First Property Areas in Melbourne

Hi All,

Im currently starting out looking for my first family home, and looking for some advice on my first steps.

I've already saved $200k with currently on a single income 65k before tax . So Im guess with my first property I should keep it at about $500k or under region as its my first experience. I think I should do a $150k deposit and keep $50k in a high interest account linked to my mortgage to helpout with repayments and for emergency use.

I've narrowed down my search so far to the following suburbs, Hoppers Crossing, Rowville & Scoresby. Any other suburbs I should be looking at?

I know the east is far better for family environment (I intend on getting married in 1 to 1.5 years) but Im attracted to the pricing in Hoppers Crossing and since Point Cook has already reached its potential pricing I think hopefully Hoppers Crossing should grow in the long term and all the growth should be concentrated in the west in the future.

I was kind of thinking buying a place in Hoppers Crossing pay it off as quick as I can and try to move onto a 2nd property.

How does that logic sound? Im kind of tossing up if I should first buy a house for investment/experience purposes then move onto a 2nd house for raising a family or if I should just go straight into a little bit more expensive property thats suited for family life first

Im a newbie so I really appreciate other ppl's experience
 
Hi Darkage,

Congratulations on being ready to buy your first property.
I love the south east growth corridor.
But if you're going to live there doesn't where you want to live matter?
I'd start with working out that first.
And I'd also consider a buy and renovate if you have a view to holding, because any capital gain is tax free for your PPOR.
Good luck with it!

Cheers, Medine
 
Well done Darkage on saving such a big deposit!

Buying at 80% interest only with the other $50k in offset account sounds perfect to me.

While is will be your home it will be your biggest asset so the growth is vitally important to your future wealth.

I wouldn't touch Hoppers Crossing or area area where lots of new development is going on. With $500k you can get into Chelsea, Carrum, Bonbeach, Seaford, established areas and beachside suburbs as well. That's where I would buy.

Good luck!
 
Im currently starting out looking for my first family home, and looking for some advice on my first steps.

As others have noted, please help us get an idea of what makes a family home for YOU.

For example, looking for somewhere where you can hang donuts all afternoon is different from say a street full of retirees and empty nesters.

Cheers,

The Y-man
 
Hi
I live in lysterfield. love the area my self
when I looked for a home to live in the most important thing to me was not that will make me the most money but that will make my family the most enjoyment.
investing was not a intrest untill 2 years ago for me.
however you have done a great job saving that much money and can buy in almost all the good home starting areas and still have money left over to invest in a few years.
hope all goes well
I do not know anything about hoppers at all so cannot guide you in that area only know about eastern sub with all the transport areas so no help on that one
 
If you are considering Rowville, you should also consider Endevour Hills. It's near the freeway, has good bus access to Danendong station and I feel that it's a great area to raise a family. Rowville seems to be a tad too car dependent for my liking. (Endevour Hills is also heavily car dependant, but at least it has a bus link to the station.
 
If you are considering Rowville, you should also consider Endevour Hills. It's near the freeway, has good bus access to Danendong station and I feel that it's a great area to raise a family. Rowville seems to be a tad too car dependent for my liking. (Endevour Hills is also heavily car dependant, but at least it has a bus link to the station.


Rowville is car dependent. There are ample buses, however. My issue using the train line at Dandenong as a selling point is its safety or lack thereof. I hear they're introducing metal detectors and police presence but as it stands, I feel very nervous at Dandenong station - particularly at night.
 
Nice deposit !

On a 500K purchase consider putting down 100K deposit (20 % thereby avoiding LMI)) and take out an interest only loan for the balance. Put the rest of your cash into an offset, your interest repayments will be the same as a larger deposit but you will have the flexibility to

  • switch the property to a rental down the track and maintain maximum tax deductibility
  • use the cash as a deposit on another property once you catch the bug and want to buy again

You don't have to do those things but you will be able to if you want to.

Wokka (novice)
 
If you you saved 200k surely you can afford better areas? That is a huge deposit. What is the fiancee's income like? I would probably be thinking about the two combined if you will be getting married soon.

Would be tryong to spend 700-800k personally could probably buy in Blackburn or Doncaster, good family areas not so far from the city with better schools/transport etc. (house would probably be pretty average though).

I was kind of thinking buying a place in Hoppers Crossing pay it off as quick as I can and try to move onto a 2nd property.

How does that logic sound? Im kind of tossing up if I should first buy a house for investment/experience purposes then move onto a 2nd house for raising a family or if I should just go straight into a little bit more expensive property thats suited for family life first

I think with areas like Hoppers Crossing, Rowville etc once you are in it is probably going to be very hard to get out in terms of getting priced out of better areas. If you really don't want to be in those areas then I'd be thinking about things very carefully.
 
Great advice Wokka1.

Nice deposit !

