Melton - what Margaret Lomas says

Margaret Lomas on Sky Business Channel in late 2009 recommended Melton stating it was Australia's hottest buy.

Just 35mins from the CBD, the price of housing there is amazing. Note also the following:

http://www.news.com.au/money/proper...s-set-new-record/story-e6frfmd0-1225822774030

Melbourne house prices set new record
From: AAP
January 23, 2010 11:28AM
THE cost of buying a home in Melbourne has shot up over $75,000 in three months to reach another record high.

<snip>

The most affordable homes are located in Melbourne's far outer west. Werribee homes average $275,000, followed by Melton at $239,750.

Median house prices are the middle value of all real estate home sales recorded during the quarter.
 
Margaret still has Melton as one of her hot spots. Even Frankston is still there.

I believe her methodology whether you believe it or not, is actually not necessarily following the crowd so to speak and is predicting areas of growth in various degrees in yield and capital growth.

Went to her seminar last night in Melbourne. She had also indicated Warnambool and Mildura as hotspots well for Vic. Not sure there is a prevailing orthodoxy that says Warnambool or Mildura is the place to invest now. Of course she did say, that the time is now not in 6 months.
 
I think that I would steer clear of Melton, Werribee, and Hoppers Crossing for the moment. I own a property in each of these suburbs.

Why....because these suburbs despite the view of some on this site have gone up about $60-100k in the last 2 years. This represents about a 30-40% increase. This was on the back of high immigration and the FHOG.

These suburbs still have potential but you are better off waiting for 6 months when the market will be softer.

Rents have also pushed up quite well also.
 
These suburbs still have potential but you are better off waiting for 6 months when the market will be softer.

Rents have also pushed up quite well also.

Sash, you appear to be espousing timing not time in - to that I disagree. Property investing is not about "knowing" the market will be softer in six months. No one knows what will happen in six months. To me, it is about holding an asset that does not cost me to ensure I have exposure to that market whatever happens. Goes down - don't care. Goes up - I'm not suprised - the odds were in my favour.

Firstly, Melton is still a very high growth area. I *never* thought I would use the term "gentrification" to describe what would happen in a outer, lower socio-economic suburb such as Melton (prob because I thought it would not be possible) but there is anecdotal evidence that original locals are being priced out with new blood. This is happening because the price differential against areas such as Footscray / Sunshine is so great.
Secondly, the blocks of land being offered in the new estates are not good value so you can still get recently-built property below replacement cost. While brand new blocks in the 400 sqm are being offered in the 180K mark, you can still buy around the mid 200ks.
Thirdly, Melton has come off a very low base. Again price differential is everything - 60K-100K is not that much money when you compare to the 100ks growth in the east. This means it is still affordable. To me, the reputation and changing attitudes toward the area is a far stronger indicator for growth than a $60K increase. It's not $60K of your own money. Gen Y / X don't care about $60K - it's all about the capability to borrow.
Finally, Melton is no longer far away with the new road.
What would concern me about buying today is the ratio between homeowners and investor-owned. In a downturn, you would be competing with all the other investors.
 
Warnambool and Mildura are also on Terry Ryders' hotspotting list so Margaret has not listed anything other experts haven't highlighted.
Hasn't the Melton area just had a large land release? Surely this would mean there is not the scarcity factor of other areas. There is still more land out that way that can be released for residential development too .One thing I can guarantee you is that Melton will not be part of the electrified rail network even though it is part of metropolitan Melbourne and has a rail line for at least 8-10 years. Sunbury is supposed to be electrified by 2012 but it won't be ready by then.
 
The market is definitely softer....I know over the next 6 months you will be able to get better buys. Why buy now when you can get better pricing soon?

I agree Melton is a high growth area....exactly the reason why I bought. Despite people saying there is plenty of land...you are correct in saying that the mid 250k houses are a good buy. This is what is driving the price of OLDER homes.....the new ones not as much!

Sash, you appear to be espousing timing not time in - to that I disagree. Property investing is not about "knowing" the market will be softer in six months. No one knows what will happen in six months. To me, it is about holding an asset that does not cost me to ensure I have exposure to that market whatever happens. Goes down - don't care. Goes up - I'm not suprised - the odds were in my favour.
 
Warnambool and Mildura are also on Terry Ryders' hotspotting list so Margaret has not listed anything other experts haven't highlighted.
Hasn't the Melton area just had a large land release? Surely this would mean there is not the scarcity factor of other areas. There is still more land out that way that can be released for residential development too .One thing I can guarantee you is that Melton will not be part of the electrified rail network even though it is part of metropolitan Melbourne and has a rail line for at least 8-10 years. Sunbury is supposed to be electrified by 2012 but it won't be ready by then.

