Melbourne Outer Suburbs - Waiting For The Ripple...

[JIT]

Hi everyone,

The ripple effect has clearly begun as evidenced by the recent performance of inner and bayside Melbourne, and some people are already being priced out of some of Melbourne's blue-chip suburbs.

Whilst I still feel there are opportunities to buy quality property in inner and middle Melbourne suburbs, for those of us who might not be fast enough to catch this boat, it might be wise to start thinking of some outer suburbs that may do well when the market really starts to move.

What are people's thoughts on which outer Melbourne suburbs are relatively undervalued and have the greatest potential for significant capital growth, as the Melbourne market enters the next boom phase?

Most of my research and investment to date has been in inner Melbourne, so I'd be interested to hear what others think about the outer suburbs...

Thanks,

GSJ

 

[Harris]

Hi GSJ,
I am biased very strongly towards bayside outer suburbs - the belt stretching from Aspendale , Edithvale through Chelsea, Seaford and Frankston terminating at Frankston South.

I have done my own research (explained in another thread "Purchasing in Vic") and have bought strongly in Frank and Frank Sth.

The activity level in those suburbs especially Seaford/ Frankston is so strong that you just need to log on to any property search engine and compare those suburbs with any other outer suburbs to track the market buoyancy.

Average selling times have come down from 67 days down to 7 days (MPRE, Crowders, Andrew Milne, Hocking Stuart), over 40% of the listings in those suburbs at any given time are "under contract/under offer" versus about 6% for other outer suburbs, interstate investors are snatching over a quarter of properties available for sale, massive amount of high end residential development are springing up all the way from Bonbeach right down to Frank Sth and a lot of media coverage is fuelling the sentiment.


Coupled with great beaches, affordable price points (though most beachside prop have increased sharply) and rental yields of close to 5.5%, it makes a strong case compared with other outer suburbs.

Having said all that, it is still lagging behind in % price increase when compared to inner melbourne suburbs on a very bullish run in the last 6-12 mths.

Given the ripple effect, I am confident that off the back of the busiest time in Frankston real estate market, there will be significant upward movement in property values in coming months.

Cheers

Harris

 

[The Y-man]

Properties with big land components (and big price tags) seem to move pretty slow....

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103989753&t=res

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103949875&t=res

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103887018&t=res

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103918577&t=res

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103929094&t=res

http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103742247&t=res



Mind you, not sure if they are already sold, and site not updated!


Cheers,

The Y-man

 

[toony]

I agree with Harris.

I bought a property with an old place, on a large block, in Edithvale for $340k 12 months ago. I did a renovation to make it rentable - even then its a little doubtful.

However 200m down the same street (further than mine to beach and station) a place sold for $530k last week. The place had been renovated.

So I am more than happy with my purchase and have seen a good return. Based on this price, I see my old shack may be worth $430k.

 

[JIT]

What's happening on the ground in Melbourne's Outer Suburbs?

BUMP!

Has anyone got examples they could share of any significant price falls in properties in Melbourne's outer suburbs in the current market?

I believe the statistics show that generally speaking outer suburbs are either still stagnating, or in some cases falling...

Clearly there are still exceptions to this, and some outer suburbs may still be showing good CG.

I'm more curious though to hear which outer suburbs are struggling in the current market and would like to hear some examples if possible...eg. of the type of price falls (if any) people are seeing in % terms...?5%, 10%, 20%, 40%???

Thanks,

GSJ

 

[Harris]

BUMP!

Has anyone got examples they could share of any significant price falls in properties in Melbourne's outer suburbs in the current market?

I believe the statistics show that generally speaking outer suburbs are either still stagnating, or in some cases falling...

GSJ

I would love to know which ones are falling..!

Frankston, Seaford, Carrum, Chelsea, Edithvale and surrounds are still going super strong with unabating rise in values.

Dandenong, Noble Park, Springvale are keeping strong (definitely not falling) and although do not have high activity level, they are still showing slight rise in values.

Werribee, Hoppers etal are slow in activity levels but no drop in prices, infact I was chatting to a couple of buyers who bought in those areas lately and for them they have seen a real rise in value at the bottom end of the market.

Melton and Hillside are doing very well. Activity in Melton is high and with some major projects in pipeline, it should only go up. Hillside has done quite well over the last few years as well.

Craigieburn, Roxburgh Park and surrounds are definitely not falling either. Still high demand there and whilst there are pockets that havent risen much in the last couple of years - new land release is still popular as ever and shows strong demand.

