Wow, hadn't even realised. 85 seems like only yesterday!
Melton Vic.
- Thread starter WBG Redcliffe
- Start date
Here is a Gov link
http://www.vicroads.vic.gov.au/Home/RoadsAndProjects/RoadProjects/WesternSuburbs/DeerParkBypass.htm
And Media Link
http://www.abc.net.au/ballarat/stories/s1477697.htm
On the matter of the time saving the estimates vary. Obviously peak hour v non peak and increased growth means more traffic come into the mix.
In summary:
- Freeway all the way Melton to CBD and no tolls.
- Average House in Melton $220k.
- Gov Planning to double population
- Expanded shopping and services.
It sums up to me.
Peter 14.7
More on why bypasses add value from those actually opposed to Bypasses.
http://www.ptua.org.au/myths/bypass.shtml
The most celebrated recent case of the 'bypass' myth is the Geelong Ring Road. Claimed by the road lobby to be a bypass route for freight and tourist traffic between Melbourne and the southern side of Geelong, its real purpose is to facilitate old-fashioned urban sprawl. Witness the glee displayed by local real estate agents after the funding announcement:
NEW suburbs may be created as commuters rush to be near Geelong's ring road, real estate agents said yesterday. Herne Hill, Lovely Banks, Wandana Heights, Queens Park and even Bannockburn will become Geelong's new boom areas, with the road putting them within an hour of Melbourne. Agent Robert Creece said the boom would be so big that areas would be renamed as houses sprung up....
Hocking Stuart principal Marcus Falconer said the road would create a new property boom for Geelong. It is just going to go through the roof, Mr Falconer said. It will quite quickly link Geelong to Melbourne, it will be a lot closer to the CBD and people will consider Geelong as an alternative place to live. Mr Falconer said travel times from southern Geelong to Melbourne CBD would become comparable to those from Melbourne's far eastern and northern suburbs....
Hayden Real Estate Grovedale sales manager Tim Darcy said it would enhance real estate activity in areas close to the road.
---Geelong Advertiser, 9 June 2004
Even Vicroads admits that the 'bypass' will not solve traffic congestion on major Geelong roads like Latrobe Terrace. In April 2005, in a panel hearing on the removal of a heritage overlay to allow construction of a left turn slip lane in Latrobe Terrace, Vicroads said that while there is likely to be a reduction of up to 17% in traffic volumes in Latrobe Tce immediately on the completion of the Bypass, the traffic will return to its pre-Bypass levels in a relatively short space of time.
The secret is out: the Geelong 'bypass', like all the other 'bypasses', is just another radial commuter route to the Melbourne CBD, duplicating and undermining patronage on the Geelong train line. Rather than remove traffic from the parallel highway as hoped, it will simply add new traffic of its own, leaving Geelong with a traffic problem twice as bad as now. Had the truth about this road been known at the start, it would never have seemed so deserving of a billion dollars of government funding!
I came to consider Melton with MychaelSyd because of the talk at SIG from the Reno Kings who emphasized "follow the freeways".
May I clarify, I am passing this on as a community service. I have no agenda to push up prices and as I have bought 2, so my money is where my mouth is. My investment is long term so a bump here in 2007 is nothing.
There is no doubt other great opportunities out there.
I just chose Melton as I live 30 min away.
Peter
http://www.ptua.org.au/myths/bypass.shtml
The most celebrated recent case of the 'bypass' myth is the Geelong Ring Road. Claimed by the road lobby to be a bypass route for freight and tourist traffic between Melbourne and the southern side of Geelong, its real purpose is to facilitate old-fashioned urban sprawl. Witness the glee displayed by local real estate agents after the funding announcement:
NEW suburbs may be created as commuters rush to be near Geelong's ring road, real estate agents said yesterday. Herne Hill, Lovely Banks, Wandana Heights, Queens Park and even Bannockburn will become Geelong's new boom areas, with the road putting them within an hour of Melbourne. Agent Robert Creece said the boom would be so big that areas would be renamed as houses sprung up....
Hocking Stuart principal Marcus Falconer said the road would create a new property boom for Geelong. It is just going to go through the roof, Mr Falconer said. It will quite quickly link Geelong to Melbourne, it will be a lot closer to the CBD and people will consider Geelong as an alternative place to live. Mr Falconer said travel times from southern Geelong to Melbourne CBD would become comparable to those from Melbourne's far eastern and northern suburbs....
