Fringe dwellers top property gains!!

From Today's The Age

http://www.theage.com.au/business/fringe-dwellers-top-property-gains-20100312-q2qv.html


"So much for location, location, location.

All but one of the top ten performing property markets in Australia over the past decade are anything but central......"

and

''Interestingly, the analysis revealed that affordable suburbs witnessed the strongest growth over the decade,'' RP said in a release. It noted that 13 of the top 20 performers have a current median price below $300,000, while 18 of them are sub-$400,000..."
 
Don't believe a word of it.....


Having a look at the capital city table, 11 of the top 20 are from Perth, and all, bar no exceptions, are scrub suburbs out in whoop whoop land, that 10 years ago were paddocks with populations rivalling 1 kangaroo and 2 bobtails every hectare.


The development mobs like Landcorp and Fini's and Satterley have pumped a huge amount of money in to get the limestone walled blocks ready, and then Joe Public has pumped a huge amount of money in to get houses on it.


This is just like Mt Claremont 10 years ago. 250K for a block. Build a 400K house on it. Two years later the papers are screaming that the suburb has had a massive jump in median prices from 250K up to 650K. Seriously ??


They even say so in the article....


Undoubtedly new development has helped boost prices in many of these areas. However, the cause for concern will likely be the longer term capital growth prospects of these suburbs. Many are a long way from the city centre and have poor public transport amenity limited roads and scarce retail amenity.

Whilst many of these outer more affordable areas have seen strong growth over the last ten years, the prospects for capital growth during the next ten years is likely to be much less.


So, who's brave enough to jump in and buy into one of these suburbs now the development has occurred ?? ....and who writes these articles ??


I think someone needs to seriously define the word "growth" when they write these articles. Buying a block for 150K plus costs, then building a spec home for 150K over 2 years, and then selling the place for 300K, then some 22 y.o. pimply journo writes that the suburb has seen 100% growth is bordering on fraud, IMO.
 
Agree that throwing development blocks from new estates in the mix of established suburbs to compare the growth isnt a fair comparison.

Harris

Don't believe a word of it.....


Having a look at the capital city table, 11 of the top 20 are from Perth, and all, bar no exceptions, are scrub suburbs out in whoop whoop land, that 10 years ago were paddocks with populations rivalling 1 kangaroo and 2 bobtails every hectare.


The development mobs like Landcorp and Fini's and Satterley have pumped a huge amount of money in to get the limestone walled blocks ready, and then Joe Public has pumped a huge amount of money in to get houses on it.


This is just like Mt Claremont 10 years ago. 250K for a block. Build a 400K house on it. Two years later the papers are screaming that the suburb has had a massive jump in median prices from 250K up to 650K. Seriously ??


They even say so in the article....





So, who's brave enough to jump in and buy into one of these suburbs now the development has occurred ?? ....and who writes these articles ??


I think someone needs to seriously define the word "growth" when they write these articles. Buying a block for 150K plus costs, then building a spec home for 150K over 2 years, and then selling the place for 300K, then some 22 y.o. pimply journo writes that the suburb has seen 100% growth is bordering on fraud, IMO.
 
A couple of years ago I say a diagram (I think in the Age) for melbourne.

It showed the long term capital growth by different radial bands from the CBD.

Basically each 5km further out had a growth rate 0.5% lower.

e.g. 0-5 km 7%, 5-10 km 6.5%, 10-15km 6%, etc...

I think this was done by averaging the growth rates of the suburbs in those bands since you don't want to try to take a median given the differences between South, East, North and West suburbs at 20+ km.

The booming of prices can also be due to a particular area getting a large amount of expensive builds/renos. The actual houses in the area have changed due to all the extra marble, an existing house without a reno may not have changed much in value. This can occur in outer areas with golf or marina type developments.
 
Agree that throwing development blocks from new estates in the mix of established suburbs to compare the growth isnt a fair comparison.

Harris

One of the biggest reasons median prices are pretty much useless and should be used as an interesting bit of trivia at best. Apples and oranges just don't get compared other than they both go in your mouth.
 
Don't believe a word of it.....
.


Your on the ball Daz.

From the article,.....


......."Topping the list is Oakdowns, a fringe suburb of Hobart, boasting a short drive east from Bellerive Oval or south from Hobart Airport. Median unit prices there have risen almost 35 per cent annually for the past 10 years to soar to $275,000, according to data compiled by RP Data".........



35% compound growth over a decade and ending with units worth $275,000 today means they were worth $13,500 in 2000.


