Buyers agents tend to work mostly in the more expensive suburbs as they charge 1-2% of the purchase price....thus they naturally focus on net gain!
Sash, your post reminded me of this post by spiderman - a classic!
melbourne up 25% in 2007!
- Thread starter Soren Lorenson
- Start date
Sash, your post reminded me of this post by spiderman - a classic!
mmmm.... Yes, I also met with this particular BA about a year ago now, and heard similar utterances. I wonder what their take will be on the current situation David! Perhaps they will explain it as a 'once off' and that it 'could not possibly ever happen again, so you had better sell off the outer suburban portfolio and engage us to find something in a 'civilised' inner area in a nice leafy street!!
Time will tell.
Regards Jason.
PS. Congratulations on your appearance in API, haven't got a copy yet, but am looking forward to reading it!
Hi Redwing,
I'm still learning too but I'll have a crack at answering your question.
Your friends would actually be hard pressed to find a suburb in Melbourne that hasn't grown at approx. 10% annualised for the last decade. So, for the long term investor, the opportunities are vast. Some suburbs have done a little better (% low teens) but much of that growth has occurred in the past 6-9 months so there is a suspicion that, going forward, those gains could level out again.
If your friends are looking for a bit of a short term boost (as we all are in the "where to buy" forum) then I think the consensus amongst those who have subscribed to this thread is to buy in Melbourne's outer ring. There are two schools of thought in regards to this strategy...
- One is that the ripple effect will deliver high demand in outer suburbs (and therefore growth) in 2008 from buyers who've been forced away from the CBD by the huge 2007 gains.
- The other theory is that rising interest rates only effect homebuyers in the outer suburbs - commonly known as the mortgage belt.
Of these two mutually exclusive ideas, the former makes more sense to me - particularly given the strong fundamentals that Harris brought to our attention above.
The "where to buy" forum on Somersoft could provide your friends with many good ideas for a place to start looking. Suburbs like Melton, Frankston, Berwick spring to mind as areas that get regular mentions. But I feel I'm only really qualified to talk about Melbourne's outer east (Knox, Maroondah and Yarra Ranges shires) because that's the area I've studied in detail.
First let me say that I'm pretty happy at present to have all of my property eggs in this basket. Eastlink (desperately needed road infrastructure) will open in a few months. It's a massive toll road linking the Eastern Freeway in Nunawading to the Monash freeway in Dandenong North and the Frankston freeway in Seaford. This will ease much of the North-South traffic congestion that is suffered by eastern suburbs commuters and also provide a CBD / airport link.
There are some suburbs in the area that have already enjoyed fantastic growth in 2007. For example, the Ringwood East chart looks a bit like that of Kew East in inner Melbourne. However, there are some suburbs that I think still represent good value for money...
I like Bayswater North at the moment - particularly the "Canterbury Gardens" estate (not the high density Glen Park area). Bayswater North is a five minute drive from the closest train station and a ten minute drive from Eastlink along the recently duplicated Canterbury Road. Rental demand is strong and you can still buy a nice family home with a backyard for approx. $350k. Locally, there's a busy shopping strip, a huge pub/bistro (pokie joint) and an even bigger Bunnings.
I like Mooroolbark at the moment. We recently bought a lovely three bedroom investment home in the "Rolling Hills" estate with mountain views on land over 800 M2. The price was $355k and we found relatively little competition amongst other buyers - rather surprising in a suburb with it's own train station . There is intense competition for much older housing in each suburb down the train line (Croydon, Ringwood East, Ringwood, Mitcham, etc...). Maybe the wave will arrive in Mooroolbark next? There's high rental demand. On the down side, there's still a little bit of land left for release out that way.
Redwing, your freinds are lucky to have an investor for a mate. We've had to make it up ourselves as we go along with the Somersoft forum being our only mentor. Still, life has been much more rewarding since we decided to take responsibility for our financial future and act accordingly. I hope this helps.
Regards - Ben
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Ben,
Read the Spiderman post....mate what a pearler....but sooo true!
