Liverpool surrounds v Inner West

[Noviss]

Hi All,

Long time viewer, very rare poster. I'd really appreciate some views on this, even if it's out of the square.

I'm currently living in Marrickville with my partner who I will be marrying in December. We rent and love the inner west. Within the next 12 months we will be heading over to Europe for a few years for work. We will be having kids when overseas.

We are seriously considering buying in Sydney before we leave. Our budget is $500k.We're sort of priced out the inner west (2brm unit). We can maybe get into Croydon Park (no train line), but even Ashfield is looking too high for us.

The other option is the outer suburbs of Liverpool where both our parents' families live. When we come back to Sydney with kids, the family support, plus a back yard will come in handy.

But the ultimate goal is the inner west.

So really, it comes down the growth. Whilst the whole family support back yard thing in Hinchinbrook or Green Valley is nice, will it put us further away from our ultimate goal of an inner west terrace house?

We feel the inner west, whilst blue chip, will get slow but consistent growth over the next 3-5 years. It's not going to be a massive winner but it's in high demand and even with the recent growth spurt we feel it will slowly creep over the next few years.

But what about Hinchinbrook and Green Valley and surrounds? I haven't had my eye on that market? Has it had a heap of growth and will it remain flat for the next few years? I suspect the Sydney market as a whole will be flat for a few years and a lot of the outer suburbs will be flat whilst their will still be demand for the inner city.

And what about other options?

Is it better to plonk our savings into blue chip shares for 5 years and upon return to Sydney we then look at buying?

Do ignore the Inner West and Liverpool, and buy a place in Brisbane's inner ring just for the growth? Due to entry and exit fees into the market I think I prefer the blue chip shares option.


I'd really appreciate any opinions and feedback.

Regards,
John

 

[Richard Feynman]

If you act quick and know a deal when you see one, $500k can still get you a 2 bedder in the inner west. I grabbed this in Marrickville recently: http://www.realestate.com.au/property-apartment-nsw-marrickville-116434351

Admittedly, I picked it up a good $40k under value but the sale stands and it's a great apartment.

I've seen a few other good deals transact of late too.

I am out of my depth speaking on Liverpool and surrounds, bit I think the inner west (and Marrickville in particular: new library, station upgrades, light rail, metro shop expansion, snowballing gentrification) are going to perform consistently above the wider Sydney market over the next few years -- apartments in particular.

Lots of buyers who are now priced out of houses/townhouses (in the area) or apartments (in other, more expensive areas) due to the mammoth growth of the last year have--and will continue to--set their eyes on apartments in the inner west. With deeper pockets, they'll put upward pressure on prices.

Since you live in Marrickville, you're at a great advantage of being able to spot a deal and you'll know the best locations etc.

In your shoes, I'd be looking in your neighbourhood since its growth prospects are strong. It's not too late for you, yet.

 

[Scott No Mates]

Green Valley has a lot of housing commission places and a lack of train link. have a look ar Blacktown and surrounds.

 

[ndonnelly]

I am no expert but as a fellow marrickvillian this is my $0.02:
If you reckon there will be little growth in the outer west suburbs and but some growth in inner west then all things being equal if you use your $500k to buy in the inner west (apartment) then when you get back logically you will be better off as your $500K inner west property will be worth more than your $500k western sydney property. They are around but getting rarer as OP indicated. To me this puts you closer to your inner west terrace.
If you buy a western sydney place or inner western place will you need to sell it to buy your terrace? If so, factor the transaction costs such as agents fees and stamp duty buying into your terrace.
Plonking your $ in shares is fine?.if you know what you are doing. If shares are BC that does not really guarantee a good return. You could double or even triple your money or you could lose half of it or more. That is really up to you. I also believe that you pay CGT on share gains but of you bought a place, went overseas then lived in it when you got back it would be exempt from CGT as it is your family home. (I am not a tax expert so if someone else wants to clarify that then go for it)
Final option is leaving $ in high interest savings account. This will give you a low return but could be the best option if you bought a place but the housing market stayed flat. It does give the highest level of security however.

 

[WattleIdo]

And here's my 2c worth:

You're assuming that inner west will rise faster and more than the outer west based on it always being more in-demand.

On the other hand, inner-west has already gone up quite a lot. Though Sydney has catching up to do, there are limits to what even Sydney-siders can afford. Not having followed the outer west market, you'll probably be surprised to see how much profit people have made out there lately.

Both are strong markets, both have given a lot of bang for buck.