We've owned a couple of IP's in Melton since late 2005. Since then we've constantly heard from so called experts and very opinionated investors that new land releases will restrict growth. Maybe to some degree it has, but like Sash .. We bought around the $160k level in central Melton and those IP's are worth around the $260,000 mark and growing. That equates to around 60% growth.

So, even with new land continually being released it hasn't stopped capital growth in the area. I can understand some people's skepticism, but you can't deny that it has performed better than many expected.

Re: the electrified rail system. That would have been great, but the Deer Park Bypass has helped with reducing commuting times to the CBD, so that now it's within easy commuting distance for workers.

It's not everyone's pick, but we are happy with our decision to invest in the area.

Mystery
 
I bought in melton over 3 years ago and I'm happy and wouldn't move ,plus with older melton is the block size mine is 750 s meters. there are 11000 new house planned to be built here and a new station. its a first home buyers paradise they are buying up here cause they have been priced out of tarneit etc. from my home melton south I can be in the city in 35 mins off peak and not go through a traffic light. the rental demand is also very strong.
I doubt the market will soften as the value is still there
cheers
 
You've done well. RPData has the % growth at 38% over 5 years.

Thanks RickF, ...RPData's figures would be based over the whole Melton market.

Anyone who bought older style IP's at that time on 600m2 plus blocks will have done better than the median price which would include all the new house and land deals on small lot's. Sash has done equally well.

Our IP's are one street back from the golf course and within a couple of hundred meters of the high street shops. They are adjoining properties with one on a corner giving us combined 1200m2 of land for future development.

Mystery
 
Here's one in Melton with positive cashflow. Likely higher than 9 %:

http://www.realcommercial.com.au/commercial-real-estate/5561095

It's getting stale. Over 950 hits for such an asset means it been there for a while.

Is it just me, or is this return not anywhere near high enough for such a large outlay?

I have no probs buying a $300k IP with a 9% return, but $3 mill? :eek:

I'd be wanting about 13% or higher to feel even remotely safe.

Is the indoor cricket business still a viable thing these days? Is it still popular?
 
You could probably rip out all the sporting equip, fit it out with childrens play equip and a cafeteria and make a killing. If I have to take my 3 year old to another birthday party at one of these places I might go mad but I guess it is one of the businesses that have taken advantage of the baby bonus baby boom.:cool:
 
Is it just me, or is this return not anywhere near high enough for such a large outlay?

I have no probs buying a $300k IP with a 9% return, but $3 mill? :eek:

I'd be wanting about 13% or higher to feel even remotely safe.

Is the indoor cricket business still a viable thing these days? Is it still popular?

I only brought it up as a cheeky example to stray from the resi theme of the thread :p

Probably is viable, Marc; selling with a likely new long term lease according to the advert. Perhaps the tenant (is the vendor) and is selling on a lease back. If it vacates, still a lot of building there and land. Melton is growing it could be subdivided, re-let as indoor soccer and combo cricket +/- (as Rick has mentioned) indoor play centre, indoor tennis, sheds, etc.

Won't sell with a "three" in front of it anyway. My perception is that it's been around for a long time. If indeed the tenant is the vendor also, perhaps they may offer some vendor financing for the term of the lease, if they want the asset off their hands.

I'd be interested (for around that price) if it were around Deer Park, Derrimut or Laverton. Nice chunk of box and land. :)
 
Re: the electrified rail system. That would have been great, but the Deer Park Bypass has helped with reducing commuting times to the CBD, so that now it's within easy commuting distance for workers.

It's not everyone's pick, but we are happy with our decision to invest in the area.

Mystery

Melton rail will be electrified, as well as an outer ring road is in planning. The green wedge between Caroline Springs and Melton is all set for residential development too. This was all from a family friend who works within the shire council, please don't ask who :)

From what was also mentioned to me, Caroline Springs was made as an experiment, in regards to infrastructure, therefore new major developments will be much better planned and there will be tighter regulations as per infrastructure developments within these communities i.e. trains, schools and road planning, as Caroline Springs in now considered a nightmare during school peak hours for transport.

So, if you own land/farms between Melton and Caroline Springs, hold onto it for a little while longer as this area will boom in the next 20 years to come. But from what was confirmed, train electrification to Melton and an outer ring road is in planing for these future developments to come, with the shire also looking into some land acquisitions to make some cash of its own tsk tsk.
 
This is a great news. Hope it will be done soon (within 5 years) :)

A lot of things will need to be done before Melton can be electrified.

Melton is effectively a new (electrified) branch (off Sunshine) and competes for track capacity with existing lines through North Melbourne, which are in themselves crowded.

Whereas extensions such as Sunbury, South Morang and Cranbourne East are much more straightforward as they're just extensions of existing lines.

If Melton continues to grow it may see improvements to the existing diesel service, but it's unlikely to be electrified before Sunbury or South Morang.
 
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