I have talked to a few BA's and most, not all, rubbish the outer areas. They are leaving themselves in a difficult position in the future as the inner city cools due to high prices...the middle and outer suburbs are definitely moving particularly at the lower end because first home buyers are wiseing (is there such a word??) up and are settling to more realistic and affordable purchases. Where would the BAs business come from when their inner city growth dries....I suspect they will have to swallow their pride then.
If I am correct....this could this be the first sign that Gen-Y is just like every other generation.....we were all once young and rash but as we mature we make more sensible decisions.
Yes people.....I am saying that with high prices you will see Gen-Y move to the outer suburbs! If you look at Sydney work is now decentralising - state govt. is now mostly in Parramatta, Distribution/Logistics is along the M7 routes near Blacktown/Liverpool. The CBA and Woolies have moved to Homesbush and the Hills District. Don't you think infrastructure will follow-up....with this Gen-Y...particularly if the swish restaurants and clubs follow. This is the case in cities like London, Los Angeles and New York....why would Sydney be different as it becomes a Mega Metropolis (superman where are you....lol)! Only time will tell.....
Would love to hear what the buyers agents on this forum have to say about this....a robust discussion would be great so we could all learn. I certainly have learn from people on this forum over the years.
Sash
Quote: Opportunity passes you by ten times a day....the smart ones keep their ears and eyes peeled to pick these up.
Read the Spiderman post....mate what a pearler....but sooo true!
I have talked to a few BA's and most, not all, rubbish the outer areas. They are leaving themselves in a difficult position in the future as the inner city cools due to high prices...the middle and outer suburbs are definitely moving particularly at the lower end because first home buyers are wiseing (is there such a word??) up and are settling to more realistic and affordable purchases. Where would the BAs business come from when their inner city growth dries....I suspect they will have to swallow their pride then.
If I am correct....this could this be the first sign that Gen-Y is just like every other generation.....we were all once young and rash but as we mature we make more sensible decisions.
Yes people.....I am saying that with high prices you will see Gen-Y move to the outer suburbs! If you look at Sydney work is now decentralising - state govt. is now mostly in Parramatta, Distribution/Logistics is along the M7 routes near Blacktown/Liverpool. The CBA and Woolies have moved to Homesbush and the Hills District. Don't you think infrastructure will follow-up....with this Gen-Y...particularly if the swish restaurants and clubs follow. This is the case in cities like London, Los Angeles and New York....why would Sydney be different as it becomes a Mega Metropolis (superman where are you....lol)! Only time will tell.....
Would love to hear what the buyers agents on this forum have to say about this....a robust discussion would be great so we could all learn. I certainly have learn from people on this forum over the years.
Sash
Quote: Opportunity passes you by ten times a day....the smart ones keep their ears and eyes peeled to pick these up.
Any reason you chose Bayswater North rather than Bayswater Proper? If I do buy in the out suburbs in the next couple of years, I thought Bayswater was a good candidate.
Example:
http://www.realestate.com.au/cgi-bi...mt=&header=&cc=&c=8286726&s=vic&tm=1201829755
Houses in the block between Orange Grove, Elm St and the Bayswater shops are walking distance from the station and are likely to be gentrified with the 2020 /2030 Bayyswater upgrade.
Hello All,
I am bit confused here. I don’t understand how Outer Suburbs will see growth if interest rate rise in the future due to the fact that these suburbs are so called Mortgage Belt where home owners are already struggling the most. How is this going to attract new investors/home buyers? I know that the rental market is pretty good but don't understand how its going to attract new investors if the Capital Gains are not good as compared to the Inner Suburbs.
I am bit confused here. I don’t understand how Outer Suburbs will see growth if interest rate rise in the future due to the fact that these suburbs are so called Mortgage Belt where home owners are already struggling the most. How is this going to attract new investors/home buyers? I know that the rental market is pretty good but don't understand how its going to attract new investors if the Capital Gains are not good as compared to the Inner Suburbs.