Broadmeadows..! Can it go any lower than $170- $180k - not sure. Perhaps some McMansions might drop a bit- I would see it struggling for obvious reasons long term.

Did you look at any specific outer burbs GSJ..?

Harris

 

[chrispy]

North-East is going up, it lagged for a while but is moving now. Bundoora, Watsonia, Montmorency, Eltham still slower, I believe, than bayside areas with rises of around 7.5 to 10% in past year.

New houses around South Morang, Mernda and Doreen (approx 20kms from CBD) can still be purchased for mid $200k's, which is not bad value:

http://www.realestate.com.au/cgi-bi...eader=&c=68826548&s=vic&snf=rbs&tm=1191133367

Chris

 

[JIT]

I would love to know which ones are falling..!

People talk about property prices 'crashing', and I'm sure this must happen to some degree. I could probably guess a few suburbs that might be stagnating or falling...and these most likely would be outer suburbs, but I don't have any specific examples I could share at present, so I was hoping someone here who's 'on the ground' in these suburbs has...I really just want to give the D&G mob something to smile about , I think we've scared them away!

I'm only tentatively looking at outer burbs now. Generally speaking, I think it would be very hard to beat outer bayside, and I think you're right on the money here Harris. Following this, outer south-eastern suburbs would be next. Entry level in outer eastern/north-eastern suburbs might (?) cost you a bit more comparatively speaking.

I certainly think there is potential in the outer northern suburbs, but I'm not yet convinced there is a significant 'ripple' reaching here just yet. Outer western suburbs - despite what people say about places such as Melton - I am not really convinced about.

Note my comments are in the context of picking areas with potential for strong CG in the next 2-5 years (ie. short to medium term). So this discussion may not have any relevance to the long-term investors here, eg. buy and hold for a >7-10 years time frame. I'm a bit impatient!

GSJ

ADD: This is the thread for everyone who has been priced out of inner Melbourne!

 

[Property Mogul]

What about Lalor? Only 17km from the CBD and the prices start below 250k. However, I know next to nothing about the area. Can anyone help?

 

[chrispy]

Lalor has always been a cheaper area. Its close to industrial areas, is flat, and popular with migrant families looking for cheaper accommodation.

There have not been any developments to gentrify the area.

Chris

 

[Property Mogul]

On average a 9.9% return since 1996 (according to PRD). Worth a second look I reckon.

 

[chrispy]

Rents are lower, reflecting the standard of property available.

Have you looked at Mill Park, Reservoir, Bundoora?

Chris

 

[jingo]

[/QUOTE]What are people's thoughts on which outer Melbourne suburbs are relatively undervalued and have the greatest potential for significant capital growth, as the Melbourne market enters the next boom phase?

Most of my research and investment to date has been in inner Melbourne, so I'd be interested to hear what others think about the outer suburbs...

Thanks,

GSJ[/QUOTE]

Hi GSJ,

Some of the areas I believe to be undervalued in the Western Suburbs of Melbourne are as follows. While I don't know if they will see significant capital growth, they have features that make them worthy of consideration from an investment point of view. They are:

ALTONA

Altona is an attractive beachside suburb with wide tree lined streets and beautiful parks. The suburb lies approximately 15 km's in Melbourne's West. A train line connects Altona to the city. The freeway is accessible from Altona, but involves a 5 minute drive down Miller's Road. This year property prices have moved up by approximately 12%. The range of housing stock consists of:

a) Many brick veneer homes there were built during the 1960's and 1970's. There are also many timber style homes that were built earlier. Many of the older houses are on large blocks, which are currently being sold to developers. Houses range in price from mid $300's upwards.

b) Many modern luxurious town houses have been built in the streets closest to the beach. Older houses have been torn down to make way for these new town houses.

c) Luxurious homes are being built along the Esplanade (the street which faces the bay). Older homes (1950's style) are often sold off and new mansions are built in their place. The price of a luxuious home on the Esplanade sells for between 1.5 and 2M.

ALTONA MEADOWS

Altona Meadows is located 17km's from the CBD. It is a 2 minute drive from Altona Meadows to Altona and the beach. The suburb is close to a train line, and has excellent access to the Princess Freeway. Many people who live in Altona Meadows are employed by industries which are based in the surrounding areas of Altona and Laverton. Many people also commute daily by car and train to work in the city.

