Mandurah land

[Rpf]

greetings,

i have a ~500 sqm piece of land at Wannanup for a number of years now. bought it in 06 for 250k, think prices have dropped quite a bit since. The supply-demand situation there is definitely not ideal.

Been assessing what to do with it at the moment - selling it outright would be challenging in current mkt conditions. holding it would be the same approach since 06. The 3rd idea would be to consider spending a couple hundred grand more to build a 2-storey house (land sits at the top of the hill overlooking the sea on both sides if elevated further up) and then selling it. Question is how much more will this increase the whole property and whether worthwhile vs selling land as is.

Anyone with experience building in Mandurah / Wannanup? Appreciate any inputs and ideas.

Cheers

 

[Ausprop]

if you don't know what it will be worth on completion what chance have we got?

2 storey is over pried in WA - investigate the feaso but sometimes you are better to undercapitalise and go single for cashlfow

 

[Rpf]

2 storey is over pried in WA - investigate the feaso but sometimes you are better to undercapitalise and go single for cashlfow

I mentioned 2-storey because of where the land is sited -i.e. on top of hill with decent sea views upon elevation. understand the CF pov and single storey would be the prudent approach. Was just wondering if there would be much of a premium to be unlocked from a double storey development with sea views at all that would be worthwhile to explore.

 

[MRO]

Look on realestate.com.au and find a similar house in a similar location and note the price. Then calculate/research how much a similar house would cost to build and you will have your answer.

I suspect you would be better off selling the land as it and cutting your losses.

 

[MTR]

greetings,

i have a ~500 sqm piece of land at Wannanup for a number of years now. bought it in 06 for 250k, think prices have dropped quite a bit since. The supply-demand situation there is definitely not ideal.

Been assessing what to do with it at the moment - selling it outright would be challenging in current mkt conditions. holding it would be the same approach since 06. The 3rd idea would be to consider spending a couple hundred grand more to build a 2-storey house (land sits at the top of the hill overlooking the sea on both sides if elevated further up) and then selling it. Question is how much more will this increase the whole property and whether worthwhile vs selling land as is.

Anyone with experience building in Mandurah / Wannanup? Appreciate any inputs and ideas.

Cheers

What do you think you would get for the land today??

Also, the problem I see is even if you go double storey there are plenty of premium properties in Mandurah with ocean views/estuary views so still too much stock IMO. Risk is if you throw more money at it will you achieve the result you want or will you still be struggling to sell and really just increase your debt??

 

[Ausprop]

usually rent will at least service the cost of the construction.

in fact I just reconsidered your block value - I doubt 2 storey will stack up on such a low value block. you need to research comparable sales

 

[Rpf]

Look on realestate.com.au and find a similar house in a similar location and note the price. Then calculate/research how much a similar house would cost to build and you will have your answer.

I suspect you would be better off selling the land as it and cutting your losses.

Thanks MRO, MTR, Ausprop for your valuable inputs.

I did not notice a lot of sales over past few months in realestate.com.au for comparison. Similar 500sqm land was seen to have been sold last July for 150k as a baseline. The most recent double-storey sale around that area was dealt at 665k in Sept although that is for a much bigger land area at 783sqm, 5x3 and a much posher house that i could afford to build.

If i assume a more modest double storey building cost of 350-400k, would really need 550-600k sale thereafter to make it worthwhile. That is coming close to the other 665k plush home sold - tight. Moreover, in view of the current mkt pricing and turnover conditions, may still take a long time to divest this - hence as MTR has mentioned earlier, a case of throwing good money after bad.

Maybe consider a single storey build costing 200k, then target sell at 400k while renting out at 400/wk as Ausprop has pointed out?

 

[Ausprop]

Maybe consider a single storey build costing 200k, then target sell at 400k while renting out at 400/wk as Ausprop has pointed out?

sounds like a good thought to explore further, can you tart it up a bit and get more towards $475k?

 

[Rpf]

sounds like a good thought to explore further, can you tart it up a bit and get more towards $475k?

hmmm...looking at the low turnover and demand-supply situation, i figured $400k would be a tat stretched to begin with. if slightly sub-400k, should be able to attract some interest...i hope

will need to do more homework on sale/rental type of demand for that area. My key concern is if i do go ahead to build while the demand for housing is no better than for land, i am back to square 1 again, this time however with more capital tied up.

