Melbourne Outer Suburbs - Waiting For The Ripple...
- Thread starter JIT
- Start date
Good question MTR.
Unfortunately I have no anecdotes to offer regarding Melbourne's inner suburbs but an agent in Ringwood East told me last week that housing is still booming across all price ranges despite higher interest rates and despite last year's big gains. She said she has worked in real estate in the area for years and has never before seen so many keen buyers - many of which come from inner and middle suburbs which are now priced out of reach.
I was pretty pleased to hear this - makes a nice change from all of the recent talk of mortgage stress and recession.
Cheers - Ben
Unfortunately I have no anecdotes to offer regarding Melbourne's inner suburbs but an agent in Ringwood East told me last week that housing is still booming across all price ranges despite higher interest rates and despite last year's big gains. She said she has worked in real estate in the area for years and has never before seen so many keen buyers - many of which come from inner and middle suburbs which are now priced out of reach.
I was pretty pleased to hear this - makes a nice change from all of the recent talk of mortgage stress and recession.
Cheers - Ben
ffc
I agree with the ripple affect...
As interest rates increase people will still want to own homes...they will adjust their expectations and move further out and borrow less. The only factor we have to be careful about is employment because this is what will affect demand for housing.
Mortgage stress is less of an issue as buyers will take on less of mortage and buy in the more affordable suburbs.
I agree with the ripple affect...
As interest rates increase people will still want to own homes...they will adjust their expectations and move further out and borrow less. The only factor we have to be careful about is employment because this is what will affect demand for housing.
Mortgage stress is less of an issue as buyers will take on less of mortage and buy in the more affordable suburbs.
Not sure I understand this. I don't want them to borrow less.
Say a couple can afford a $400k house. They look inner suburbs - can't afford anything, so they look middle suburbs. Soon they can't afford there so finally they look in the outer suburbs. Still spending as much as they can afford.
This is the ripple effect?
Do you know how many percentage is the capital gain in carrum downs from last year? and which one is higher demand in renting, 2 bedroom or 3 bedroom? unit or house?
I am interested in the area, so I need more input since I am new at this.
Thanks.
I am interested in the area, so I need more input since I am new at this.
Thanks.
Hey all,
Reading the Herald Sun today Frankston and Carrum Downs received some positive press as "Hot Spots" for 2008.
Mornington got a mention also
Merry Christmas all
That's basically how it works. The other factor in this is the quality of the property. It's not just the cost, but what you get for your money.
They want the nice house in a nice area, so keep looking further out until the standard of house and local amenities of the area satisfy their budget.
Another term used for this scenario is "over-flow suburb". This is where as the mored desirable suburbs become too expensive, everyone moves to the next closest and more affordable one that has similar amenities and quality of houses.
Mate, go buy Australian Property Investor magazine (API) it lists all suburbs all over Australia and gives you the figures for the past 12 months. It has listed Carrum Downs as having achieved 5.9% growth in median prices over the past 12 months, averaging over 9% for the past 10 years.
Hi Theheath,
Sorry, I don't have a copy of the latest API magazine in front of me. But when you say the last 12 months. That would be for median values up to what date?
When I used to buy API, it's data would always be 4+ months old.
What's the use?
Sorry, I don't have a copy of the latest API magazine in front of me. But when you say the last 12 months. That would be for median values up to what date?
When I used to buy API, it's data would always be 4+ months old.
What's the use?
http://www.theage.com.au/news/natio...operty-shakeout/2008/03/16/1205602195506.html
Did you guys get your ripple or did it break on the rocks?
Did you guys get your ripple or did it break on the rocks?
Didn’t break on the rocks for me Dis..
Got my 25% + CG for my outer suburb portfolio and over 30% for inner in the last 12 months. Not much of a difference for me between my inner or outer portfolio for capital growth..
But with my outer portfolio’s rental yields at 6.6% (excluding 2 development blocks) with fixed interest rate of around 7.4% mean that I can hold the outer indefinitely without bleeding my cash flow too much. Look forward to holding the outer as pressure on rents increases and yields hit 7% mark in the next 6 months.
Inner portfolio yields started with 3.5% 6 years ago and sitting at around 5.9% currently on original purchase price (after massive cash shortfall over the last 6 years).
So if I were to start all over again, I know which areas I will be giving a miss in order to gain the biggest prop portfolio (in $$ term) with the minimum holding costs.
How did you fare..?
Harris
I got 15%-20% growth in areas I am holding (Melton and Wyndham shires) over the last year. The real bonus has been rental return which are sitting above 6%...I expect these will be over 7% by year end.....I fixed some rates at 6.5% and 6.95%....so expect these to be almost positively geared.
Based on what I am hearing from agents the demand is still steady in the suburbs which bought in due to affordability. Also, with the new infrastrucutre being put in place...these suburbs are expected to perform. There are lots of people pouring in from the SE burbs due to affordability.
I expect growth to continue....but will be 5%-10% this year.
Hi Dis,
Great article! Wife and I normally have a laugh at the cr@p written in the Sunday Herald Sun about Melbourne’s property trends. I didn’t realize that The Age could be just as hilarious.
Fortunately, when it comes to investing, we pay more attention to value, growth and yield and not too much notice of “prestigious suburbs” or “auction clearance rates” (sorry Enzo).
Regards – Ben
Ours are in the middle ring - Heidelberg and Donvale. I'd be guessing at about 25-30% over the last 2 yrs. The most recent purchase in Heidelberg west is probably up 15-20% in 6 months.
The reason I asked the question was because I plan on investing in the outer subs over the next few years as oportunities arise:
http://www.somersoft.com/forums/showthread.php?t=40437
I was curious how much price and yield discrepancy there is in the outer burbs right now.
Traralgon
Cheaper end up 20% easy.
Middle of the range up by a little less
Land up around 25-30%
Morwell
Cheaper end up 10-15%
Middle range up a fraction
Land up a little unlike Traralgon
Traralgon is the pick of the bunch. Rents are up and growth is evident. There is also a sever land shortage. Justin Madden recently knocked back a 8000 lot subdivision. This only means more upward pressure on price. Plus a massive amount of money sent into the region by the Govt and private sector. Did i mention the hundreds of jobs coming up soon?
Traralgon
Cheaper end up 20% easy.
Middle of the range up by a little less
Land up around 25-30%
Morwell
Cheaper end up 10-15%
Middle range up a fraction
Land up a little unlike Traralgon
Traralgon is the pick of the bunch. Rents are up and growth is evident. There is also a sever land shortage. Justin Madden recently knocked back a 8000 lot subdivision. This only means more upward pressure on price. Plus a massive amount of money sent into the region by the Govt and private sector. Did i mention the hundreds of jobs coming up soon?
Yes, I did get a pleasant surprise on the capital growth side from Traralgon, and it's further aided by bullish comments from magazine and local newspapers. On the way to Lakes Entrance last weekend, I did notice that only Sale and Traralgon have decent weekend crowd, which confirmed a renowned property researcher's bullishness about these areas. Clean coal pilot plant should start in a few months time, as confirmed by my PhD colleague who's still working in Monash Uni at the moment.
I am also very bullish about Frankston South. However, since my exposure is a 2bd room unit, I am yet to see any kind of obvious capital growth, as opposed to what's experienced by most investors here. However, the yield growth is fantastic, and that should relieve our holding cost a great deal in not too distance a future.
Who is it?