Do interest rate rises only effect households in the outer suburbs? Please tell my why a family who has a $350k mortgage in Wantirna would suffer MORE mortgage stress than a family with a $620k mortgage in Williamstown?
Interest rate rises are only one aspect of the overall supply/demand picture as Harris summed up above.
Hi Dis,
No arguments here - Bayswater is an excellent long term investment opportunity. Nearby Boronia improved out-of-sight when the train station went underground ten years ago. Hope the money train comes to Baysy soon!
The property that you mentioned in John Street is an oldish house on on a subdivided corner block that has a new unit where the backyard once was. It will probably sell for nearly $340k. Would have been able to pick it up for maybe under $250k a year ago. "Bayswater Proper" has already appreciated 25% over the Sep07 and Dec07 quarters.
The reason I nominated Bayswater North in my response to Redwing is simply that I think it looks underpriced at the moment in relation to it's neighbours.
Regards - Ben
To be fair to them, I honestly believe they preach this as they truely believe it is the best way, not because it's 'extra money' for them. In addition, they certain do have a good reputation, name and contacts in the industry.
I'm not sure. As Jason said, time will tell. Some people say these people just can't afford the higher prices.
Traditionally in inner areas there is a larger proportion of people who full own their homes and are therefore less sensitive to interest rate movements.
The only accurate answer to that is to locate where the majority of mortgage defaults are occurring today. I don't have the answer, I only have anectodal evidence from a few RE specialists who deal in reposessions and auctions for banks and mortgage defaults and they have always tended to mention various outer suburbs.
THERE WILL BE PAIN IN THE OUTER SUBURBS THIS YEAR! I have just completed an extensive review of a major banks mortgage portfolio and the outer suburbs are full of people who will be struggling with another rate rise. FORCED SALES!
The inner suburbs are strong, very low LVRs and the majority have the capacity to over pay on their mortgage... a very apparent trend, AUSTRALIA WIDE.
You might get a bargain in the outer suburbs as of plenty supply... you will be waiting a while for growth though, you may even see it comeback a bit western Sydney Like. Stick to Bluechip and buy early this year and you will probably get double digit....
I am not convinced on the ripple effect everyone talks of... yes the outer suburbs rise eventually... usually following a inner boom, but the inner keeps increasing consistently.
There is a reason why there is gap between inner an outer suburbs.... they are a better place to live with proximity to the city, schools and education.
Check this out very interesting...
http://www.latestsales.com.au/melbourne-price-growth/
The inner suburbs are strong, very low LVRs and the majority have the capacity to over pay on their mortgage... a very apparent trend, AUSTRALIA WIDE.
You might get a bargain in the outer suburbs as of plenty supply... you will be waiting a while for growth though, you may even see it comeback a bit western Sydney Like. Stick to Bluechip and buy early this year and you will probably get double digit....
I am not convinced on the ripple effect everyone talks of... yes the outer suburbs rise eventually... usually following a inner boom, but the inner keeps increasing consistently.
There is a reason why there is gap between inner an outer suburbs.... they are a better place to live with proximity to the city, schools and education.
Check this out very interesting...
http://www.latestsales.com.au/melbourne-price-growth/
Retire Early, pi2012
First of all in response to Retire Early...I agree certain pockets of Western Sydney have had repossesions and negative equity. In some areas the prices have come off 20%-30% off the 2003 highs. This is due to the extent that Western Sydney boomed.......for example in 1997 it was possible to buy houses for 90K and as low a 65K in the Mt Druitt suburbs. These same houses were worth close to 300K-400K at the peak. These now have comeback to realistic levels around 230K to 320K. Given this the prices have still tripled. However, houses on the North shore went from 500K to 1million...essententially doubling. So the correction in Western Sydney needed to happen....as is the case most cycles in Sydney and Perth there are booms and busts.
So that is Sydney.
As for other states the less desirable areas are moving well. Particularly in Adelaide and Brisbane. As a matter of fact some of the faster mover are places like Elizabeth (Adelaide) and Eaglby/Beenleigh. These suburbs are similar to the poorest Western suburbs of Sydney.