Mandurah is really a different kettle of fish....sigh

 

[bombers86]

I think building a single-story home on it would be a good idea, I've been trying to follow Mandurah a bit lately, and think it has some good prospects over the next 12 months following on from what has been a huge past 12 months for Perth.

Does anyone have any further input on Mandurah as I am also looking to build down in this area as I think prices for land in (most of) Perth have gone up so much it just doesnt stack up trying to find a development site there. Anyone work/live in Mandurah or follow the Mandurah market closely? There's been some positive reports in real estate columns about the South West picking up too so just wondering if any of you pro's out there have some feedback mainly on Mandurah - yes or no to investing here now? Prices are still a lot lower than there peaks so maybe this market has a bit of ground to make up? (So sorry if i have totally taken away from the original post, just thought this discussion would be relevant too)

 

[MTR]

Mandurah is still price sensitive.

Contact some of the experienced agents in the area, Lee Perry, Harcourts you could try him. Find out what is selling, and work from here.

This southern corridor is improving, I recently sold my Singleton property and got snapped up on first day.

I have property in Mandurah and indications from local agents is that they are expecting 5-6% increase this year.

MTR

 

[MTR]

Hegney

You may be interest in what the Hegney Group had to say about this market, dated 14.1.14:

Buyer?s market on coast
In a stark reminder of how far the property market in Western Australia?s holiday south-west has fallen, a coastal plot of land purchased for $1.9 million in 2006 is now on the market from $499,000.
Near Mandurah about an hour?s drive from Perth, the vacant 1800-square-metre Estuary Road block is near the heart of the pre-financial-crisis buying frenzy, when cashed-up Perth residents sought to secure a luxury weekender.
After a torturous half-decade, an abundance of heavily reduced properties might now offer a buying opportunity for the brave.
Gavin Hegney, of property valuers Hegney Property Group, said many luxury residences and plots of land on Mandurah canals were priced at below what it cost to build them or prepare the site.
?Mandurah represents some of the best value in the market,? Mr Hegney said.
?You can buy a canal block for $350,000 when it must have cost $500,000 to get the site ready.?
The abundance of properties means it is a buyer?s market and there are few, if any, future developments planned for the saturated market, which will limit new supply.
Property prices in Western Australia doubled between 2004 and 2007, with holiday spots in the south-west enjoying some of the biggest price gains. Price tags that rose fastest then fell hardest.
The owner of the Estuary Road property in Dawesville, just south of Mandurah, paid $1.9 million for the vacant site in mid-2006.
Further south, in Busselton, agent Neil Honey said the local market had not recovered as fast as he had hoped.

 

[justgjt]

greetings,

i have a ~500 sqm piece of land at Wannanup for a number of years now. bought it in 06 for 250k, think prices have dropped quite a bit since. The supply-demand situation there is definitely not ideal.

Been assessing what to do with it at the moment - selling it outright would be challenging in current mkt conditions. holding it would be the same approach since 06. The 3rd idea would be to consider spending a couple hundred grand more to build a 2-storey house (land sits at the top of the hill overlooking the sea on both sides if elevated further up) and then selling it. Question is how much more will this increase the whole property and whether worthwhile vs selling land as is.

Anyone with experience building in Mandurah / Wannanup? Appreciate any inputs and ideas.

Cheers

Hi Rpf.

I purchased a 1012m2 block in the East Port side back in 03 and did the same as you, sat on it for a while. I decided to build a 4x2 duplex development on it and fluked it at the right time. My break even for both 4x2's plus land was $495k. They took 20 months to build which was during the crazy time in Perth and the agents valuation came in at $938k. The bank val came in at $900k (which was a surprise) Weekly returns at that time was only $280 pw each and it has since moved up. I then used the equity to move onto purchase further IP's because thats the name of the game.

Yes you are correct times have changed since then.

What has changed in your circumstances that you no longer what to proceed with building ?
I take it that you no longer want to invest in the area. So if that is the case then it may be prudent to just sell the land and pay your exit cost and move your funds elsewhere. I do not know what a reasonable sale price for the block would be.

If your sitting on the fence maybe it would be better to build on it and rent it for a period of time. Get some decent depreciation on it and wait for the market to come back up some then shift it. Perth has been flat for a while and the pundits are tipping it to move forward over the next two years. The surplus stock in the area will eventually balance out and then prices will move upwards again. It all depends on your time line and plans / circumstances.