I know exactly how you feel about the inner-west. I lived most of my adult life there and when I sometimes miss Sydney, it's that interesting and unpretnetious area that I miss.

Interesting that 20 years ago, Newtown was the inner-west; 15 years ago, Petersham and even SummerHill. Now even Strathfield is considered inner-west. And so it goes.

Punks, Hare-Krishnas, drunks on the street, Chinese laundries. Where are they now?

Basically, according to my 2 bob, both inner and outer west will continue to do well. If you can buy in Marrickville or close by, then do it! If you can buy there now, buy there now - as long as you can afford it.

If not, the outer west will continue to grow steadily and sometimes strongly. You might make as much money out there.

disclaimer: I would really love to buy in the inner-west myself. I feel like I 'belong' there.

 

[r3ckless]

Marrickville fir me has increased 11% in past 9 months!!

 

[WattleIdo]

In Hinchinbrook, the asking price for a 3 bdrm house has increased by 20% in the last 12 months and by 27.5% in the last 3 years - to about 470K.

Units there have increased by 45.3% in the last 12 months and 56% in the last 3 years (SQM, today). Though it looks like a bit of an anomale with the units in April/May. Looks like they're around 350K-400K.

Asking rent is pretty steady at about $418 pw for a house and $350 for a unit. Vacancy is around 0.7%

Noviss, how could you not know this if you have family there?

Vacancy rate in Marrickville is comparable at 0.9%.

34.3% increase over 12 months for a 3 bed house, 40% incr over 4 years.
Units doing well at 12+% increase over 12 months and 35% over 3 years.
Rents around $450 to $750pw.

Looks pretty expensive in Marrickville right now but if you're there, you might be able to find something. Might want to be quick because it looks like the market in Mville has frozen over the last week or two - probably the shock of the budget.

Guess you have to ask yourself if either or both of these places are going to keep increasing at the rate they've been going which would make buying now a great option. Or are they going to ease up a bit - which would make coming back to them later an option to be considered.

 

[Mr T]

what about Edmonton park near the new train line ? Does it tick all the boxes?

 

[Noviss]

Inner West it is. Just have to find the place. Thank you for all your help.

 

[Finrod]

We've had a 3 bedder in Hinchinbrook for about 4 years, and had results pretty much bang on what WattleIdo has stated. Had no tenancy issues in that time. DSR/boomtown also seems to think it'll be well placed to keep growing in the near future.

With young kids, don't underestimate the benefits of having babysitters (whom you trust) near by! You don't want to be driving 30 mins from Marrickville to drop the kids off, then come back into town every time you want to catch a show!

If you buy a property and use it as a PPOR for some period of time (1 year?), you can then rent it out for up to six years (whilst officially keeping it as your PPOR). This means that when you come back from Europe, you won't hit with CGT should you decide to sell.

Assuming a 470K buy in price (in either the Inner West, or greater Liverpool), that means ~$20K in transaction costs today, and probably a similar or greater amount when you return from Europe and sell up so you can buy your terrace. That's $40K gone right there, so you'd need the CG over this period to be greater than these costs. I'd say that would be uncertain given your time horizon and desire to sell on your return.

Shares however a liquid with low transactional costs, provide dividends (without pesky tenancy issues), and you might be able to take a margin on them to leverage further. Whilst your capital base is also at risk, at least you're not starting $40K in the hole due to property related transaction costs.

Whilst I prefer property overall as a vehicle for wealth accumulation, given your time horizon and your desire to move into the Inner West, I'd go with shares - unless you can somehow wrangle your way into affording your dream PPOR today. Else, if Hinchinbrook will suit your long term needs, I'd suggest buying in now before it grows any further, and renting it out (whilst claiming it as your PPOR for 6 years in line with ATO rules).

...my thoughts anyway.

Disclaimer: I'm just some dude on the internet. My thoughts are general in nature, and not to be taken as qualified financial advice.

 

[blackenator]

I currently live in Hinchinbrook can vouch for the area I have no issues living here for 10 years now.

As for Liverpool their is a lot of money being poured into the city centerThe mayor has major plans to create a similar stretch like parramatta has in church street. Their is alot apartments that are going up and prices in liverpool are still heading north.

Its pure for investment I think liverpool may out preform marrcikville area with the new airport and other projects but as mention marrickville has some infrastructure going on as well.

All comes down to what you want to do if you want to live in the inner west I suggest trying to purchase something in your most desirable area