Property in Altona Meadows has moved up by 7% this year. There are a range of properties available:

a) 2 bedroom units - starting at approximately $220,000
b) A small % of Town Houses which sell for around the $275-$280 mark.
c) 3 bedroom houses starting at approximtely $245,000
d) 4 bedroom houses which range in price from $280,000 upwards.

The housing stock is mainly brick veneer. The older part of the suburb was established during the late 1960's-early 1970's. Extensive building occured in the suburb during the last boom, and most of the suburb is built out. (There is not much land available in Altona Meadows now, and blocks of land on 450sqm are selling for approximately $185,000). There is not much stock available for sale in the suburb at the moment. A quick glance at real estate.com revealed only 55 properties avaible for sale. A couple of years ago there were approximately 200 for sale at any one time.


LAVERTON

Laverton is situated on the other side of the Princess Freeway opposite Altona Meadows. Property in Laverton has averaged approximately 10% growth p/a over a 10 year cycle. Recently, I have noticed that prices have moved again. In 2003 it was possible to pick up property for around $195,000 to $200,000. Now I notice that many properties are selling above $220,000. The suburb was primarily established to house the RAAF personel, and many 1950 style homes exist. The suburb is now popular with many of the workers from nearby factories and industry. Recently an announcement was made by the council that the RAAF base would be turned into a commercial and residential development. There are not many houses available for sale at the moment. A quick glance the other day revealed only 12 available for sale in the suburb.

I believe that all three suburbs above have the potential to increase in value due to their relatively close proximity to the CBD. The journey to the city by car is made easy by the dual four-lane freeway, and the train line runs directly into the city. Furthermore, all suburbs are close to the Altona beach. Add to this, all three suburbs are closer to the city than Point Cook, and are largely built out. (There is not much land available in these areas).

Point Cook is close to Altona Meadows and Laverton, and there is currently an extensive shopping centre and commercial centre being developed there at the moment.

From an investment perspective, tenants in the area include:

1) Workers who are employed by the industries which surround the area
2) Single parent families
3) Families who are up-grading their homes and building in the surrounding areas of Point Cook and Sanctuary Lakes.

Regards Jason.

PS: My PPOR is in Altona Meadows, and I have 1 IP there as well.

 

[JIT]

Thanks Jason, good post. Will have to re-consider my stance on the outer west now! - at least for bayside outer west.

GSJ

 

[The Y-man]

People talk about property prices 'crashing', and I'm sure this must happen to some degree. I could probably guess a few suburbs that might be stagnating or falling...and these most likely would be outer suburbs, but I don't have any specific examples I could share at present, so I was hoping someone here who's 'on the ground' in these suburbs has...I really just want to give the D&G mob something to smile about , I think we've scared them away!

GSJ

ADD: This is the thread for everyone who has been priced out of inner Melbourne!

I don't think these have "crashed", but they have been on my watchlist since time immemorial - they keep changing agents, or simply readvertising as "new"! (feels like some have been on the market over a year?)

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=76897790&s=vic&tm=1191158446
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103983907&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103881210&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=102817670&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=104157933&t=res

Cheers,

The Y-man

 

[BV]

I don't think these have "crashed", but they have been on my watchlist since time immemorial - they keep changing agents, or simply readvertising as "new"! (feels like some have been on the market over a year?)

http://www.realestate.com.au/cgi-bi...=&fmt=&header=&c=76897790&s=vic&tm=1191158446
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103983907&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=103881210&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=102817670&t=res
http://www.realestate.com.au/cgi-bin/rsearch?fslm=1&a=o&id=104157933&t=res

Cheers,

The Y-man

Y-man
Why are you watching them?
Are you looking for a new PPOR?
Cheers

 

[The Y-man]

Y-man
Why are you watching them?
Are you looking for a new PPOR?
Cheers

Always!

The one we have is pretty good, but I still think we need a bigger back yard....

Cheers,

The Y-man

 

[Dis]

Donvale (where I live) is starting to see alot more "for Sale" signs out now (last 2 months). Prices have gone up about 30% over 4 years in the streets around me, and most of that in the last 2 years. From an investment point of view I actually dont like Donvale so much (lack of public transport) but if the wave has just reached us, Mitcham / Nunawading may be worth investigating. Rail link, good access to freeways, older houses with high land component.

 

[Kenster]

...I still think we need a bigger back yard....

... And a scooter to fetch the mail?

 

[oc1]

Have you looked at Mill Park, Reservoir, Bundoora?

Chris

Reservoir has done 50% over the last year, primarily for the standard 3-4 bedroom home in the better side. Huge demand!!