Melbourne Outer Suburbs - Ripple Effect

Hi there,

What's happening in the outer suburbs of Melbourne?

Are people seeing value in some of the outer suburbs now?

Or have they already risen a lot in the last 6-12 months (like the inner/middle ring suburbs)?

I think it's getting a bit late to get good value property in many inner/middle ring suburbs of Melbourne now, and maybe time to look at the outer ring to catch the wave from the ''ripple effect".

As an example, I bought an inner city IP at 475k in Dec '08, that's now worth about 625k, so about 150k or 32% growth in a bit under 12 months. So buying this sort of property now, you would have already missed out on massive short-term growth. Hence, my theory is to look further out for better value now, and better short to medium-term growth.

Thanks.
 
Montmorency area has taken off. Units/Townhouses are sold almost as soon as the sign goes up. Older stand alone dwellings are being sold for development. Sales are at asking price or higher.

I have a friend selling a 4 BR house for auction on the 21st Nov. On the first OFI there were 23 groups through.

Chris
 
Been looking for a PPOR around Ringwood North, Croydon North area.

Selling within 1-2 weeks, and 3-4 bedroom, 1970's buid, 750sqm are going for 500-600K.
 
Hi there,

What's happening in the outer suburbs of Melbourne?

I have a couple of IP's in an outer suburb of Melbourne. I noticed when looking at the area recently that nothing is available in this area under $300,000. That wasn't the case even a month ago!

It's possible that the ripple effect may have already occured - although this is just my observation based on a cursary glance at the market. (No in depth research undertaken!)

As always, it is difficult to know where to buy to capture instant equity! :eek: Well done JIT. I'm going to follow your crystal ball from now on. $150,000 (32%) in less than 12 months is certainly impressive. I'd say that was an outstanding investment! :D

Regards Jason.
 
Absolutely ridiculous. Who can afford these sort of prices? I've lived in Ringwood for 10 years and I don't think this is sustainable.
sorry, can you explain what your living in Ringwood for 10 years has to do with the property prices there ?

and it surely is not unsustainable... this area will continue to grow due to upcoming development.. surely, if blackburn, mitcham etc have grown exponentially, then there'll be some ripple effect on areas like ringwood and north ringwood, given that these are well connected areas with adequate amenities
 
As an example, I bought an inner city IP at 475k in Dec '08, that's now worth about 625k, so about 150k or 32% growth in a bit under 12 months.

Forgive me for being sceptical, but having owned a SF renovated Edwardian cottage in Richmond for the last 14 years, which we just sold at auction, I'm very dubious of your stated "growth" over the last 12 months.
 
Forgive me for being sceptical, but having owned a SF renovated Edwardian cottage in Richmond for the last 14 years, which we just sold at auction, I'm very dubious of your stated "growth" over the last 12 months.


JIT will no doubt answer this himself, but my guess is he bought:

1) When the fear of the GFC was at it's peak (ie late last year) and market sentiment was very low.

2) Bought below market value.
 
What's happening in the outer suburbs of Melbourne?

I am actively looking for 2 / 3 Bedroom units in Ringwood. Having watched the market since early this year I have seen a large price increase.

Unrenovated 2BR units selling for 260-290k late last year are now going for 310-320k or more, with these properties being snapped up extremely fast.

So I think any sort of ripple opportunity has already passed, the boom is well and truly in motion in this outer area.
 
sorry, can you explain what your living in Ringwood for 10 years has to do with the property prices there ?

and it surely is not unsustainable... this area will continue to grow due to upcoming development.. surely, if blackburn, mitcham etc have grown exponentially, then there'll be some ripple effect on areas like ringwood and north ringwood, given that these are well connected areas with adequate amenities

I bought my house in Ringwood 10 years ago for under $200K, and it was a nicer place than that one. Sure it's got a good amount of land, but $623K for a block of land? Not within walking distance of a station, not in an activity centre, just in an ordinary suburban street 25km from the city. How can this possibly be worth around 7 times average household income?

To the developers out there, assuming someone has bought this to knock it down and put up townhouses, how much would you need to sell them for to make it work?

When I see this sort of thing I really think there will be a crash sometime soon. I thought it would be a gentle stagnation, but the mania has returned.
 
Sure it's got a good amount of land, but $623K for a block of land?
Sometimes land is more valuable to an individual if for instance you owned one or both of the blocks each side, or the one behind it.