Melbourne has been slower but the increase at the lower end is still noticeable. For example in places like Werribee, Melton, and Hoppers Crossing in the Western suburbs properties under 200K are snapped up quickly. I suspect by the end of year there will be very few places under 200k with Melbourne. In know this as I bought as low 130K and have not paid over 170k in Melbourne in 2006-2007. These opportunities do not exist any more. Also these suburbs also have a high amount of new housing which takes a couple of years to move in value. I tend to go for the older houses, these are the ones that are moving quickly as they are very affordable and not overpriced. Typically they sell with 60%-70% land content. In otherwards you could not build these at the same cost...a quick reno and Bobs your uncle.
This is my opinion...as I have said previously...only time will tell.
First of all in response to Retire Early...I agree certain pockets of Western Sydney have had repossesions and negative equity. In some areas the prices have come off 20%-30% off the 2003 highs. This is due to the extent that Western Sydney boomed.......for example in 1997 it was possible to buy houses for 90K and as low a 65K in the Mt Druitt suburbs. These same houses were worth close to 300K-400K at the peak. These now have comeback to realistic levels around 230K to 320K. Given this the prices have still tripled. However, houses on the North shore went from 500K to 1million...essententially doubling. So the correction in Western Sydney needed to happen....as is the case most cycles in Sydney and Perth there are booms and busts.
So that is Sydney.
As for other states the less desirable areas are moving well. Particularly in Adelaide and Brisbane. As a matter of fact some of the faster mover are places like Elizabeth (Adelaide) and Eaglby/Beenleigh. These suburbs are similar to the poorest Western suburbs of Sydney.
Melbourne has been slower but the increase at the lower end is still noticeable. For example in places like Werribee, Melton, and Hoppers Crossing in the Western suburbs properties under 200K are snapped up quickly. I suspect by the end of year there will be very few places under 200k with Melbourne. In know this as I bought as low 130K and have not paid over 170k in Melbourne in 2006-2007. These opportunities do not exist any more. Also these suburbs also have a high amount of new housing which takes a couple of years to move in value. I tend to go for the older houses, these are the ones that are moving quickly as they are very affordable and not overpriced. Typically they sell with 60%-70% land content. In otherwards you could not build these at the same cost...a quick reno and Bobs your uncle.
This is my opinion...as I have said previously...only time will tell.
typical...!
The chart in the link demonstrates what we have already known since eternity... Melbourne's prop value for inner suburbs are higher than median and outer suburbs are below median..!
What's the big revelation..?
And lets ask you some more details about your "motherhood statement".. "Outer suburbs are full of defaulters in melbourne based on your study for a bank".
Can you please provide us the link or the white papers on that review/ research so we can get a bit more information..?
You are not convinced of the ripple effect..! Ok..! How many prop do you own..? How many property cycles have you gone thorugh..? Were your studies able to predict the previous ripples..? How come some outer suburbs of Melbourne have had over 20% increase in median and are seeing highest activity levels, compared to other outer suburbs..? Whats happening with the 52,000 people arriving in melbourne each year from overseas..? Are they all settling in Kew and Toorak or are they bunking in youth hostels..? What effect does the half a dozen major road projects have on the outcome of prop values (as a result of accessibility) on the values..? Whats happening to the people who are getting priced out of the middle ring suburbs..? Are they buying in outer suburbs or have they decided to migrate to another country..?
Talk is cheap.
"There is a reason why there is gap between inner an outer suburbs.... they are a better place to live with proximity to the city, schools and education." Duh.. As if this is another secret that none of us knew about...!!! Even a 15 year old knows this great piece of wisdom that you are bestowing on us.
Harris
The chart in the link demonstrates what we have already known since eternity... Melbourne's prop value for inner suburbs are higher than median and outer suburbs are below median..!
What's the big revelation..?
And lets ask you some more details about your "motherhood statement".. "Outer suburbs are full of defaulters in melbourne based on your study for a bank".
Can you please provide us the link or the white papers on that review/ research so we can get a bit more information..?
