I understand everyone has different needs, strategies and plans when deciding to buy a property. I would like to know, what would YOU do if you were in this position - single 30 years old currently renting and looking to buy a place (PPOR or IP) in Melbourne (preferably in the SE suburbs) at a maximum price of 450k.
First home buyer - Melbourne - what would you do?
- Thread starter chenderson
- Start date
i would buy what i could comfortably afford with an interest only loan with an offset account.
i would buy an established place not house and land or off the plan
i bought my first place when in a similar situation and age to yourself and it turned out pretty well.
Before the specifics, can I ask
* What lifestyle choices are driving you to move into a PPOR now?
* What financial factors are making you pursue buying a PPOR now?
* What lifestyle choices are driving you to move into a PPOR now?
* What financial factors are making you pursue buying a PPOR now?
let's just say that the maximum I'm willing to spend is 450k after taking account my saving, annual income, debts, and health condition.
Very good questions indeed, which is why I did mention everyone has different needs, lifestyle choices, etc. What would YOU do? Let's say you were earning around 81k a year, saved up around 150k, and didn't have any debt.
Thanks Bigtone for the reply, could I ask the reasoning behind your answers?
interest only and offset to keep your options open (possibility of upgrading and keeping as investment), provide a buffer and reduce mimimum committment
for example if you bought for $450k and borrowed at 80% ( i would borrow at 90%) but being more conservative at 80% the loan amount would be $360k
So 20% plus costs would be $110k approx. $7k from FHOG and $103k from savings. Leaves loan of $360,000 with $47,000 in offset.
Interest only repayments at 6% on $313,000 would be $1565pm, try and save as much in offset as possible above that figure.
Established becuase growth tends to be much higher and most fhb's get ripped off when tehy buy OTP or H & L
If it was me in this position I would buy a 2 bedroom unit in a suburb as close to the city as I could for $450k, but borrow 80% as I wouldn't want to pay LMI for a PPOR.
But this wasn't my situation at 30 so instead we got a H&L package in the western suburbs instead.
But this wasn't my situation at 30 so instead we got a H&L package in the western suburbs instead.
Melbourne currently has the worst yields in the whole country. What would I do? Continue renting, save as diligently as possible until yields returned to normal levels.
Melbourne price have fallen quite substantially in some areas and there are still signs the bottom is far from in. Consider that:
http://www.bullionbaron.com/2012/06/chart-guide-to-melbourne-property-crash.html
- Prices boomed by an unsustainable 35% over 2009/2010
- Stock on market is above GFC highs and around equal to record levels
- Sales volumes have collapsed
- High levels of new construction will add to oversupply
- Supply glut of new apartments not due to peak until next year
- Vic net mortgages actually fell in May (more mortgages discharged than created)
- Prices have fallen over 8% past 12 months, over 10% since peak and falls appear to be accelerating
- Even after above price falls yields are shockingly low from historical view and compared with other Oz cities
- Property vacancies are estimated to be around 2.5x REIV's figures based on water supply usage
Of course not every suburb can be summed up from the average/median view of Melbourne outlined above, so it would pay to investigate the specific suburbs you are looking to purchase in.
If it were me and I felt the need to purchase even with overpriced levels I would:
- Purchase with a min 20% deposit to avoid LMI
- Ensure I had a cash buffer on top of this
- Take out income protection
- Lowball vendors bigtime given the current environment
- Avoid apartments/new builds which have been churned out last couple of years
Goodluck!
Melbourne price have fallen quite substantially in some areas and there are still signs the bottom is far from in. Consider that:
http://www.bullionbaron.com/2012/06/chart-guide-to-melbourne-property-crash.html
- Prices boomed by an unsustainable 35% over 2009/2010
- Stock on market is above GFC highs and around equal to record levels
- Sales volumes have collapsed
- High levels of new construction will add to oversupply
- Supply glut of new apartments not due to peak until next year
- Vic net mortgages actually fell in May (more mortgages discharged than created)
- Prices have fallen over 8% past 12 months, over 10% since peak and falls appear to be accelerating
- Even after above price falls yields are shockingly low from historical view and compared with other Oz cities
- Property vacancies are estimated to be around 2.5x REIV's figures based on water supply usage
Of course not every suburb can be summed up from the average/median view of Melbourne outlined above, so it would pay to investigate the specific suburbs you are looking to purchase in.