Hayden Real Estate Grovedale sales manager Tim Darcy said it would enhance real estate activity in areas close to the road.
---Geelong Advertiser, 9 June 2004
Even Vicroads admits that the 'bypass' will not solve traffic congestion on major Geelong roads like Latrobe Terrace. In April 2005, in a panel hearing on the removal of a heritage overlay to allow construction of a left turn slip lane in Latrobe Terrace, Vicroads said that while there is likely to be a reduction of up to 17% in traffic volumes in Latrobe Tce immediately on the completion of the Bypass, the traffic will return to its pre-Bypass levels in a relatively short space of time.
The secret is out: the Geelong 'bypass', like all the other 'bypasses', is just another radial commuter route to the Melbourne CBD, duplicating and undermining patronage on the Geelong train line. Rather than remove traffic from the parallel highway as hoped, it will simply add new traffic of its own, leaving Geelong with a traffic problem twice as bad as now. Had the truth about this road been known at the start, it would never have seemed so deserving of a billion dollars of government funding!
I came to consider Melton with MychaelSyd because of the talk at SIG from the Reno Kings who emphasized "follow the freeways".
May I clarify, I am passing this on as a community service. I have no agenda to push up prices and as I have bought 2, so my money is where my mouth is. My investment is long term so a bump here in 2007 is nothing.
There is no doubt other great opportunities out there.
- Chippendale Sydney.
- Caboolture Qld.
- and
- Altona, Werribee VIC
I just chose Melton as I live 30 min away.
Peter
I am thinking about 'investing' in Melton mainly due to its price. You can get a new house for under 200K. It would be my first property. Im also looking at Bayswater and Cranbourne as I currently live in melbourne's east. What are peoples opinions on what the new developments will have on Melton? I know there is a lot of available land in melton so thats why I ask.
bump!
So I drove out to Melton last weekend to have a wander around, get an idea of where everything is. Here's some thoughts:
Melton West has the newish shops (http://www.woodgrove.com.au), which includes Bunnings, a chain supermarket and a few knick-knack shops and a cinema.
Melton has "High Street" which is now looking a bit old in comparison (although the council has released a plan to increase housing density around High Street and update the look of the shopping precinct: http://www.melton.vic.gov.au/Page/page.asp?Page_Id=544&h=0).
So, Melton West has the "convenience shopping" and Melton has the "town center". I don't see that changing much, the council seems to have twigged to the split between the two areas and looks to be working to make sure they co-exist, rather than fighting for dominance (covered in the strategy documents linked above).
The new development area with the Harness Racing complex is being called "Toolern" (http://www.toolern.com/map.html) and is actually going to be right next to Melton South, on the south of the Freeway. It will add a few new shopping locations (the red blocks on the map) and a commercial area. Along with a whole bunch of housing, probably identical to what they are selling off now between $220k and $240k.
Personally, I think places in Melton South that are going to join up to Toolern might be a reasonable bet (ie: look at the borders of the future Toolern, and buy in Melton South where roads will later join the two). But you'll be waiting a while for that to pay off.
The thing which gets me at the moment is the growth expectation for Melton Township population .. currently around 38k, rising to 150k by 2030. Assuming 2.6 people per house, they're going to need about 57k new homes. That's a few _thousand_ a year.
Anywho ..
So I drove out to Melton last weekend to have a wander around, get an idea of where everything is. Here's some thoughts:
Melton West has the newish shops (http://www.woodgrove.com.au), which includes Bunnings, a chain supermarket and a few knick-knack shops and a cinema.
Melton has "High Street" which is now looking a bit old in comparison (although the council has released a plan to increase housing density around High Street and update the look of the shopping precinct: http://www.melton.vic.gov.au/Page/page.asp?Page_Id=544&h=0).
So, Melton West has the "convenience shopping" and Melton has the "town center". I don't see that changing much, the council seems to have twigged to the split between the two areas and looks to be working to make sure they co-exist, rather than fighting for dominance (covered in the strategy documents linked above).
The new development area with the Harness Racing complex is being called "Toolern" (http://www.toolern.com/map.html) and is actually going to be right next to Melton South, on the south of the Freeway. It will add a few new shopping locations (the red blocks on the map) and a commercial area. Along with a whole bunch of housing, probably identical to what they are selling off now between $220k and $240k.
Personally, I think places in Melton South that are going to join up to Toolern might be a reasonable bet (ie: look at the borders of the future Toolern, and buy in Melton South where roads will later join the two). But you'll be waiting a while for that to pay off.