On a 500K purchase consider putting down 100K deposit (20 % thereby avoiding LMI)) and take out an interest only loan for the balance. Put the rest of your cash into an offset, your interest repayments will be the same as a larger deposit but you will have the flexibility to

  • switch the property to a rental down the track and maintain maximum tax deductibility
  • use the cash as a deposit on another property once you catch the bug and want to buy again

You don't have to do those things but you will be able to if you want to.

Wokka (novice)

I think your advice is spot on as that will allow maximum tax benefits and maximum flexibility. Having a higher loan on your PPOR than your investment makes good financial sense.

I was recently advised by a very cluey mortgage consultant to structure the loan in a similar manner for an investment property purchase. The loan structure would be set up in 3 parts as follows: 1) PPOR, 2) Deposit amount for the investment property purchase which equates to 20% of its cost to avoid mortgage lenders insurance plus conveyancer fees plus stamp duty, and 3) The 80% loan balance for the investment purchase.

This arrangement allows you the freedom to purchase something either in the short to medium term (3 months to 2 years) but would also mean you pay no interest on the 2nd part of the loan until it is actually used. It also assists families that have a sole income earner. The only fly in the ointment is that parts 1 & 2 of the loan structure are with one bank (and on a relatively competitive low interest rate) with the 3rd part of the loan being with another bank (such as Bankwest which will charge a higher rate of interest).

However as I was advised the higher interest rate component should not deter our thinking of jumping into the market since property has and always will perform well.

That's my 5 cents worth.
ed1976.
 
I think that Hoppers Crossing is very under-valued. I am sure a lot of people of this site disagrees. I am also biased in the sense that I own houses in Hoppers Xing and Werribee....I bought these for 170k and 130k in 2006....they are now 280-290k and 240-250k respectively. You be the judge as to whether you will get growth?? Houses in the South East worth 450-500k in Southeast are now about 700k...in Frankson/Seaford they have performed better stuff worth 240k are now worth 350k. In percentage (real growth terms) Hoppers Xing has out performed.

The trick is to buy the older houses for say 250-260k and do a quick comestic reno....6-7k should do.

Hi All,

Im currently starting out looking for my first family home, and looking for some advice on my first steps.

I've already saved $200k with currently on a single income 65k before tax . So Im guess with my first property I should keep it at about $500k or under region as its my first experience. I think I should do a $150k deposit and keep $50k in a high interest account linked to my mortgage to helpout with repayments and for emergency use.

I've narrowed down my search so far to the following suburbs, Hoppers Crossing, Rowville & Scoresby. Any other suburbs I should be looking at?

I know the east is far better for family environment (I intend on getting married in 1 to 1.5 years) but Im attracted to the pricing in Hoppers Crossing and since Point Cook has already reached its potential pricing I think hopefully Hoppers Crossing should grow in the long term and all the growth should be concentrated in the west in the future.

I was kind of thinking buying a place in Hoppers Crossing pay it off as quick as I can and try to move onto a 2nd property.

How does that logic sound? Im kind of tossing up if I should first buy a house for investment/experience purposes then move onto a 2nd house for raising a family or if I should just go straight into a little bit more expensive property thats suited for family life first

Im a newbie so I really appreciate other ppl's experience
 
I think that Hoppers Crossing is very under-valued. I am sure a lot of people of this site disagrees. I am also biased in the sense that I own houses in Hoppers Xing and Werribee....I bought these for 170k and 130k in 2006....they are now 280-290k and 240-250k respectively. You be the judge as to whether you will get growth?? Houses in the South East worth 450-500k in Southeast are now about 700k...in Frankson/Seaford they have performed better stuff worth 240k are now worth 350k. In percentage (real growth terms) Hoppers Xing has out performed.

The trick is to buy the older houses for say 250-260k and do a quick comestic reno....6-7k should do.

that's like an average of 25K growth per year for those places you bought in 2006. What's rental like? are you positive or negatively geared?
 
Hoppers originally rented for 185pw....tenant moved out Nov. 2009 at a rent of 230pw...did a 6k reno and rented for 270pw. Thinking of putting rent to 280pw. Positively geared as mortgage of 150k is fixed at 5.64% till next year.

Werribee....originally rented for 165k....did a reno for 11k. Currently rented for $220pw....tenant moving out end of June and will be re-listed for $245pw. The interest rate of this comes off 7.45% and will be fixed at 6.69%. Mortgage only 117k so will also be positive.

Just because you buy a 500k property in 2006 and it goes to 650k does not mean you have hit the jackput. After you factor in the in costs like Stamp Duty (26k), Legals/Transfers/Inspection report (2k), LMI (10k assuming 10% deposit), interest loss (about 27k over 4 years)....your profit is more like 95k and that is not factoring in selling costs.

that's like an average of 25K growth per year for those places you bought in 2006. What's rental like? are you positive or negatively geared?
 