If it were me and I felt the need to purchase even with overpriced levels I would:
- Purchase with a min 20% deposit to avoid LMI
- Ensure I had a cash buffer on top of this
- Take out income protection
- Lowball vendors bigtime given the current environment
- Avoid apartments/new builds which have been churned out last couple of years
Goodluck!
I would have to partly agree with hobo-jo although Im not sure on his "normal level" of yields. I too, purchased my first house at about 28 and as with bigtone, it hasnt turned out that bad
I'm looking for something small myself in inner bayside and I'm seeing 0% decline from a few years ago for little houses. Flats I think have come off, so again when people talk of "Melbourne's property has declined" they haven't been looking in Albert Park for a little single fronter that needs work.
My advice, from someone who fully owns a 2 yr old family house in a primo suburb in Melbourne financed largely from property investment, is to buy the biggest piece of land you can with the crappiest house as close to the city as possible. It may mean living in a dump, but if you buy a house that's as close as possible to land value, it gives you more opportunity to find CG in the future. Generally, land goes up, houses go down...
No need to rush but you need to do you DD and get up to speed with land values per sqm for your chosen, tiny plot that you are focusing on. Then you know when something is cheap and where values are headed...if you look at sales over a few months for example.
I bought a dump for my first house, just 100m down the road from the block actually and the kitchen had not been touched in 50 years as was the other part of the house. It had the old firewood stove even. After a small reno, I sold it, borrowed a whole lot more to buy a few flats which in hindsight was a dumb dumb decision.
I would have to partly agree with hobo-jo although Im not sure on his "normal level" of yields. I too, purchased my first house at about 28 and as with bigtone, it hasnt turned out that bad
I'm looking for something small myself in inner bayside and I'm seeing 0% decline from a few years ago for little houses. .
Hi pieman
http://www.realestate.com.au/property-house-vic-albert+park-110658329
Bought this house for mid $80k's in the late 80's, spent $8000 on reno. and sold it for $135k 3 months later.
Looks like it hasn't been touched since, would be a bit tired now.
Was told by gloomers then that prices were to expensive and would stop going up.
Still holding a number of properties in the lowest decile in bluechip areas and not seeing much of a drop in these prices.
i think you will find albert park was among the biggest drops in melbourne over the last year in terms of price.
without question - it's really nice place to live.
without question - it's really nice place to live.
Nice one Turk
I got allot of the "you're mad borrowing that much on your salary" it was after all 7 times my gross
and "they"ll never go up much, no one can afford to pay more than 200k for those little houses"
Of course you try not to listen to those people, but its hard when they're in the same family
Hi Melbournian
In terms of median it have been one of the biggest drops, but with a small number of properties being sold the number is easily skewed, plus as per my post I am referring to the lowest decile of housing.
I also picked up houses in this area 1994/95 in the $125,000/$145,000 range and once again was told how silly I was, they were over priced and could not go up, now valued in the $850,000/$1,000,000 range.
Picked up property in Brighton in Oct. 2008, reoe'd and now after dropping in value still worth around 45% more than buy+ reno. cost.
Another stupid move according to gloomers.
Boom-Tish Y-man aka town and country...Need i say more...
i would keep renting, in fact its what i do ... its a huge hit to ego and lifestyle not being able to clean up the bathroom and the stigma associated with renting but seriously i am now onto my third rental place because lifestyle needs keep changing, not once have a lived somewhere that the yeild was even remotly worth while for what i would have to spend to get into it now.
I have purchased several places outside of this as IPs but not in areas i want to live in.
I have purchased several places outside of this as IPs but not in areas i want to live in.
Thanks guys for your input, and as I've expected there are so many different suggestions from different people...I understand this is a very vague question, so I would like to narrow it down a bit...
What would YOU do, given the same financial situation described earlier, but with these goals in mind:
1) Want to buy PPOR which could be later transformed into an IP
2) Looking at a term of 10 years
3) Looking to buy in SE suburbs of Melbourne - around 20-30 kms from CBD
4) And most importantly, something that will gives me the most financial benefit after 10 years.
thanks again...
What would YOU do, given the same financial situation described earlier, but with these goals in mind:
1) Want to buy PPOR which could be later transformed into an IP
2) Looking at a term of 10 years
3) Looking to buy in SE suburbs of Melbourne - around 20-30 kms from CBD
4) And most importantly, something that will gives me the most financial benefit after 10 years.
thanks again...