The thing which gets me at the moment is the growth expectation for Melton Township population .. currently around 38k, rising to 150k by 2030. Assuming 2.6 people per house, they're going to need about 57k new homes. That's a few _thousand_ a year.
Anywho ..
Great Post Murtagh.
Concise assessment on where Melton stands. FYI as someone how has bought 2 and organised another 2 , I am seeing a lot of IP investors are in the market there and sales as moving a lot quicker for anything under $230k.
On the downside the rentals have jumped accordingly from 70 on the net to around 110. Rental increases are being held for the time being.
Melton is two markets and it really depend son your strategy whether you go for:
Near new with depreciation for $230k mark
Old with no depreciation for $200k or less
Melton South is the punt. The Redfern of Melton so to speak.
There is a chance the new estates will raise the bar for this area but personally I don’t see it growing that much when you can buy or rent new for $230k or $230 week. My strategy with Meton is set and forget and almost cost neutral. I don’t have the time to reno to gain value but for others this may be the go.
One thing, watch any unit developments. When houses are so cheap, units don’t have much of a demand IMO.
Peter 14.7
Concise assessment on where Melton stands. FYI as someone how has bought 2 and organised another 2 , I am seeing a lot of IP investors are in the market there and sales as moving a lot quicker for anything under $230k.
On the downside the rentals have jumped accordingly from 70 on the net to around 110. Rental increases are being held for the time being.
Melton is two markets and it really depend son your strategy whether you go for:
Near new with depreciation for $230k mark
Old with no depreciation for $200k or less
Melton South is the punt. The Redfern of Melton so to speak.
There is a chance the new estates will raise the bar for this area but personally I don’t see it growing that much when you can buy or rent new for $230k or $230 week. My strategy with Meton is set and forget and almost cost neutral. I don’t have the time to reno to gain value but for others this may be the go.
One thing, watch any unit developments. When houses are so cheap, units don’t have much of a demand IMO.
Peter 14.7
The price of established units versus established houses in suburbs like Melton is interesting.
Normally one expects units to be significantly cheaper than houses. Eg in a mid-priced suburb an established house might be $400k whereas a unit might cost $250-300k. It is sometimes stated that this difference is due to the higher land content of the house*.
My observation is that these rules do not apply in some suburbs, at least for established units and houses. Units and houses are about the same price.
The cheapest Melton unit I could find on the web was a 2br at $151k (in Melton South) but $160 - 180k is more typical with a whole heap of new units around $200k. For this exercise, assume $170k.
Houses start around $165k, but $170 - 190k gets a big choice with many respectable-looking homes. So for this exercise assume $180k.
Thus the price difference between established units and houses in Melton is about $10k or much less than 10%. On average units will be newer than houses, but partially offsetting this will be that most units are 2br, whereas most houses are 3br.
What about land value component?
A 600m2 house block in Melton is worth say $100k. This leaves $80k for the building. Hence the house has a fairly high land value component of 55%, even if it is in a suburb known for its cheap land.
The unit might be on 200m2. So the land value is $33k, leaving $137k for the building. The land value component here is low - say 20%.
How do these compare with current replacement value?
The unit might well be a similar metres square to the house (3br houses were small in those days) so I'd say replacement values are the same unless you can get economies of scale by building a whole unit complex.
Then there's depreciated value.
The unit might be 20 years old (and have cost $50k to build), whereas the house might be 40 years old (and cost $15k to build). If we depreciated these we end up with a building value of $25k for the unit and close to $0 for the house, even if both buildings are sound, fit for purpose and rentable.
But in the context of current prices, current building values of $25k and $0k are about the same - ie two-fifths of bugger all.
Back to the assertion sometimes made that the price difference between houses and units is due to land value. Maybe it can be justified in the inner suburbs, but in Melton (and one or two other suburbs I can think of) this claim is plain wrong.
Houses are hardly dearer than units in Melton. There are huge differences between land value components yet the influence this has on unit versus house sale prices is minimal.
Though units might be 20 years newer than houses, both are old enough to make their depreciated building values negligible today. But that shouldn't be news since depreciation is accountants bunkum and use value is generally fairer.
We've established that differences in land value is not an explanation for the similarity between house and unit prices in Melton. Neither is building value, as conventionally assessed (whether through replacement or depreciation method).
I have yet to find a good explanation why a unit should cost the same as a house as it does in Melton.
