Been a long time watcher and sometimes purchaser of detached dwellings in inner city Melbourne property. Whilst everyone knows the strength of the market througout this year, two auctions over the weekend (one in Windsor and other in Seddon) have crystallised in my mind, that there is little real value in this sub-market.
The latter in which I was seriously considering, the prices being paid are very very strong with multiple bidders (5 at each). I have also prided myself on being able to pick the value of properties, but both auctions went well over what comparable properties had sold for.
Windsor property sold for $726k whilst this
Seddon property sold for $739k.
In late 2007 I purchased a similarly sized, far more original, better floorplan but arguably inferior located property in Windsor (a few mins walk from the one above). A deceased estate but in almost identical condition as this property. This property sold for over $115k more than what I had purchased it for. That is almost 20% above the 2007 value. I cannot see that being value relative to possible future capital growth and holding costs, even where yields are traditionally lower in inner city Melbourne.
From an investor's point of view, in the inner city Melbourne market for detahced homes is far too hot for a good value purchase in my opinion. If you have property there, enjoy the ride, hopefully it is not met by a 2008-like fall.
Might be time to change what and where I am going to buy.