Is it time for Frankston?

Discussion in 'Where to Buy' started by clouds, 7th Jan, 2014.

  1. clouds

    clouds Banned

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  2. grand dad

    grand dad Banned

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    It's definitely time for Frankston. It's lagged so far behind it can only bounce upwards.

    RP Data made a prediction last week, putting Frankston in their Top 10 Melbourne suburbs for price outperformance this year. There was an article in The Age to this effect, I will post the link when I find it.

    Without a doubt, Frankston and Seaford are among the cheapest development-friendly beachside suburbs in the country. To the naysayers: the crime rate in Frankston is greatly overplayed and is no worse than that of inner-city Melbourne.

    According to the Valuer General's office, less than 2% of Melb houses are on subdivisible blocks. In contrast, close to half of all houses in Frankston and Seaford are sitting on development sites. Remember, both are beachside suburbs, making them more desirable in the long run. That in itself makes the area a strong buy, more so given the fact that prices are still affordable and the Council is very pro-development.

    Given that it has lagged behind for so long, I am confident that Frankston will outperform the broader Melbourne market this year. Rents have risen quite a bit (5% yields are standard) and the bogans are relocating inland. Slowly but surely, the area will be gentrified.
     
    Last edited: 8th Jan, 2014
  3. S.T

    S.T Member

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    grand dad can you link to that Valuers General statistic?
     
  4. Trzmo

    Trzmo Member

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    Hi all,

    I have started looking at the Frankston area, and was wondering if there are areas i should steer clear of or particularly focus on?

    Any help would be appreciated.

    Thanks!
     
  5. debonair

    debonair Member

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    Frankston

    I have been reading many posts on this forum for a while and grand_dad, you attach that quote "According to the Valuer General..." on the majority of your posts about Frankston which if fair enough.

    However, it comes down to affordability and your risk profile. Investing in Frankston is more affordable then investing in a blue chip suburb like South Yarra but if you can afford to invest in the later, then most people would be. Especially if you can buy a house in a market that is close to its trough (Exhibit A).

    In terms of subdivisions and development you can have a look at areas like Clayton, Chadstone, Hughesdale, Ashwood etc. and there are plenty of large blocks of land with both subdivision potential and development potential. Obviously, these areas are more expensive than Frankston. Developers who have the money know that they can make more money with the same effort/resources in many other areas prior to venturing out to Frankston.

    My mate bought in Frankston over a year ago and has yet to see any growth. Another bought a unit in Chadstone at the same time (circa June 2012) and growth has been exceptional. Further he is actually positively geared and has been from the start. (Who said there positive gearing didn't exist except in regional areas?)
    There will always be a stigma associated with Frankston, and it is irrelevant whether it is incorrect or not as even the council says it exists and turns many people off. At the end of the day it is all in the numbers. If Frankston starts rising, then all of us who are anti-Frankston will have egg on our face, but that will be okay because we are investing in blue-chip areas and will be fine in the long run. People have been speculating about Frankston for a long time now, perhaps all of this will allow the values to start growing or that stigma will continue and the majority of those with the adequate funds will stick to the blue-chip suburbs
     
  6. jackbak

    jackbak Member

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  7. debonair

    debonair Member

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    Further to what I said.
    This might be controversial and seem hypocritical.
    I would only invest in houses i.e. property that has land on its own title. If my budget was 300-450k I wouldn't be able to buy anything in the blue chip suburbs (perhaps a Beach Box in Brighton!- http://house.ksou.cn/p.php?q=Brighton&sta=vic&id=302065)

    As a result I would be considering Frankston as IMO, based on the figures buying a house in an area like Frankston is still better than buying an apartment in a blue chip suburb. (unless you really find something under market value)
    I can see all the buyer's agents screaming, but that is what I believe and not just speculating but have done my homework. Many apartments are overpriced and all the hype surrounding them, especially when most buyer's agents are flogging them, the hype can lead to inflated prices. What's more important is what the valuers rate them. After all you will need to be borrowing to purchase further and the valuations are important for future borrowing capacity.

    If you have the funds, IMO always go for something where you have your own block of land. It gives you more options, and more options means more ways to make a profit from it.

    This is coming from someone who has lived in the inner suburbs all my life after coming to Australia (Elwood for 8 years and Elsternwick for 14), went to school in the inner suburbs (East St.Kilda) and have invested in the inner suburbs (South Yarra).
     
  8. JamesGG

    JamesGG Member

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    Not at all. There is some great buying down that end of the woods that suits a certain type of strategy. It has been quiet over the last few years from a statistical growth point of view but as "grand dad" likes to point out, there has been plenty of money made by those being a little creative.
     
  9. pieman

    pieman Member

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  10. S.T

    S.T Member

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    cheap 2bdr units go for low 200's still within 800m from station in Frankston, they seem to get snapped up quicker these days.
     
  11. investor2009

    investor2009 Member

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    Ive just placed a house in F central on the market. Had since 09 and its been stagnant. Never a rental increase in that time. Jusr going to place cash from sale nto kortgage. Might pocket $50k
     
  12. mflying

    mflying Property Developer

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    if you are 30-40 and have lousy 100k in SMSF.. may be frankston is a go for right property (Development block, around 6% yield).

    in nutshell, it will be long time..
     