You are not convinced of the ripple effect..! Ok..! How many prop do you own..? How many property cycles have you gone thorugh..? Were your studies able to predict the previous ripples..? How come some outer suburbs of Melbourne have had over 20% increase in median and are seeing highest activity levels, compared to other outer suburbs..? Whats happening with the 52,000 people arriving in melbourne each year from overseas..? Are they all settling in Kew and Toorak or are they bunking in youth hostels..? What effect does the half a dozen major road projects have on the outcome of prop values (as a result of accessibility) on the values..? Whats happening to the people who are getting priced out of the middle ring suburbs..? Are they buying in outer suburbs or have they decided to migrate to another country..?
Talk is cheap.
"There is a reason why there is gap between inner an outer suburbs.... they are a better place to live with proximity to the city, schools and education." Duh.. As if this is another secret that none of us knew about...!!!
Even a 15 year old knows this great piece of wisdom that you are bestowing on us.Harris
THERE WILL BE PAIN IN THE OUTER SUBURBS THIS YEAR! I have just completed an extensive review of a major banks mortgage portfolio and the outer suburbs are full of people who will be struggling with another rate rise. FORCED SALES!
The inner suburbs are strong, very low LVRs and the majority have the capacity to over pay on their mortgage... a very apparent trend, AUSTRALIA WIDE.
You might get a bargain in the outer suburbs as of plenty supply... you will be waiting a while for growth though, you may even see it comeback a bit western Sydney Like. Stick to Bluechip and buy early this year and you will probably get double digit....
I am not convinced on the ripple effect everyone talks of... yes the outer suburbs rise eventually... usually following a inner boom, but the inner keeps increasing consistently.
There is a reason why there is gap between inner an outer suburbs.... they are a better place to live with proximity to the city, schools and education.
Check this out very interesting...
http://www.latestsales.com.au/melbourne-price-growth/
An interesting theory - time will tell. Actually we might both be right, some outer suburbs may suffer and some may prosper.
With respect, I think the link that you included in your post was really not news. It's a graphical representation of prices - not growth. I think you would be a little surprised by a growth chart.
I think there are clear reasons why some outer suburbs are doing better than others, relatively speaking.
My concern is more with middle and outer Western Melbourne, which is still home to perhaps the greatest concentration of socio-economic disadvantage in Melbourne - yet has experienced significant growth despite this (and some would even say it's largely due to credit growth/availability, rather than supply/demand imbalance)...
Will it fall back to the extent that Western Sydney did?
Or is this comparison not worthwhile or relevant?
I think there will be a ripple to the outer suburbs...but, what will happen after this has passed?
Could the last to rise be the first and hardest to fall...in the post-boom 'crunch'??
Harris,
Ditto!
You are correct based on the stats I have viewed about Melbourne there is not evidence of widespread defaults...it is a different case in the Western Suburbs of Sydney. Additionally the Melbourne economy is much stronger than Sydney...though Sydney is picking up speed.
I agree about arrivals into Melbourne....the figure which is imprinted in my mind is 71,000 net (includes people from other states). I don't think you have to worry about migration out of Melbourne...you may need to build a wall to keep people out!
Agree about the infrastructure driving growth in outer areas...primarily these are the Eastlink (will give Frankston in particular a boost...already has but more growth to come), Deer Pass Bypass (Melton is moving well..), and rejuventatoin of Dandenong (prices here have moved from 200K to 260 median in two years).
I feel that I am able to comment as I have invested in these outer surburbs with great success......they have been great to me. Let's hope not everyone does not catch on to this! Based on this forum there is a reluctance to invest in these areas....more properties for me!
Ditto!
You are correct based on the stats I have viewed about Melbourne there is not evidence of widespread defaults...it is a different case in the Western Suburbs of Sydney. Additionally the Melbourne economy is much stronger than Sydney...though Sydney is picking up speed.
I agree about arrivals into Melbourne....the figure which is imprinted in my mind is 71,000 net (includes people from other states). I don't think you have to worry about migration out of Melbourne...you may need to build a wall to keep people out!