Though they might rent well (I don't know), Melton units seem relatively poor value and houses relatively good value for capital growth purposes. The near parity of house and unit prices at Melton is perhaps an advantage compared to similar suburbs interstate, where houses are far dearer than units**.
Peter
(*) An exception is new townhouses. These are nearer in price to houses, presumably because enough people think that their low average age and high-tech features offsets the $200k less land value compared to a house.
(**) Logan in Qld has similar socio-economic characteristics to Melton. Townhouses there are around $165k (ie similar to Melton units) but their houses are much dearer starting around $210k. Frankston in Vic follows the Logan pattern, with units significantly cheaper than houses.
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Perhaps...
The type of people who are now being attracted to live in Melton prefer newer, lower maintenance, 'medium-density' housing, at an affordable price - ie. units?
Perhaps also there is not enough supply of these units in Melton at present, but with a greater demand for them, so subsequently these units have a premium in price attached to them. And hence they are only slightly cheaper, or almost the same price as older houses on larger blocks of land nearby.
The land value, as you suggested, may not have as significant an impact on the price of property out here in Melton, compared to say, Yarraville or Footscray, as there is a much larger supply of land available in Melton (and maybe less overall demand for that land).
Just a thought, I haven't done any demographic research to back this up
, but the 2006 census is out so that might help you here.The property valuation 'theory' I follow is all based on supply and demand, and this is how I would attempt to understand the difference in property prices.
Also, perhaps the premium in unit prices is led by a local investor demand - ie. investors prefering this type of property rather than houses for investment purposes?
GSJ
I think it is simply that when given the choice we all prefer a home to a unit.
Melton is young families, not young professionals. Even childless couples eventually see kids fairly soon and kids need space and yards and bedrooms.
Also everyone drives. It is 2 cars per household town. I.E. the very new Town houses have 2DLUG. Local are very car proud.
The older units have carports or SLUG and that is against them.
Even if you work in the CBD, supermarkets, fast food and all the other shops are in the Malls so you need to drive to get there, so you need a car. Street parking is easy and no charge.
Units exist when land is expensive. I know of 2 medium density sites in Melton for sale around $155k that are virtually DA approved for 5 to 6 units and no builders want them? If it stacked up then investors would be in know.
There is a very high density development in Philip St which is single storey high density and it has been on the market almost 2 years with little takers despite being 3 to 4b and brand new with SLUG but very small yards of 300 to 400m2. It simply misses the mark.
People move to Melton away from Melbourne for the space. If they wanted a unit then Footscray, et all would suit.
Regards, Peter
Melton is young families, not young professionals. Even childless couples eventually see kids fairly soon and kids need space and yards and bedrooms.
Also everyone drives. It is 2 cars per household town. I.E. the very new Town houses have 2DLUG. Local are very car proud.
The older units have carports or SLUG and that is against them.
Even if you work in the CBD, supermarkets, fast food and all the other shops are in the Malls so you need to drive to get there, so you need a car. Street parking is easy and no charge.
Units exist when land is expensive. I know of 2 medium density sites in Melton for sale around $155k that are virtually DA approved for 5 to 6 units and no builders want them? If it stacked up then investors would be in know.
There is a very high density development in Philip St which is single storey high density and it has been on the market almost 2 years with little takers despite being 3 to 4b and brand new with SLUG but very small yards of 300 to 400m2. It simply misses the mark.
People move to Melton away from Melbourne for the space. If they wanted a unit then Footscray, et all would suit.
Regards, Peter
the value point
Personally I am seeing the value in the older, well located (ie: either near the High/Coburns intersection or the High/Station intersection) houses. These are large blocks, in the very center of town, going for 180k with a 3 bdrm house on them.
Sure, there is a lot of land around for the overall town to expand into, but they just aren't making any more land that's walking distance from the center of town. At the moment, yes, the locals are preferring to drive 5 minutes to their double garage, but that will eventually be a ten minute drive. And then we'll see "inner" land getting more of a premium.
But you know, that's just me, and I've got no money in the area (yet!) so I can't really say my money is where my mouth is.
(oh, also, the amount of new developments going up should be a very strong clue about the future potential - developers aren't likely to be making heavy investments in an area unless they think they'll get their money back. And there's a whole lot of developing going on, which leads me to think they know something is up)
Personally I am seeing the value in the older, well located (ie: either near the High/Coburns intersection or the High/Station intersection) houses. These are large blocks, in the very center of town, going for 180k with a 3 bdrm house on them.
