Is Melbourne cooling?

Hi Buzz
Thanks for the info.
just curious, so when you do sell up, where will you buy?

Also, any chance of accessing the equity?

Cheers, MTR
 
I still feel that we are in a very small buying window in Melbourne, eg. 2-3 months max.

I think prices may keep going up after this, while interest rates continue to peak.

I'm not so sure that there will necessarily be huge passive CG to be made now though, and any purchases now would need to be balanced against the risk of holding costs increasing further in the short-term as interest rates rise further.

I think there will be a bigger correction in Melbourne prices in 6-12 months' time.

I'm also not sure that now is such a great time to be selling property given the current negative sentiment.

I also find it interesting that property appears to be affected by negative sentiment in the same way that shares are, but perhaps to different extents and with different time lags.

My 2c!
 
I reckon that we're seeing Melbourne cool off only slightly. Yes, we've had a few weeks below 80%. And, in one suburb that I watch the harder to sell properties didn't sell at auction last week and are still on the market.
= Not everything is selling
= Market it no longer crazy hot

Most ot the Auctions I was watching sold within the expected range
= Vendors are more realistic and buyers aren't paying crazy prices.

On the other hand I was watching an apartment that went for $120k more than a good price or about $70k higher than a sensational price.
= Some properties still catching people's imaginations and going for crazy prices. (Those vendors are still drinking the champers)

So, overall, I reckon a bit cooler, but not much yet.
At the moment I reckon the state of the market is a week by week thing.

Good luck, Medine
 
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Hi Buzz
Thanks for the info.
just curious, so when you do sell up, where will you buy?

Also, any chance of accessing the equity?

Cheers, MTR

Signed authority last Thursday (20th), so its now on the market. The agent who has the property sold another renovated one in the block a month or so ago for high 4's. Looking for mid 4's.

Reason for selling is primarily that the price I am hoping to get is IMO, the most I will able to get for some time. It would rent for ~$315pw. Can't see it appreciating too much in the next 12 months and I think I can do better elsewhere now.

I told the REA, 30 days authority only, no advertising, 2% inclusive of GST commission, (have to leave something for them) and what I thought is a pretty good price, for me anyway. They accepted without batting an eyelid. Its being advertised between $410k - $450k.

I am at the top end of my serviceability, so accessing equity and purchasing another is probably not doable. Offloading this at ~30% gain over the past 18 months gives me an opportunity, probably in the spring to look at a house, probably in the Moonee Ponds vicinity. My previous inner south locations are too expensive now for my budget.

I am also looking to trade-up (is that the right word?), to houses and away from flats. With this one sold, the portfolio is all but houses now. And if it doesn't, does anyone want to rent a 2 br flat in North Balwyn? :p
 
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Witnessed a property in Avondale Heights go for 520K+ (2 bedroom; weatherboard renovated house). Was quoted 400 - 440K during inspection.. Can't believe it.
 
I'm noticing that some cheaper un-renovated units (the sort an investor would buy to house a pensioner) are sitting around unsold.

In my view their asking prices are still high - if you can get a bigger nicer one in much better condition for $30k more, why would you bother with a crammed in cheapie that needs some work?

However the mid-priced units and houses, as an owner occupier would favour, are still fetching high prices and enthusiastic bidding.
 
To paint for 30k? :p

Even if you painted you'd still have a small cramped cheapie in a poorly maintained block with a courtyard fit for a mouse, so the value add would be nowhere near $30k.

Maybe $5k gain for $1k spent in paint and $10-20pw more in rent as all the other disadvantages of the unit are unchanged, and more critically, beyond your control to change.

To my way of thinking a slightly tired but larger unit with street frontage where more things could be done with presentation would be a better buy. If such a unit costs $30k more, this limits the gains possible from the smaller cheaper unit as no matter what you do it can never be as good.
 
Some observations at work today...

I noticed myself that the office was the busiest I have seen it for a good few weeks, perhaps even a couple of months regarding sales enquiries.

I overheard an agent telling someone he knows that he believes we've hit the bottom and that it's going to pick up again, and is looking to buy himself now. He had a lot of interest in some properties from people re-entering the market today.

I have no idea if it means anything, just some observations from where I work (Melbourne inner Bayside area). I know Melbourne has seen some pretty good growth in a short amount of time, so don't expect the same sort of growth any time soon. But it definately slowed down the last few months, so maybe investors are entering now? Although, maybe it's just localised, as I know there are markets within markets.
 
I overheard an agent telling someone he knows that he believes we've hit the bottom and that it's going to pick up again, and is looking to buy himself now. He had a lot of interest in some properties from people re-entering the market today.

What the hell. Was he telling this to a prospective buyer? Talking the market up, when with GFC2 on the way, it's about the tank.
 
