[Melbourne] Thoughts on apartment as first home/investment?

[zed_kid]

Do what I do. Look for older buildings (70s 80s) with few apartments in them. Look for 2br apartments with separate dinning room, covert it to a 3rd bedroom. Throw some paint on the walls, do kitchen, bathroom, new floors (carpet or timber or laminate) it’s instant CG. Stick to Toorak, South Yarra, Prahran, Armadale.

PS im looking to drop south yarra in favour or Armadale / hawthorn, too many new developments in SY for my liking

 

[Aaron_C]

PS im looking to drop south yarra in favour or Armadale / hawthorn, too many new developments in SY for my liking

Very good point. Add Richmond to that list of oversupply of apartments

 

[7smurfs]

Do what I do. Look for older buildings (70s 80s) with few apartments in them. Look for 2br apartments with separate dinning room, covert it to a 3rd bedroom. Throw some paint on the walls, do kitchen, bathroom, new floors (carpet or timber or laminate) it’s instant CG. Stick to Toorak, South Yarra, Prahran, Armadale.

PS im looking to drop south yarra in favour or Armadale / hawthorn, too many new developments in SY for my liking

Thanks for your advice zed_kid/Aaron_C. I really appreciate your insights

 

[Graemsay]

A huge number of two bedroom apartments were built in the centres of UK towns and cities, largely to cater for property investors. They were sold on at optimistic prices, and when the GFC came along the prices collapsed due to a combination of oversupply of units and an undersupply of tenants.

I recall reading about a surplus of apartments in central Melbourne about a year ago.

Looking at Realestate.com.au, there are a huge number of generic one to two bedroom apartments in your price range, so I'd probably avoid them.

Personally, rather than looking for something you desperately like, I'd be after a property that has potential. For example, the page source says that this one was up for sale for between $600K and $750K, and described as the cheapest house in Toorak.

http://www.realestate.com.au/property-house-vic-toorak-107712861

There are no interior shots, but it's possible that with a refurbishment you'd be showing a profit.

 

[Melbournian]

it all goes down to lifestyle reasons as well. i for now... would prefer to stay in the CBD like QV as it is easier for me to do things. walk to a work client site (80 collins, yum cha in city and buying groceries etc - things that i normaly go back and then drive out to get. would prefer just walking a few minutes or take the lift down.

i wouldn't buy in southbank anymore - unless it is a pretty big bargain or for lifestyle reasons - would choose freshwater - best facilities i reckon in melbourne for its price range. others like lucient 505 st kilda with its million dollar price tag offers far less with average like facilities.

 

[lesley_g]

Hmm sounds like a new development to me… be careful

Hi, I just came across this forum while searching for more info about apartment buying & am definitely new at it. Out of curiousity, why would it be dangerous in purchasing new apartment development?

 

[Aaron_C]

Hi, I just came across this forum while searching for more info about apartment buying & am definitely new at it. Out of curiousity, why would it be dangerous in purchasing new apartment development?

There is nothing wrong per se with new developments. You get something new to live in, and you don't have to put down much money to secure the property. It's just that people on this forum are biased against them for various reasons. But without people buying off the plan there would be no development at all so it's not the evil everyone makes it out to be.

The main risks, however, are that a) the builder/developer doesn't deliver what they say they will (e.g. giving you cheap quality tiles instead of the good ones you agreed to in the contract), b) the project takes too long and c) when you apply for finance the bank valuation might be lower than what you paid for it.

 

[yorkiefish]

st kilda ?

hi smurfs,

what about st kilda, very close to the city and the beach and always plenty of renters.

check this one out just listed.
http://www.realestate.com.au/property-apartment-vic-st+kilda-109427736

always worth seeing whats available and then you'll work it out for yourself.
good luck.
yorkie

 

[7smurfs]

hi smurfs,

what about st kilda, very close to the city and the beach and always plenty of renters.

check this one out just listed.
http://www.realestate.com.au/property-apartment-vic-st+kilda-109427736

always worth seeing whats available and then you'll work it out for yourself.
good luck.
yorkie

Thanks for the tip yorkiefish!

Still looking very slowly... biding my time

 

[Melbournian]

just wait to find a good deal - they's quite a lot on the mkt.

 

[7smurfs]

just wait to find a good deal - they's quite a lot on the mkt.

Still looking.... the abundance of apartments within my price range is staggering. Hard to differentiate what is exactly a 'good deal' to the norm.

Ramping up daily research with motivation to get off my lazy *** and purchase one

 

[Deltaberry]

Not a big fan of suburban apartments unless location is really unique.