Sure, there is a lot of land around for the overall town to expand into, but they just aren't making any more land that's walking distance from the center of town. At the moment, yes, the locals are preferring to drive 5 minutes to their double garage, but that will eventually be a ten minute drive. And then we'll see "inner" land getting more of a premium.
But you know, that's just me, and I've got no money in the area (yet!) so I can't really say my money is where my mouth is.
(oh, also, the amount of new developments going up should be a very strong clue about the future potential - developers aren't likely to be making heavy investments in an area unless they think they'll get their money back. And there's a whole lot of developing going on, which leads me to think they know something is up)
I agree.
Property investing is all about the search for value.
Then purchasing when you find it.
If you see value before others do, you gain.
But if others never do see value then prices are stagnant and your returns are average or worse.
However I consider the risk of this is lowered in a growing area like Melton.
As you point out this is due to the value of a centrally-located property increasing relative to places further out as more get built on the fringes.
Peter
This has a lot of truth; in Melton one can either live near the major shopping centres or the railway station, but not both.
I consider this a major disadvantage of Melton compared to the better planned suburbs such as Frankston, Sunshine, Chelsea, Mentone, Malvern, Preston and even Roxburgh Park (from next month).
The financial implication of this is that with 2+ cars people can afford lower mortgage payments compared to 1. Which might somewhat limit capital growth compared to better located areas where people can economise easier.
The increasing number of mortgagee/reposessions in outer suburbs is another factor that might also limit growth in Melton. But I can't see prices dropping; if investors see good value, this might support prices, with the only change being an increase in the percentage of rental properties.
So in one sense I can see value in Melton, but there are also factors that might limit its growth.
I believe most of the houses on Plilip St are now sold, but are still listed on Realestate.com.au. A Barry Plant agent told me that the houses were on the market with another agent for a long period of time but did not sell. However since Barry Blant took over they have sold fairly well. Quite nice houses too.
Good Assessment Peter.
Re the mortgagee sales are interesting.
I have found they sell out only to rent in the town. It appears many bought in 2003 and rate rises since has meant they cannot afford to own. Sad, but I fixed in 2003 for 6.18% so really, there were options. These homes are most of the new stock hitting the market.
I agree Melton is not perfect as price growth may well be limited by the fact new estates are coming on line. But if the population growth projections are right (and the Gov says they officially support that growth) and with the Deer Park bypass, it cannot go anywhere but up. Correctly bought they are cash flow neutral so why worry?
I don’t know the name but I know there is a suburb 10km south of Melton being developed for the luxury high end home buyer. So the whole area will change as the shops to support it mean more growth in Melton.
Peter
One sold last week for $200k for a 4 bed with SLUG but on 200m2. They are a real punt. Holding costs they make sense but the CG potential is dubious IMO.
If they are all bought by Investors it could become a ghetto. The Units behind are very very average and could rent to those likely to cause issues, again IMHO.
Peter
So the general consesus on Melton is
: That you are better to buy a house than a unit as they are similar in price.
: An established house with more land is better than a new one on a 'smart block'.
: Melton South is viewed as a higher risk area for investment than the other surrounding areas.
: A lot of new infrastrature (new bypass, Harness Racing track, shopping centre upgrade etc) should help growth.
Is this roughly correct?
: That you are better to buy a house than a unit as they are similar in price.
: An established house with more land is better than a new one on a 'smart block'.
: Melton South is viewed as a higher risk area for investment than the other surrounding areas.
: A lot of new infrastrature (new bypass, Harness Racing track, shopping centre upgrade etc) should help growth.
Is this roughly correct?
Yep except:
Peter 14.7
- near new house have more depreciation so consider that against the older houses
- houses with unit development potential are not viable at this time.
Peter 14.7
where does Lakewood Estate fit into the picture ?
im talkin about places like these:
http://www.realestate.com.au/cgi-bi...eader=&c=57701964&s=vic&snf=rbs&tm=1188337411
Is a "realisation sale" a situation where a lender has foreclosed on a developer or something ? Similar to a mortgagee sale ?
im talkin about places like these:
http://www.realestate.com.au/cgi-bi...eader=&c=57701964&s=vic&snf=rbs&tm=1188337411
Is a "realisation sale" a situation where a lender has foreclosed on a developer or something ? Similar to a mortgagee sale ?
LVR of 100% plus costs is costing me around $10 a week. Yet to crunch the final depreciaton schedule but range would be $5 to $15 I assume subject to that. Will update when I do in week or so.
Peter 14.7
