Do people think 2770 still has potential for growth???

[tpepper]

Hello,

I am a long time reader of the forums, first time poster.
I have been researching the prices of western sydney 2770 for some months and recently its gone crazy, do people think the prices have much more scope to grow?

This unit
5/9 gauss place sold for 210 k in 2007
then 210k in 06/13
then 260k in 09/13
and i dont think that person who bought it in june did much to it

then this burnt house sold for 295K
http://www.homesales.com.au/sold/5-gauss-place/hs567577.aspx

paying 300k for a weatherboard house in lethbridge park/tregear seems crazy to me.

one argument that seems sound to me is that prices are similar to 2003 but incomes have grown so much since then

I have a unit in a nearby area already with good yields was interested in a house with subdivision potential. was looking at adding a granny flat but fear there may be an oversupply and the yields aren't that great anymore.

just interested to know peoples thoughts?

 

[Shahin_Afarin]

Totally off topic but those places are riddled with Asbestos and people need to have super precautions when renovating.

 

[tpepper]

but cheaper than brick to knock down surprisingly

http://www.environment.nsw.gov.au/resources/warr/1086CostsOfDecon.pdf

 

[Shahin_Afarin]

Asbestos is more expensive to remove - you need to also factor prep and disposal costs.

 

[tpepper]

it would make sense that it is more expensive

do you know the approximate figure ie total to demolish for a small say standard 3 bedroom weatherboard/fibro house?

 

[Corey Batt]

Put the old fibro up for free on Gumtree and you might be lucky that someone will take it off your hands. $0 demo costs + you're 'recyling' a house.

 

[tpepper]

Thankyou cjay that's a much better idea. Maybe I should look for myself on gumtree for one. much cheaper than the ones currently with the western sydney premium!

 

[skater]

In answer to the original question. Yes! I think there's still growth to be had. There is so little stock & a huge amount of competition for it, that it has to keep pumping away for a while yet.

 

[Shahin_Afarin]

Put the old fibro up for free on Gumtree and you might be lucky that someone will take it off your hands. $0 demo costs + you're 'recyling' a house.

.....and the council will slap you with a $100k fine for not dismantling or disposing of the asbestos material in a safe manner.

Trust me don't go el cheapo on asbestos - the council takes asbestos extremely seriously and rightfully so.

Plus why one someone what asbestos material? It would work out cheaper to get the safe stuff.

 

[DaveM]

In answer to the original question. Yes! I think there's still growth to be had. There is so little stock & a huge amount of competition for it, that it has to keep pumping away for a while yet.

Yep especially when you have stuff like this

http://www.realestate.com.au/property-house-nsw-willmot-114751999
http://www.realestate.com.au/property-house-nsw-willmot-114789331

 

[see_change]

Hi Dave

so those would have gone for around 200 / 230 a year ago , or more than that ?

Cliff

 

[mini2]

There's still cheap stock around 2770 just that their condition is reflected in the price. Went to inspect 118 Aurora Tregear, absolutely shocker of a place asking $269-279k (? can't remember) and was sold first thing Monday morning. Every single person questioned "is the block really 750m2?" because it doesn't look like it at all.

 

[TMNT]

question: what is happening to the yields? if I recall correctly, a $220k house was renting for about $250-$270 in willmott for example,

now that they are selling for $270-$280k ish with rent of $250-$270pw,

surely considering investment cycles, the yield is making it unjustifiable,

eg I saw an arctile yesterday about some 1bdr run down selling for $700k in sydney, surely these wouldnt rent for more then $350 per week, however , yes people who buy in these areas dont care about yield

 

[tpepper]

The yields definitely are not what they used to be, some properties there even at todays rates are slightly negative. and vacancy rates are increasing in some parts.

One theory that i have heard a lot, is that its proximity to ropes crossing so investors would buy hoping for capital gain and hoping that the much bigger blocks of land will encourage people to develop there instead.

But knowing the history of the suburbs have people seen? or think that much new development is going to happen in the not too distant future in suburbs like tregear/letho?

 

[jaspn]

One theory that i have heard a lot, is that its proximity to ropes crossing

Dave and I had a good laugh at the massive chain link fence separating Ropes Crossing from the riff raff. It's kind of like "Stay in your jail and don't think about coming over here!"

 

[skater]

Hi Dave

so those would have gone for around 200 / 230 a year ago , or more than that ?

Cliff

Some were starting to ask mid 2's, but they weren't selling for that.

 

[skater]

question: what is happening to the yields? if I recall correctly, a $220k house was renting for about $250-$270 in willmott for example,

now that they are selling for $270-$280k ish with rent of $250-$270pw,

surely considering investment cycles, the yield is making it unjustifiable,

It's all part of the cycle. Expect yields to go down, while prices and vacancies are going up.

More & more investors & first home buyers purchase, meaning that there are fewer tenants and more rentals available. Less demand means lower prices. Over time, the vacancies get fewer, putting upward pressure on rents.

Last time around, at the top of the cycle, a crabby 3 x 2 would sell for $240-260k and rent for $175pw. Rents stayed that way for a while, then went mad, increasing at around $20pw each 6 months until they got to around $300pw.

 

[tpepper]

thanks for all your thoughts, this question has been asked in other posts as well.
http://somersoft.com/forums/showthread.php?t=90928
http://somersoft.com/forums/showthread.php?t=90526
http://somersoft.com/forums/showthread.php?t=85623

At this stage it really is a guessing game whether it will continue, but i think as soon as interest rates rise thats when prices will start to cool down soon. and we also can only try to predict when that will occur.

I wonder how people are funding these properties? that seem so overpriced surely the valuations are coming in low from the bank! Maybe they just have a large cash deposit and they don't mind paying the shortfall.....

 

[monalisa]

Last time around, at the top of the cycle, a crabby 3 x 2 would sell for $240-260k and rent for $175pw. Rents stayed that way for a while, then went mad, increasing at around $20pw each 6 months until they got to around $300pw.

Wow - such poor yield!! 3.5%! If yields are consistent this time round.... bring it on - looking forward to all the growth - yields are still 6% plus for some strata properties.

Though when I do the figures based on our current rents the numbers look crazy e.g. TH rented for $340pw, at 3.5% yield, val of $500K+. Recently purchased it for $265K - I do struggle to believe that it may go up to $500K!