Mornington - VIC

Hey all!

I'm interested to get people's thoughts on Mornington (VIC) as a potential area to invest in. The place I'm considering will yield 5% which isn't too bad and partially one of the reasons I'm considering the location.

Statistically, it has performed quite poorly over the past 5 years, median prices are only marginally higher in that time (averaging about 5% gain a year over the last 5 years according to yourinvestmentpropertymag.com.au suburb report). Homes are on market for an average of 84 days (rpdata) which indicates very low demand I believe.

Mornington is a lovely place however imo. Situated between two high end real estate areas being Mount Martha and Mount Eliza. The shopping district is lovely with lots of character. I think it has great potential in years to come but perhaps not in the short term future based on current demands. I can see it as a great place to retire and with the baby boomer generation nearing retirement over the next 10-15 years could this possibly be a highly sort after location like its neighbours Mount Martha and Mount Eliza?

What are people's thoughts on the area?
 
I'm no expert on Mornington but I think this gives you your answer:

Statistically, it has performed quite poorly over the past 5 years, median prices are only marginally higher in that time (averaging about 5% gain a year over the last 5 years according to yourinvestmentpropertymag.com.au suburb report). Homes are on market for an average of 84 days (rpdata) which indicates very low demand I believe.

You need to ask yourself what the catalyst for change is going to be. I don't think flow on effect from neighbouring suburbs when you're that far away form Melbourne is enough for it to be considered investment quality.
 
Hey Jackbak,

Fair call. The demand in neighbouring areas is definately not high enough to see any overflow, not yet anyway.

I don't believe historical data is an accurate indicator of future trends to come but regardless they sure do make you think twice hence this post to get more thoughts about the location.

As for a catalyst of change, I can't really think of anything other than it being a beautiful beachside location with potential. A popular retiree location maybe? Mount Martha and Mount Eliza are very popular locations for this segment of the population so maybe Mornington could also have the same type of appeal in years to come?? There doesn't seem to be much happening in terms of infrastructure developments that I'm aware of.

On the plus side, I should mention that the property I'm interested in is already about 25% below the median price for similar dwellings in the area, which is one of the main reasons I'm considering it. The place also requires no work and is ready to go - doesn't seem to be much competition on the rental market with only about 19 options with 3 bedrooms available. After taking a closer look at the numbers I have it yielding around 4.6 - 4.7% based on maximum sale price and minimum rental income.

Anyone else have any thoughts on the potential of Mornington they care to share?
 
Fantastic area to live. Good range of schools around there and Mt Eliza. Excellent main street which is everything Frankston isn't. Only for the bigger things would you need to go to Franga.

Big problem is the lack of local jobs - especially for other than tradies and retail. Though health and aged care should grow given the area's old population. Also it's a long way to a big uni campus.
 
Can't comment on the location but 5% yield and 5% growth per year over the last 5 years is good growth, what would you expect?
 
I have always liked Mornington as an area, bought a corner block basic 4 bed house in the older non beachside of Nepean highway back in 2008.

Conservatively it's had approx 44% capital growth on purchase price and 39% rental growth, so definitely not a stellar performance over 7 years, but have had the same tenant, no issues and apart from the usual old house Maintainence "stuff" it "may" be worth a redevelopment down the track.

I do notice that the bottom end properties in mornington now seem to be a few more renovated and asking slightly higher prices than 12 months ago, so it might be on a mini move at the moment.
 
Fantastic area to live. Good range of schools around there and Mt Eliza. Excellent main street which is everything Frankston isn't. Only for the bigger things would you need to go to Franga.

Big problem is the lack of local jobs - especially for other than tradies and retail. Though health and aged care should grow given the area's old population. Also it's a long way to a big uni campus.

Agreed on all points. My wife and I were sitting in a cafe in Mornington about a year ago, and we discussed that it looks like a lovely place to live and the price point is definitely affordable. There's a lot of value for money in the real estate.

We then discussed that I wouldn't want to move my office, where it is now is a far better location for business. Not a big deal, it's only a 45 minute commute (more like 1 hour to the CBD), but more in peak hour. Then I imagined that mere 45 minutes when I've seen an after hours client, it's 8pm and I'm tired.

Nice lifestyle, I might buy there as a retirement strategy, but there's not enough employment nearby to make it a strongly consistent capital growth area.

Perhaps if they expand the docks in Western Port, but even that is a long drive. I don't see that project happening for a while though.
 
Live in Mornington myself; for me there is nothing to prop up the market where one would see decent capital growth in the short to medium term. Another sleepy hollow coastal suburb- the retail sector relies on summer to make the bulk of its money as the towns population more than doubles.

The baby boomer demographic may see a decent movement an spike in population growth but other wise, limited employment nodes outside of retail and local trades.

The Beaches are beautiful, the Main Street is epic but believe there are better places to put $$$$$
There are some cheapies that can be picked up around Robertson, and Richardson Street which I'm told are no go areas by lifetime locals as there was a lot of public housing back in the day and still existent in those pockets however have been spent time cruising these streets and have seen zero social issues in there. Big blocks too-
 
That's great feedback guys, really appreciate your insight.

Good points raised around the local jobs issue, I definitely agree there isn't enough on offer nor will there be in the near future to attract a higher influx of people to the area. It really is a beautiful place to live but probably more suitable to your older demographic and not your working class "professional".

Would it be fair to assume that a property priced well below the median in the area for similar sized properties would 'catch up' over time and perhaps see a quicker increase in capital growth compared to other properties that are already priced around the median value?
 
My wife n me looked at mornington as well.
Looked at 12to16properties which were in our target market.
Highest yield.
Beautiful place but as many said b4 no drivers 2 improve much.

Retired people dont want to walk steep hills.
For holiday rental etc nice but for permanent rental u need to buy very below market value.
We bought 2 properties in bendigo instead.
Ip 1 was 230000 n rents for 280/wk and ip2 was 192000 n rents for 220 wk.
Not great but ok for us.bendigo gets a new hospital, infrastructure is good for 5to 8 percent growth
 
Can't comment on the location but 5% yield and 5% growth per year over the last 5 years is good growth, what would you expect?

Hey Hugh,

It appears growth has slowed over the last 3 years in particular. The 5 year growth is at 26% but the 3 and 1 year growth only shows a measly 3% for each period. So yes technically it has seen an average annual growth of 5% over the past 5 years which is passable but that trend has reduced to 3% over the past 3 years - not so passable. But again I wouldn't live and die by historical data, in fact a slow couple years could mean its due for a bit of a spike? Particularly in properties that are priced well below the median value of the area? Perhaps I'm just being optimistic in my thinking lol
 
My wife n me looked at mornington as well.
Looked at 12to16properties which were in our target market.
Highest yield.
Beautiful place but as many said b4 no drivers 2 improve much.

Retired people dont want to walk steep hills.
For holiday rental etc nice but for permanent rental u need to buy very below market value.
We bought 2 properties in bendigo instead.
Ip 1 was 230000 n rents for 280/wk and ip2 was 192000 n rents for 220 wk.
Not great but ok for us.bendigo gets a new hospital, infrastructure is good for 5to 8 percent growth

Hi Bernie,

Thanks for your response!

The place I was considering in Mornington is about 20-25% below market value hence why I thought it could be a viable option. I think I can get a minimum $350 a week for it which will see me yielding somewhere around 4.7%.

Bendigo is a nice town, I travel there for work regularly and there always seems to be something new popping up. Sounds like you've done pretty well, I like the idea of spreading your investment dollars and minimising your risk. Nice job!
 
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