See ya's.
 
If what I am hearing is true about credit.....then I would be careful about very expensive inner city houses.

The financial institutions are now focusing on risk and affordability (of loans) when lending. This means that peoples ability to buy expensive homes relative to income comes to play.

An example of this is to look at the LMI premiums at 300k, 500k, 700k, and $1m. A 95% (hard to get but I am still getting them) is about 5.7K, 16-20K, 25-30k, and 40k plus for loans on these.

Whilst the FHB have disappeared.....affordable properties will continue to creep despite some low levels of default among first home buyers. Unlikely given the current strong jobs market.

I think the finance game has changed.....remember property is only the VEHICLE....finance is the main game. The banks are tightening credit where people once offered 700k will now be offered 450k. This means people will adjust their expectations.

I suspect Gen-Y will continue persist with trying to buy properties within 10 klms of a CBD....but as they get married and have kids their priorities will change and will look further afield for cheaper housing with a garden for kids.

Most times this subtle shift is not seen. Just like the rejevenation of Western Melbourne..or Frangers..people only see today. You need to have vision to see the future.

As I said I bought my 3 houses in Western Mebourne for 455K...about 3-4 years ago. It now seems that they now worth about 810k. This would be similar to buying one inner city house in Brunswick for 455k which would be worth about 810k. The only difference is that I had positive/neutral CF for most of the holding period.

There are many roads that can be taken....my road is to continue to accumulate which I can do as I have CF+....others have taken the CG road but will find serviceability will become an issue quickly.:D
 
If what I am hearing is true about credit.....then I would be careful about very expensive inner city houses.

The financial institutions are now focusing on risk and affordability (of loans) when lending. This means that peoples ability to buy expensive homes relative to income comes to play.

An example of this is to look at the LMI premiums at 300k, 500k, 700k, and $1m. A 95% (hard to get but I am still getting them) is about 5.7K, 16-20K, 25-30k, and 40k plus for loans on these.

Whilst the FHB have disappeared.....affordable properties will continue to creep despite some low levels of default among first home buyers. Unlikely given the current strong jobs market.

I think the finance game has changed.....remember property is only the VEHICLE....finance is the main game. The banks are tightening credit where people once offered 700k will now be offered 450k. This means people will adjust their expectations.

I suspect Gen-Y will continue persist with trying to buy properties within 10 klms of a CBD....but as they get married and have kids their priorities will change and will look further afield for cheaper housing with a garden for kids.

Most times this subtle shift is not seen. Just like the rejevenation of Western Melbourne..or Frangers..people only see today. You need to have vision to see the future.

As I said I bought my 3 houses in Western Mebourne for 455K...about 3-4 years ago. It now seems that they now worth about 810k. This would be similar to buying one inner city house in Brunswick for 455k which would be worth about 810k. The only difference is that I had positive/neutral CF for most of the holding period.

There are many roads that can be taken....my road is to continue to accumulate which I can do as I have CF+....others have taken the CG road but will find serviceability will become an issue quickly.:D

Sash mate, the way things are going in the current market and I kid you not, a Brunswick house bought for $455K 3-4 years ago would be worth close to $1 million if not more.
 
Sash mate, the way things are going in the current market and I kid you not, a Brunswick house bought for $455K 3-4 years ago would be worth close to $1 million if not more.

Are there any reports like RPData or Residex or any sales results etc which can substantiate that Brunswick has gone up by 120% over last 3-4 years?
 
One of the biggest reasons median prices are pretty much useless and should be used as an interesting bit of trivia at best. Apples and oranges just don't get compared other than they both go in your mouth.

True.
Nice profile pic, by the way. Your workouts are really paying off :)
 
Are there any reports like RPData or Residex or any sales results etc which can substantiate that Brunswick has gone up by 120% over last 3-4 years?

Not going to state exact address for privacy but according to owner (who I spoke to, so taken as a grain of salt), house was bought on Donald St in 2005/2006 period (again no exact year for confidentiality reasons) for low $400's and sold/valued recently for mid $900K's (again, not going to give it away if it was a sold property or just valued). Decent block of land just under 500sqm. The property has probably gone up another good $30-50K this week given the state of Melbourne's property market on fire.

In my opinion, median prices are merely conversation starters and should only be used for illustrative purposes. It captures too much of the crap associated with little 1 bedroom flats and is skewed by land sales of $3-4mil+ just because a 5000sqm was sold.
 
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