Hoppers originally rented for 185pw....tenant moved out Nov. 2009 at a rent of 230pw...did a 6k reno and rented for 270pw. Thinking of putting rent to 280pw. Positively geared as mortgage of 150k is fixed at 5.64% till next year.

Werribee....originally rented for 165k....did a reno for 11k. Currently rented for $220pw....tenant moving out end of June and will be re-listed for $245pw. The interest rate of this comes off 7.45% and will be fixed at 6.69%. Mortgage only 117k so will also be positive.

Just because you buy a 500k property in 2006 and it goes to 650k does not mean you have hit the jackput. After you factor in the in costs like Stamp Duty (26k), Legals/Transfers/Inspection report (2k), LMI (10k assuming 10% deposit), interest loss (about 27k over 4 years)....your profit is more like 95k and that is not factoring in selling costs.


Well some stuff shouldn't be factored into. Eg LMI (pretty easy to avoid), interest loss (assuming you are investinga nd positively geared).


Well some stuff shouldn't be factored into. Eg LMI, interest loss (assuming you are investinga nd positively geared). So of those costs, there's $2k legal (but I've gotten solicitors for $400), stamp duty of $26k. That's around $26.5k upfront costs. Then maybe 2% real estate agent fees is around $13k?

So around $40k costs. $150k profit less $40k costs. That's around $110k profit over 4 years. Then you go, ok you invested probably 20% so that's $100k. Return is $110k over 4 years. That's an IRR of 20%?
 
Thanks all for your very helpful response's. (Really appreciate the positive feedback for my first time experience :) )

I've narrowed down to two areas on my list which are -

- Build new in Point Cook. (get grant and stamp duty saving)

- Rowville not too far out from Stud road. (walking distance to bus services.)

Both are within the same price range that Im looking at about low 500k-ish

Which one makes more long term financial sense ? Based on myself occuppying for at least 10 years. Not sure about the CG factor there.

I know Rowville would be steady blue chip investment, but Point Cook its closer to the city and all my friends that purchased expect appreciation in general area when wyndham harbour is completed.

FYI - Im use to living far out so, as long as its close to eastlink on this side then thats okay but PC would be luxury in a way (20 min drive to non-peak city and Im young early 30's) but then its the West have to adjust a little to environment change.
 
I know Rowville would be steady blue chip investment, but Point Cook its closer to the city and all my friends that purchased expect appreciation in general area when wyndham harbour is completed.

For the same price I'd pick Rowville despite its poor transport to the city. Rowville is nearer the geographic centre of Melbourne than Point Cook. Similarly jobs are skewed towards the east and south-east.

Draw a circle 10km around Rowville. Do the same thing for Point Cook.

Count the number and status of jobs, schools, universities and TAFE colleges in each circle.

Rowville has a huge number of nearby jobs (of various levels) in the shopping centres and office parks along Blackburn, Springvale and Stud Rd. Plus Monash Uni is within a convenient distance.

Whereas the same distance around Point Cook has Laverton North (largely blue collar jobs), Werribee Plaza and no sizable universities (although the new selective entry school at Hoppers will help).

The high-level services (especially major uni campuses and big hospitals) in the west pretty much finish at Footscray whereas you've still got them 20km east of the CBD.

I believe suburbs have different levels of amenity and this is reflected in the prices they command. However the market is imperfect and it's possible to find houses for equal price in suburbs of unequal merit. Hence I'd lean towards Rowville as it's a better suburb for the same price.

However if the question was about comparing a $300k house in Hoppers Crossing against a $500k house in Rowville, then I wouldn't automatically favour Rowville (although both might offer better value for money than a new place in Pt Cook).

In many respects (average incomes, topography, distance from universities) Hoppers is an inferior suburb to Rowville (though it has some advantages eg transport). But paying $300k for the amenity of Hoppers is at least as good a deal (and in my judgement probably better) than paying $500k in Rowville. Far better to buy a $300k house in a $300k suburb (or a $500k house in a $500k suburb) than a $500k house in a $400k suburb.
 
agree

I think that Hoppers Crossing is very under-valued. I am sure a lot of people of this site disagrees. I am also biased in the sense that I own houses in Hoppers Xing and Werribee....I bought these for 170k and 130k in 2006....they are now 280-290k and 240-250k respectively. You be the judge as to whether you will get growth?? Houses in the South East worth 450-500k in Southeast are now about 700k...in Frankson/Seaford they have performed better stuff worth 240k are now worth 350k. In percentage (real growth terms) Hoppers Xing has out performed.

The trick is to buy the older houses for say 250-260k and do a quick comestic reno....6-7k should do.
I think hoppers xing is undervalued also. You can find a great house in the older areas, on massive blocks. There are some great little pockets.
 
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