Melbourne Property Cycle Update

[jcwc888]

That's fair but the influx of people will be skilled workers due to Australia's lack thereof, I believe. It is my belief that inner city may bust but "suburbia" will continue to flourish as the population continues to move further out as housing becomes scarcer and scarcer closer to the city. Sounds like commonsense to me but by no means do I claim to be an expert, I'm just an accountant.

I doubt it. Back in the day it 90s.. it was easy to go to the city to work... nowadays it takes like 1-1.5 hours from clayton.

Unless the corporates and court houses, melbourne uni, swiburne, monash and the rmit all move to point cook or rowville or frankston - then yeah.. but with the current infrastructure growth in place - it is unlilkely it could go down 5-10% but if you saying outer suburbs will outpace the inner city like hawthorn, south yarra, balwyn, caulfield..unlikely.

 

[Invest]

All I can see becoming more popular in Melbourne are high rise city and inner city suburbian apartments...as long as people travel to CBD for work, inner city suburbs will keep their prices as blue chip suburbs.

 

[DeeHwa]

All I can see becoming more popular in Melbourne are high rise city and inner city suburbian apartments...as long as people travel to CBD for work, inner city suburbs will keep their prices as blue chip suburbs.

I would agree, although I would think low-rise apartments/flats would be more popular than the high rise city ones because of scarcity value, boutique nature and low outgoings given high body corp fees with high rise apartments in the CBD.

There are a few issues that come into play. Firstly, there are more and more people wanting to live close to the CBD, and judging by auction results all around the 15km mark (and sales results in general over the past year), it seems to reflect this. Most people who bought real estate last year in inner city should be seeing over 20% minimum of capital growth in less than 1 year. I for starters, would be disappointed if my house doesn't hit 30-40% capital growth within 9 months of purchasing. Another reason we would see continual strong growth inner city (assuming there is continual price growth - I am not going to argue whether prices will fall or rise here, or we would be here forever) is that a lot of people ALSO buy based on their confidence and anticipated levels of how much they can sell it for later on (whether they sell or not is irrelevant). People these days perceive almost anything that is close to the CBD as a prime investment, regardless if it is a Toorak mansion or a 1 bedroom shoebox flat (or a tin shed for that matter). Current confidence of inner city reflects anticipated confidence that someone in the future will also bring this same confident mindset when it comes the time to sell (or get revalued) and hence, fueling the continual popularity of not only inner city, but blue-chip prime real estate in general.

Hence, there is no secret as to why over the long term, blue chip places have in the past roared to extraordinary supreme status. Nearly everyone goes in and pays whatever price it is, knowing with UTMOST CONFIDENCE, they will get their year on year $100K capital growth or whatever it is they anticipate (maybe $1mil year on year in Toorak). Whether they do is not the issue, it is the expectation of future growth that dictates the price paid today and as some people claim, perhaps economics can be more explained by psychology than theory.

 

[MTR]

http://www.heraldsun.com.au/news/me...brakes-on-market/story-e6frf7jo-1225805549577

Just thought I would post this one.

Cheers, MTR

 

[Bigtone]

If the GFC and tightening of credit policies has taught us anything it is "get your money out when you can"!!

Anytime you can re-value and get cash out IMO, do it.

Rules for "cash-out" are getting harder and harder and some lenders closed the door for new money completely.

I say get your money now and re-apply again in 3 months if the property has continued to grow further.

Cheers

Bigtone

 

[RocketMan]

not necessarily Bigtone - what are you going to do with that extra equity? If house prices are too high then you would be stupid to leverage yourself up even more with another acquisition...

 

[super_sam]

Buy a business or use the cash out to fund a new one, shares, managed funds, fx trading or even buy a property with approvals to develop. Many options other than buy and hold property investment

 

[Deltaberry]

Yea well if property prices are crashing, the rest of the economy is probably not that great any way. Not to mention fx / derivatives etc trading is gambling even for experienced traders at Optiver, and I suspect you're not one?

 

[super_sam]

No - I work in property finance in the private lending area. I cant comment on either Rocketman or Bigtone however which is what I was responding to (or anyone else reading this for that matter)

Was just putting other ideas out there. Of course you're right about if property is down many other things will also be down but there are businesses that are recession proof whether you invest in these by owning the business or buying shares in it...

 

[Bigtone]

i was talking about getting it out when you can, you don't need to spend it straight away just get it when u can. u can put back into loan and take when required.

if u wait until you need or want it the rules and or conditions could have changed and u can't get it out anymore, this has happened alot over the last 12-18 months