  13. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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    Frankston was a little overheated in the 2010 FHOG boom as the area has been popular with first time buyers due to the low price point.

    Since 2010 not much has happened, although the growth rate just scrapes in at my minimum cut off of 7% 10 year avg.

    The suburb as far as property stock is concerned isn't very aesthetically appealing and as such has a stigma (warranted or not) attached to it which needs to be overcome. It is for this reason that many established buyers, advocates and investors stay away from the area. I personally think stigmas should be ignored in favour for facts.

    With that being said there are signs of improvement. $150mil was spent on the Bayside Shopping district by CFS which added cinemas and shops. The state government, in 2013, has also budgeted ~$14mil to spend on upgrading the look of the railway station and surrounds.

    Population growth has been slow but steady - 123,000 (2006) to 126,500 (2011) to 135,000 (2016). Can't really see any major price growth coming from population changes.

    The area is mainly occupied by Australian-born people and 41% of these people currently hold a mortgage which is above avg. The bad thing about a higher mortgage rate is that people will be less likely to rent if they can just afford to buy a house leaving you with lower rents and higher vacancy periods. (source: ABS Census Data)

    Frankston's vacancy rate right now, however, is okay for Greater Melbourne at 2.9%: (Source: SQM Research)

    Frankston has a reasonably diverse economy, more so than other popular regional areas (e.g. Geelong) which is a positive. Stay away from 1 horse races.

    The town is well serviced by transport as the existing train line as aforementioned is there and the $2bil Peninsula Link was recently completed in 2012.


    The key with buying in FT is to go with the mass market. Purchase a 3br brick houses on a block that is 600sqm+, ideally a couple of streets back from the beach on the "right" side of the tracks. You should be able to pick them up for $300k-$400k depending on location/accommodation.

    Personally would only purchase in Frankston if one's strategy is add-value/sub-divide/develop as there are better suburbs to buy solely for Buy & Hold.
     
    Last edited: 10th Jan, 2014
  14. Aaron_C

    Aaron_C Finance Broker

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    You know the market is booming when people talk about Frangers (yet) again! :)
     
  15. grand dad

    grand dad Banned

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    If you are looking for bragging rights, Frankston is not the place for you. It's definitely too downmarket and too unbelievably cheap. I am in it for capital gain, not for anything else. That Frankston/Seaford are beachside suburbs means little to me personally, although I am mindful that some people love that sort of thing.

    Warren Buffett once said that he made his best gains by buying stocks that "informed analysts" ignore. Such is the logic with Frankston. It's lagged behind so long there's only one direction it can move - up. Its catch-up time, for sure, particularly for the cheap-end of the local Frankston/Seaford market.

    Spot on. The big capital gain prospects lie in Frankston/Seafords development potential. The secret is to buy cheaply, away from what the so-called experts tell you to buy. Paying too much for a near-beachside house is not a smart move for CG (although its fine if its a PPOR and you love the beach). The profits lie in buying cheap "junk" on larger blocks. The council is pro-development and its common to see blocks that are below 600sqm being subdivided and redeveloped.
     
  16. MC1

    MC1 Member

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    Jake. What is the right side of the tracks??
     
  17. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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    Going to disagree slightly here with Grand dad (sorry) in that investors should look primarily on the Beach side of the train tracks.

    It doesn't have to be beach-front as those properties are in a completely different price league but close enough to be 10-15 mins walking distance is good as large bodies of water almost always increase capital growth.

    Again though, the strategy here shouldn't be buy and hold and as Grand dad said, if you can find a good sized parcel with nice margins for development feel free to look in other pockets of the suburb.
     
  18. S.T

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    Jake, have you bought any properties for clients in Frankston?

    Not sure if you know Frankston well, but there are very few houses on the beach side of the railway tracks as it's mostly commercial/industrial.

    Plenty of apartments on Nepean hwy. Plenty of houses off Gould st, but you're looking at a minimum of 600+, nothing close to 300-400k.

    The Southern part of Frankston, off Kars Rd, past footy oval etc is priced high too, due to it being one of the better parts. You'll pick up units for 300+ but good luck getting a house on 600m2 in that range.

    Most of the properties on decent land of 600m2 are other side of tracks and freeway that are selling for 300-400k. Bloke I sit next to at work has just bought 2 in the last 3 months.
     
  19. Jake Milne

    Jake Milne Buyer's Agent (Vic)

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    Simtr I appreciate your challenge and am happy to say it took me less than 1 minute to find an example on market: http://www.realestate.com.au/property-residential%20land-vic-frankston-200615683

    600+ sqm, within 10mins from beach, on the beach side of the tracks, between 300k-400k, ripe for development (although I've not looked closely at the figures)...

    Build a 3 br brick home at the front and leave enough room for a sub-div later...
     
  20. S.T

    S.T Member

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    Sorry, thought you said 3BR home. Not vacant blocks of land.