas is being considered but this won't be ratified until ~2017.

Currently there are no major projects, population growths or substantial increments in accessibility and lifestyle amenities to move this suburb from a cheaper working class family area into a suburb in which the whole market finds desirable.

The suburb faces socio-economic and language barrier challenges, also higher murder and rape crime rate problems which will repulse the single female market. (Compared with Melbourne's highest single female population areas). Council is working on this problem with community facilities.

There is lack of transport into the city which will deter younger people who wish to have nights out and also CBD commuters (although the V-Line does run regularly http://ptv.vic.gov.au/timetables/linemain/1728).

The council is actively trying to make the area more appealing for children so there may be more scope for young families who want to own a house rather than renting. This area will not attract people who desire private schooling however (1.2% currently attend private institutions).

There is scope for gentrification and subdivision to occur in three GRZ3 areas which may increase nearby RZ1 area house prices: http://services.land.vic.gov.au/maps/pmo.jsp
Housing approvals in Deer Park however are not as exciting as Sunshine and Sunshine West (both of which are better for renovate/development investors).

There are high risks to capital growth in Deer Park. These risks are mainly the huge amounts of available land available for developement in neighbouring Derrimut and Ravenhall which could easily over saturate the stock levels of residential real estate as the population growth is not growing aggressively.

In summary this area would be expected to perform worse to equal with Greater Melbourne in the range of 1-3% for units and 1-4% for houses over the next 5 - 8 years.



What to buy
If you want to purchase in Deer Park buy what the majority of the market wants to live in as a home. In Deer Park that primary market desires 3 bedroom houses.

  • 90.4% (4,845) of properties in Deer Park are detached houses;
  • 6.1 % (325) are units.


If you're considering buying a unit here, stop. Think about this:

When it comes to resale time you only have a niche or minority of the local population that would consider purchasing a unit as a home. Having a large pool of potential home buyers is key in attracting future emotional results during the sales cycle for extra profit.

Also, only 14 unit transactions occurred over the last 12 months
(source: http://house.ksou.cn/profile.php?sta=vic&q=Deer Park)
This means a unit in Deer Park is more illiquid real stock than in other areas like St Kilda where units are traded regularly.

Source Investopedia: "The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity."

In short, it is more likely to be difficult to sell that unit quickly or to have an outstanding recent comparable sale to get a good bank valuation from in the future.

TLDR; (Too long didn't read); If you're certain you want to invest in Deer Park only buy a 3 Bedroom house.


Look for a decent brick house (again 3BR) on the North Deer Park side near Coles and North Deer Park Primary. Make sure it's in the Residential Zone 1 planning scheme. Good example streets to consider are: Amelia Ave and Ambon Ave.

The train station at this point in time is irrelevant as only a minority commutes.


I hope this helps anyone considering this area.
 
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Jake the Hake...I must respectively disagree.....look at what has happened to Sunshine.

Though to be fair, despite its rough reputation, Sunshine is nearer to vastly more services than Deer Park.

Eg electric trains every 20 min (as opposed to 2 hour gaps currently at Deer Park), a university campus at Sunshine and proximity to bigger campuses at Footscray, nearer the CBD, more jobs close by, it's a seat of local government. Plus it's had more infrastructure projects eg railway station rebuilding and council projects.

Sunshine has much derelict and underused land around (even within 1-2km of the town centre) it but not as much as the empty land around Deer Park (mostly industrial).

Enjoy this! http://www.heraldsun.com.au/news/vi...nes-sunny-suburb/story-fnkd6ppg-1226846852642
 
I agree with Spiderman, I've always been a fan of Sunshine despite its challenges and have shared information on that suburb in several threads.

Many BA's do prefer Blue Chip and yes to an extent so do I but they don't suit everyone so all areas must be researched. I've looked into Deer Park extensively and for me there are other areas with the same price point that have fundamentals that are likely to contribute to a higher capital growth rate.

More than happy for you to disagree though, thanks for your thoughts!
 
Hi jp

Source for this?

I know the area but don't live there...

Don't know anything about it and nothing against deer park but if it happens it will probably be an eyesore

Just like every other new shopping/ dining hub they build these days

A massive carpark surrounded by a few large chain stores, a charcoal chicken, pizza , sushi and a cafe which looks out of place

Id like to be proven wrong

A street design works best, cars out the back somewhere
Not sure why councils don't think about this sort of stuff
 
A street design works best, cars out the back somewhere
Not sure why councils don't think about this sort of stuff

They often do but developers tend to go for the 'big box' car oriented pattern and tell council that street designs don't work.

Especially as people in new estates are typically 2+ car households and street layouts are hostile to walking.

Having said that there are some newer areas that have sought to replicate a 'main street' environment (such as found in inner or middle suburbs which have experienced high capital growth).

Eg Caroline Springs, Laurimar and Point Cook Town Centre are attempts at this.

Also see http://www.acnu.org/wp-content/uploads/data/acnu-congress-2010/FRIDAY/Kaufman.pdf
 
Great post Jake. My friend bought a 3-bedroom house in Deer Park in the 2010 peak and needed to sell it in early 2013, losing quite a lot. Are you doing a write up for Maidstone? I am thinking about buying PPOR there.
 
Hi

Hi,

This is a great read because every one has different opinions.

It always shows us that we can all make different in different areas at different times.
 
I've looked into Deer Park extensively and for me there are other areas with the same price point that have fundamentals that are likely to contribute to a higher capital growth rate.

Hey Jake, thanks for the write up. A lot of effort to discount an area though? What area did you buy your last investment property in?
 
I wouldn't be buying a townhouse in sunshine or deer park. Why spend 450k on a townhouse when the same money buys an affordable family home in the area?
For 450k I would buy a townhouse in an area with greater demand for such, like pascoe vale or coburg.
I know nothing about Pascoe Vale or Coburg, from an IP perspective that's why I chose not to mention those suburbs.

If you read my post again, you'll see I was never advocating to spend $450k on a townhouse in Deer Park. Not sure why you thought that...

I still maintain a Sunshine purchase is a much smarter choice than Deer Park, for $450k. That's all I was getting at.

And yeah, everyone has their own opinions, which is the beauty of it all.
 
I know nothing about Pascoe Vale or Coburg, from an IP perspective that's why I chose not to mention those suburbs.

If you read my post again, you'll see I was never advocating to spend $450k on a townhouse in Deer Park. Not sure why you thought that...

I still maintain a Sunshine purchase is a much smarter choice than Deer Park, for $450k. That's all I was getting at.

And yeah, everyone has their own opinions, which is the beauty of it all.

I agree on Sunshine over DP also
 
What a terrific detailed post Jake. Made for excellent reading and very informative. Do you have anything similar for st kilda east?
 
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