This would allow more units to be built, thus reducing the land cost for each.

Picture it this way, if you had a single block and ran a driveway up one side for 3 units, if you had the block next door aswell you could have 3 more units by just adding a little to the driveway.
 
JIT will no doubt answer this himself, but my guess is he bought:

1) When the fear of the GFC was at it's peak (ie late last year) and market sentiment was very low.

2) Bought below market value.

Or maybe it's not worth what he thinks/hopes it is.

And yes, I'm well aware of what the market was doing late last year. Perhaps he bought off the plan, or there are some other miraculous reasons that his property has outstripped all other growth by over 100% in this narrow time frame.
 
Or maybe it's not worth what he thinks/hopes it is.

And yes, I'm well aware of what the market was doing late last year. Perhaps he bought off the plan, or there are some other miraculous reasons that his property has outstripped all other growth by over 100% in this narrow time frame.

Yes, it would depend on the type of property he bought too. I guess we will have to wait for his reply to find out further details about his equity gain.

Regards Jason.
 
Hi there,

What's happening in the outer suburbs of Melbourne?

Are people seeing value in some of the outer suburbs now?

Or have they already risen a lot in the last 6-12 months (like the inner/middle ring suburbs)?

I think it's getting a bit late to get good value property in many inner/middle ring suburbs of Melbourne now, and maybe time to look at the outer ring to catch the wave from the ''ripple effect".

As an example, I bought an inner city IP at 475k in Dec '08, that's now worth about 625k, so about 150k or 32% growth in a bit under 12 months. So buying this sort of property now, you would have already missed out on massive short-term growth. Hence, my theory is to look further out for better value now, and better short to medium-term growth.

Thanks.

Just curious which suburb you bought inner city IP?
 
It's not quite inner city, but Thornbury has had exactly that kind of growth in the past 12 months, as has Northcote....it does happen.
 
I really shouldn't have mentioned that little anecdote as I've now derailed my own thread.

Forgive me for being sceptical, but having owned a SF renovated Edwardian cottage in Richmond for the last 14 years, which we just sold at auction,

Great, but I'm not sure what the relevance of this is to anything??

I'm very dubious of your stated "growth" over the last 12 months.

I'm not trying to sell anything here, it is what is based on most recent comparable sales.

In a nutshell:

- property was purchased a few weeks after ''Black Saturday'', reported then as the lowest auction clearance rate in Melbourne in 4 years. Not that I pay any attention to these figures or news articles, but it was at a time when fear and uncertainty in the market were very high, and confidence low.

It was a buyer's market (a bit like in 2005 in Melbourne), but most buyers were sitting on their hands and not taking any action...

http://www.theage.com.au/national/a...collapse-to-a-fouryear-low-20081025-58oe.html

- property was passed in at auction
- property was part of a deceased estate
- property was purchased at about 10% below it's likely valuation 6 months prior
- an unconditional offer was made
- property was purchased in a blue chip inner-city suburb, predominantly owner-occupied, in a great street, walking distance to train and cafe late's
- property appealed to owner occupiers, investors, retiree market
- no renovation, development, OTP or anything like this involved
- liveable and rentable as it was, but with scope for future value-adding
- no buyer's agents needed

And then... market sentiment changed, and the rest is history!!

Whilst I was confident that the property's value would increase significantly in the short-term, I did not expect it to rise this fast in under 12 months. So in a way, I'm as surprised as you are!

I've got similar examples of this for all 4 of my other purchases, and with similar growth rates.

All the fundamentals of a good property purchase must be there, as well as buying at the right price and, most importantly (if you want high short to medium-term growth), at the right time.

Hope this helps.

I'm now going to take that 150k equity and try and knock down the price on one of these babies:

http://www.carsales.com.au/all-cars...lcarhome&__Nne=15&trecs=33&__sid=122D6E77B870

Just kidding!!
 
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Great, but I'm not sure what the relevance of this is to anything??

Hope this helps.

I know the inner city market well, which is why I mentioned my situation. I'm also a licensed estate agent and auctioneer of 20 years, so forgive me for having had 100's of examples where owners think that their house is worth far more than they often are.

That said, I left real estate 4 years ago having purchased a non-related business in Richmond.

Btw, well done on always buying a bargain. You obviously have the midas touch.
 
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