Absolutely no doubts about this. If you're not snapping up every house you can, you'll be regretting it in 18 months time.

The media can only scare people for so long. Don't be afraid to bust down to sellers though. Low ball them to hell, if the weak minded still have it in their mind's we're going down - it's to your advantage.

I'm hearing things are picking up and enquiries are up. It might take a little time to full get them off the fence, but you can never keep property down.

Enzo, welcome to the forum.

If you are the CEO of the REIV, I could understand the bullishness of your post as it relates to the commercial interests of the industry your superintend :cool:

If it's mere coincidence, I have a few questions for you:

Were you an investor in Melbourne from 1991 to circa 1997?

If, so were you buying in 1991 and bleeding with gearing losses whilst seeing negligible growth?

And if so, how did you manage to duplicate and suck out equity from your properties when there was no growth?

Keen to hear your responses and thoughts on what fundamentals exactly are going to drive the (Melbourne) market into greater growth in the next 18 months as you allude. :confused:

Demand is waning. Confidence is waning and we are now softening. Just as well too or there would have been a bubble to pop. Right now the market will find equilibrium, however with credit constraints and more uncertainty ahead from global whitewash, I believe there is no rush to be buying in Melbourne right now as prices are still high in relative terms with very poor yields. Rents will need to play some catch up IMHO ;)
 
I believe there is no rush to be buying in Melbourne right now as prices are still high in relative terms with very poor yields. Rents will need to play some catch up IMHO ;)

I tend to agree with this, I was just pointing out my observation rather than opinion. Had lots (more than usual) of sales enquiries today, but maybe that was just a one off, will be interesting to see what next weekend is like.
 
I tend to agree with this, I was just pointing out my observation rather than opinion. Had lots (more than usual) of sales enquiries today, but maybe that was just a one off, will be interesting to see what next weekend is like.

what suburb is your office in biggles?
 
I overheard an agent telling someone he knows that he believes we've hit the bottom and that it's going to pick up again, and is looking to buy himself now.

Oh then if he said that it must be true!! I'm glad someone has finally clarified this and knows where the bottom is, I'm off to buy 4 more houses this week before it's too late.....

I spoke to another agent today who actually told me that Santa Clause is real after all... and all this time I thought it was my mum and dad who bought the presents, silly me.

It's amazing what info can be gained from these highly educated individuals.
 
Congrats

Update: Sold for asking price today, 6 weeks after listing.

Well done Buzz. :)

I actually harvested one (clear title) last month and look forward to being ca$hed up. The cash out on offer was an extremely sub-optimal use of that title. It was also too land rich for the box upon said land that soon would have needed a couple of year's rents in repairs that would not have added any perceived value to a future tenant. My bonus is that I have let go of an asset whose land tax was 20 % of the actual yearly rent. :( I now have more choices :D and I'm not rushing.

I sold at auction after a very quick three week campaign. I was a realistic vendor however and so were you.

In Feb and March of this year yours probably would have sold in 6 hours not six weeks. The ones struggling now are due to persiting unrealistic expectations from vendors and more stock than buyers. there is a lot of hesitancy out there and for good reason.

Biggles not having a go at you or your relaying of the conversation in your office.

I've been doing this for a while and if I'm wrong and the market explodes as Enzo reckons, no probs, I have more to harvest and convert into far higher yielding assets............and not likely in Melbourne.

If there is another leg up, then we will definitely be in rampant speculative bubble territory and watch out :eek:

The market cooling and softening is very welcome IMO to establish some balance and homeostasis whilst rents catch up.
 
Well done Buzz. :)

I actually harvested one (clear title) last month and look forward to being ca$hed up. The cash out on offer was an extremely sub-optimal use of that title. It was also too land rich for the box upon said land that soon would have needed a couple of year's rents in repairs that would not have added any perceived value to a future tenant. My bonus is that I have let go of an asset whose land tax was 20 % of the actual yearly rent. :( I now have more choices :D and I'm not rushing.

I sold at auction after a very quick three week campaign. I was a realistic vendor however and so were you.

In Feb and March of this year yours probably would have sold in 6 hours not six weeks. The ones struggling now are due to persiting unrealistic expectations from vendors and more stock than buyers. there is a lot of hesitancy out there and for good reason.

Biggles not having a go at you or your relaying of the conversation in your office.

I've been doing this for a while and if I'm wrong and the market explodes as Enzo reckons, no probs, I have more to harvest and convert into far higher yielding assets............and not likely in Melbourne.

If there is another leg up, then we will definitely be in rampant speculative bubble territory and watch out :eek:

The market cooling and softening is very welcome IMO to establish some balance and homeostasis whilst rents catch up.

i agree player, a flat spot for 12-18 months would be a good thing now and avoid a bubble, might also give me a chance to upgrade the ppor which would also be nice:D
 
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