sooo something like werribee?
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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/
Got slammed on my last comments...
I didn't intend to tell you something you didn't know, we all know the inner suburbs are proven performers. .
Hence it is why it is the only thing I will touch, I feel comfortable in the fact that my small portfolio of 5 properties are in Hawthorn, Surrey Hills and Malvern. I will take 10% every year... with the occassion 30-40% now an then.
There won't be forced sales... that's all I'm saying.
The outer ring of suburbs have a large number of customers who are really stretched, with two rate rises already priced in we will see some pain. I'm afraid I can't give you the analysis on this as it is the property of one of the banks.
Thank you so much for that information. It is consistent with what I experienced in the early 90's in MElbourne. Forced sales of some people I knew personally left them with negative equity. I do believe in the ripple effect but i think it is strong near the city and loses its strenth as it heads out. It makes sense that the pressure be on the small % close to the city. I think that you can make good money if you time your purchase ahead of the wave but in an outer area you may not then experience much growth for some time and the prices may be more sensitive to interest rate rises.
How much rate rise do you think is required to cause real pain further out? .5% ? Less?
In 1971 my father and his friend each bought a family home. My parents paid $13K and he paid $15K. He bought in Croyden. They bought in Canterbury. In 1988 they sold. He sold for $150K and my parents sold for $332,500K. Fast forward to today and the average price in Croydon is $367,250 and Canterbury $1,416,500.
GoAnna
Inner city is not better than Outer suburbs and vice versa. It is much easier to build a property portfolio due to cashflow and serviceability.
I tend to agee with Harris....inner city propery does do well but over all the rates of growth change. Bare in mind some suburbs change a move faster than others....for example the traditional working class suburbs like Brunswick, Preston, Footscray are now in demand. In the 70s no body would touch them. This is driven by infrastructure and other amenities.
Now if they bought somewhere in Melton...they could get a house for 180K and with a 10% deposit their shortfall would be around $65 per week after taxes.
So if you have only have 2-3 properties in better areas working for you vs say 7-10 properties spread over a couple of areas around the country you will spread your risk and cover the growth spurts OZ wide as cities perform in different cycles. Remember that eventually the growth will come of your asset base so 2-3 properties in years maybe worth 1.2 million vs say 2.4 mil. Even if the better portfolio grows at 10% pa you are adding 120pa in wealth but even if the less desirable portfolio grows at 8% it is still about 190K. So eventually there is a balancing affect
Perhaps someone could do a poll on their networth and what type of properties predominate in their portfolios - outer vs inner suburbs. There will be some anamolies as some people could have bought in the once unfashionable inner suburbs very early on. But if you are starting a portfolio today and want build quickly this is a strategy that works. Margaret Lomas has built a $9 million portfolio using this strategy, so has Jan Somers (over $10 million), and Paul Giezemkamp (Property Secrets) in relatively short period of time 15 years.
My thoughts anyway....if you are still on Somersoft in 5 years...I will gently remind you... lol....lol...lol.
Perhaps someone could do a poll on their networth and what type of properties predominate in their portfolios - outer vs inner suburbs. There will be some anamolies as some people could have bought in the once unfashionable inner suburbs very early on. D
Yes we appreciated the million dollar capital growth we received last year but would happily have swapped it for the multi millions we would have got had we the cashflow to hold the same sized portfolio in blue ribbon Melbourne.
I would be the last person to ever doubt the integrity of the information coming from you.. knowing you personally. However over the last 25 years, Canterbury has grown at a rate of 12.1 % and Croydon at 10.8% - (If you take 2007 out of the equation where Canterbury grew at close to 40%) then both Croydon and Canterbury grew at almost identical rate long term... There must be huge differences in the kind of property that they bought since median for both suburbs even back then had a big difference.
Harris
Hey all,
Have been observing that over the last few months the supply of residential land in outer developing areas of Melbourne has been running behind demand.
to give a couple of examples....
Point Cook...Alamanda estate, if you want a block, it will only be titled near end of 08, people are camping out to secure some dirt!
Lyndhurst, Marriott waters estate, 19 of 22 blocks sell in 30 minutes last friday...titles expected sep/october.....
i have received emails from land sales agents, that due to demand and the cost of infrastructure increasing (whatever that means )...that there will be price rises greater than the "normal" ammount from stage to stage.
with land getting snapped up faster than it can be supplied, the fact that vacant land prices are increasing in the outer suburbs should help prop up or raise the price of established properties in these same areas as the cost of replacing a home increases by the increase in the value of the dirt its on.
watch the cost of construction as building suppliers and trades start to feel the squeeze of higher interest rates and petrol etc, which then gets passed on to the consumer...it seems that prices could be on the way up from this side also.
Combine a shortage of vacant land with 60 thousand new melbournites a year needing a roof over thier heads, and it should lead to a couple of things....higher rents and higher values, including the outer suburbs.
Cheers,
Hi Sornen,
i think over the last 2 years it was about 49,000 and 51,000 population growth in melbourne each year....i remember the Herald sun brought out the same type of article 2 years running, showing the population growth of all capitals over the same period.
not sure where they got the info from ABS i guess....i then remember an article from somewhere that they had underestimated the growth of Melbourne somehow....i just picked 60,000 out of thin air, but you can bank on approx 50,000 per year increase anyway,
Cheers
I remember reading 71K net migration just Melbourne. I believe that 41K is just in immigration. The remaining is from people moving within Victoria and other states. This represents almost 2% growth...which is considered very good.
I can personally attest to Land in the Western suburbs...whilst everyone is under the impression that there is plenty of land. There is not as supply takes time to develop. Blocks in Wyndam Shire has gone from 90-100K for 500 sqm plus square blocks to 115k-140k and wait for it....you have to wait it to register which can take 6-12 months.
The developers are very smart these days and will strongly control supply so this is not going to go away. The Melbourne developers are copying what is happening in Brisbane where land prices have gone from lwo 100k to almost 200K. They have worked out they can do less and sell less but make very good profits by controlling supply carefully.