 

[VaSSagO]

After a torturous half-decade, an abundance of heavily reduced properties might now offer a buying opportunity for the brave.
Gavin Hegney, of property valuers Hegney Property Group, said many luxury residences and plots of land on Mandurah canals were priced at below what it cost to build them or prepare the site.
?Mandurah represents some of the best value in the market,? Mr Hegney said.
?You can buy a canal block for $350,000 when it must have cost $500,000 to get the site ready.?

I agree, I purchased a 611m2 canal block last year for $370k. Got Justin Langer and Kim Hughes across the canal from me.

 

[Rpf]

Hi Rpf.

I purchased a 1012m2 block in the East Port side back in 03 and did the same as you, sat on it for a while. I decided to build a 4x2 duplex development on it and fluked it at the right time. My break even for both 4x2's plus land was $495k. They took 20 months to build which was during the crazy time in Perth and the agents valuation came in at $938k. The bank val came in at $900k (which was a surprise) Weekly returns at that time was only $280 pw each and it has since moved up. I then used the equity to move onto purchase further IP's because thats the name of the game.

Yes you are correct times have changed since then.

What has changed in your circumstances that you no longer what to proceed with building ?
I take it that you no longer want to invest in the area. So if that is the case then it may be prudent to just sell the land and pay your exit cost and move your funds elsewhere. I do not know what a reasonable sale price for the block would be.

If your sitting on the fence maybe it would be better to build on it and rent it for a period of time. Get some decent depreciation on it and wait for the market to come back up some then shift it. Perth has been flat for a while and the pundits are tipping it to move forward over the next two years. The surplus stock in the area will eventually balance out and then prices will move upwards again. It all depends on your time line and plans / circumstances.

justgjt - thanks for sharing your own executed strategy - very interesting indeed. Timing is indeed everything and clearly evident you were able to unlock equity from it at the right time to leverage onwards.

For now, my stance would be to still monitor the mandurah market. when demand for sale or even rental improves to a more sustainable level, then i would seriously consider building on it. My land is not overly outstanding in nature, just a modest plot at the top of a small hill overlooking water on both sides if elevated further - which you can find a dozen more such parcels all over the area. hence nothing too differentiated.

Are you still renting out your unit (assuming still holding the property)?

 

[MTR]

I agree, I purchased a 611m2 canal block last year for $370k. Got Justin Langer and Kim Hughes across the canal from me.

Cheap as chips, I wonder what you would pay for this during the boom time, probably double the price.

Good for you, will this for your dream home, holiday home?

 

[justgjt]

justgjt - thanks for sharing your own executed strategy - very interesting indeed. Timing is indeed everything and clearly evident you were able to unlock equity from it at the right time to leverage onwards.

For now, my stance would be to still monitor the mandurah market. when demand for sale or even rental improves to a more sustainable level, then i would seriously consider building on it. My land is not overly outstanding in nature, just a modest plot at the top of a small hill overlooking water on both sides if elevated further - which you can find a dozen more such parcels all over the area. hence nothing too differentiated.

Are you still renting out your unit (assuming still holding the property)?

Yes, I still have both of those properties. Rents are increasing as per the norm. I could not guess what the prices have come down too but I am not overly bothered as its part of the cycle. I think Port B was a little ahead of its time but over a longer time frame I am of the opinion that it will move forward.

 

[justgjt]

Cheap as chips, I wonder what you would pay for this during the boom time, probably double the price.

Good for you, will this for your dream home, holiday home?

That is a good price.

I did look at canal blocks in the past but was not overly keen on sitting on my balcony watching people sitting on their balconies watching me.

So I went ocean front.

 

[VaSSagO]

Cheap as chips, I wonder what you would pay for this during the boom time, probably double the price.

Good for you, will this for your dream home, holiday home?

Dream home, won't live in it for 5-10 years though (once we semi-retire). Was thinking of picking up another block though as a build and sell

This block was better than most due to above average size allowing for a good size single storey house and the canal at the rear is alot wider than normal, so alot further away from the neighbours.

This would of gone for ~$500k during the boom. My BIL bought a block down therelast year as well, paid $324k and the previous owner paid $440k for it back in 05'.

 

[Ausprop]

You may be interest in what the Hegney Group had to say about this market, dated 14.1.14:

Buyer?s market on coast
In a stark reminder of how far the property market in Western Australia?s holiday south-west has fallen, a coastal plot of land purchased for $1.9 million in 2006 is now on the market from $499,000.

wow a 75% drop and still not sold... and some people deny that prices dropped as much as 40%! and let's not forget this is over the course of 8 years