Agree about the infrastructure driving growth in outer areas...primarily these are the Eastlink (will give Frankston in particular a boost...already has but more growth to come), Deer Pass Bypass (Melton is moving well..), and rejuventatoin of Dandenong (prices here have moved from 200K to 260 median in two years).
I feel that I am able to comment as I have invested in these outer surburbs with great success......they have been great to me. Let's hope not everyone does not catch on to this! Based on this forum there is a reluctance to invest in these areas....more properties for me!
Harris,
Ditto!
You are correct based on the stats I have viewed about Melbourne there is not evidence of widespread defaults...it is a different case in the Western Suburbs of Sydney. Additionally the Melbourne economy is much stronger than Sydney...though Sydney is picking up speed.
I agree about arrivals into Melbourne....the figure which is imprinted in my mind is 71,000 net (includes people from other states). I don't think you have to worry about migration out of Melbourne...you may need to build a wall to keep people out!
Agree about the infrastructure driving growth in outer areas...primarily these are the Eastlink (will give Frankston in particular a boost...already has but more growth to come), Deer Pass Bypass (Melton is moving well..), and rejuventatoin of Dandenong (prices here have moved from 200K to 260 median in two years).
I feel that I am able to comment as I have invested in these outer surburbs with great success......they have been great to me. Let's hope not everyone does not catch on to this! Based on this forum there is a reluctance to invest in these areas....more properties for me!
Ditto!
You are correct based on the stats I have viewed about Melbourne there is not evidence of widespread defaults...it is a different case in the Western Suburbs of Sydney. Additionally the Melbourne economy is much stronger than Sydney...though Sydney is picking up speed.
I agree about arrivals into Melbourne....the figure which is imprinted in my mind is 71,000 net (includes people from other states). I don't think you have to worry about migration out of Melbourne...you may need to build a wall to keep people out!
Agree about the infrastructure driving growth in outer areas...primarily these are the Eastlink (will give Frankston in particular a boost...already has but more growth to come), Deer Pass Bypass (Melton is moving well..), and rejuventatoin of Dandenong (prices here have moved from 200K to 260 median in two years).
I feel that I am able to comment as I have invested in these outer surburbs with great success......they have been great to me. Let's hope not everyone does not catch on to this! Based on this forum there is a reluctance to invest in these areas....more properties for me!
Deer Park Bypass is no Eastlink.
Melton median price increase from Dec '06 to Dec '07...1.9% (for the whole year).
For Melton South...3.9%.
What about it's more proximal neighbours...Deer Park -0.3%, Caroline Springs 1.3%...
JIT
Have you not heard stats, stats, damn lies...lol...lol!!!
Just kidding......on a serious note there are sub markets in Melton. The stuff that is moving well is the older stuff....this is being driven by the price of land. Land early last year was 75K....now your are paying 90K plus for a decent block. House and land on a 450sqm plus block is now 240K plus was 220k last year.
JIT, out of curiousity....where do you own in Melbourne
Have you not heard stats, stats, damn lies...lol...lol!!!
Just kidding......on a serious note there are sub markets in Melton. The stuff that is moving well is the older stuff....this is being driven by the price of land. Land early last year was 75K....now your are paying 90K plus for a decent block. House and land on a 450sqm plus block is now 240K plus was 220k last year.
JIT, out of curiousity....where do you own in Melbourne
In response to the huge amount of defaults coming to outer melbourne
There has to be an absolutly huge amount of defaults to stem demand in Melbourne and these people are going to need somewhere to live still. The outer western suburbs i believe will move with the ripple but probably not the the extent that everyone is talking about.
It will be good growth for some time but not as big as what the inner suburbs have previously seen (not yet anyway).
There has to be an absolutly huge amount of defaults to stem demand in Melbourne and these people are going to need somewhere to live still. The outer western suburbs i believe will move with the ripple but probably not the the extent that everyone is talking about.
It will be good growth for some time but not as big as what the inner suburbs have previously seen (not yet anyway).