Given the massive supply of apartments, you want to choose ones that really stand out. My favourite apartments are still some of the nice buildings around The Tan on St Kilda Rd. Still best spot to live as far as high rises go in my opinion. Failing that, I'd go CBD.

Wouldn't live in any thing else - eg if I were to live in Prahan I certainly wouldn't buy an apartment. Might as well buy a townhouse.

 

[Melbournian]

Still looking.... the abundance of apartments within my price range is staggering. Hard to differentiate what is exactly a 'good deal' to the norm.

Ramping up daily research with motivation to get off my lazy *** and purchase one

start with a budget first then look

 

[BernieLarkham]

Hi, I just came across this forum while searching for more info about apartment buying & am definitely new at it. Out of curiousity, why would it be dangerous in purchasing new apartment development?

New apartments can be very dangerous, particularly if its a signifiant number of apartments in the development. There is no scarcity about them, there will be alot of people looking to rent them out so the rent agents quote is often too high as a discount war can eventuate. Worst of all the valuations from the banks can come up well short leaving you in danger of losing your deposit if you cant find the extra cash to cover the shortfall.

A better option is too look for a block with fewer than 20 units/apartments and that has low outgoings. The market knows the value of these units much better than the new stuff off the plan. CG is often poor due to overpaying for something because it is "new".

In 20 years it wont be new and neither will the 70s block next to it, but chances are the 70s block was built bigger and better than todays dog boxes.

 

[BernieLarkham]

Still looking.... the abundance of apartments within my price range is staggering. Hard to differentiate what is exactly a 'good deal' to the norm.

Ramping up daily research with motivation to get off my lazy *** and purchase one

Have you tried looking in Elwood or West St Kilda? Very in demand areas close to everything and a lot less development then alot of the old inner city areas like Sth Yarra and Richmond.

 

[Ren45]

I usually notice apartments in St Kilda coming up quite regularly. Mary St and Deakin St are very popular - great location and close to a lot of activity.

Real Estate St Kilda

Real Estate Elwood

 

[Deltaberry]

I usually notice apartments in St Kilda coming up quite regularly.

That's not a good thing.

Where supply > demand...

 

[Tony3008]

Got pointed to this story by a post on skyscrapercity.com - http://www.thesundaily.my/news/312950 . ... Savills reported late last year that investors and developers from China, Singapore and Malaysia had spent more than $100 million in buying Melbourne development sites over the past 18 months. Asked on Magna Prima's reason for launching the remaining units, he replied: "We are from Malaysia so we like to sell it in Malaysia first." Any balance may later be marketed in Singapore, Jakarta and Australia..... [note the order!]

I hadn't realised just how much Asian funded development there is in Melbourne. OK for now, but when these buyers want to sell they can only sell to Australians, which makes me think that there may be a huge mismatch of stock coming on the market and demand down the line.

 

[Melbournian]

Got pointed to this story by a post on skyscrapercity.com - http://www.thesundaily.my/news/312950 . ... Savills reported late last year that investors and developers from China, Singapore and Malaysia had spent more than $100 million in buying Melbourne development sites over the past 18 months. Asked on Magna Prima's reason for launching the remaining units, he replied: "We are from Malaysia so we like to sell it in Malaysia first." Any balance may later be marketed in Singapore, Jakarta and Australia..... [note the order!]

I hadn't realised just how much Asian funded development there is in Melbourne. OK for now, but when these buyers want to sell they can only sell to Australians, which makes me think that there may be a huge mismatch of stock coming on the market and demand down the line.

many of these buyers are cash buyers or investors looking to hedge their money overseas - such as the person described in the article who is a celebrity singer and her husband a politician and businessman.the thing is they launch it in asia for a reason - as normally in malaysia, singapore etc if you buy off the plan - and after completion the price goes up as in capital gain. However it works a little different here in melbourne as off the plan normally does not yield a capital gain.

this model is nothing new - and has been around since the 90s whereby they are attracting overseas buyers to buy up units. there must be a reason too why the initial developer decided to offload - and using "istana" as a name - which in translation in malay is palace is kind of name used in middle east so a bit odd for it to be named that. And yes many sell at a loss - eventually when the time comes as they are only looking to get rid of it. you gotto pick the right place to purchase

 

[Tony3008]

this model is nothing new - and has been around since the 90s whereby they are attracting overseas buyers to buy up units.

Yes, I was one - bought two Central Equity apartments in Melbourne CBD in 2000 and 2003 whilst living in the UK and sold each one after seven years for more or less what I paid - holding costs in the interim being significant (net yield 3.0-3.3%). The difference then was the exchange rate - CE offerings were then (in sterling) something like half the price of an equivalent property in London. I can't now see Brits being entranced by one-bedders at £300K.