Purchasing in VIC - Frankston Area

Nice post Harris, good information.

Harris said:
The townhouse and units market which in Frankston had been lagging behind the house market has turned the corner and is showing good results, both in activity and the price points realized.

The development at the corner of Yuille and Denbigh St (just finished) had 2 townhouses sold by MPRE recently. A 2 bedroom 13 sq + garage sold for $380k and the 3 bed 17 sq + garage sold for $450k.

http://www.realestate.com.au/cgi-bi...eader=&c=65456511&s=vic&snf=ras&tm=1197458093
Click to expand...


These have been on the market for some time now and been advertised for at least since May this year. I am not sure if the whole development is fully completed however.

There has been another 3 unti site development on Kars St (45?), that took them a while to sell, and they had to drop their price. Didn't sell for as much as the ones you mention, of course they weren't as big or had as nice a finish. So its not all peaches and cream.

I do agree however that there is a significant transformation occurring in the Frankston are. You can actually see the transformation with the new developments, not only along the premium parts of FS, and if the other projects (Frankston CBD & marina) finally get off the ground, it will really change Frankston forever.

Have dealt with all the agents you mentioned in some way shape or form in the past 12 months, I have found AM RE to be the most balanced in their views. The others are far too bullish and are a real through back to the 1980's style REA.
 
buzzlightyear said:
These have been on the market for some time now and been advertised for at least since May this year. I am not sure if the whole development is fully completed however.
Click to expand...

They have been wanting to sell it even before May - I have a development block in Denbigh St (closer to Kars St) that I am land banking, so have driven past this development almost every week.

I can understand why they didnt start selling till the project was almost completed. Effectively asking half a million bucks for a 3 bed townhouse of 17 sq at a fair distance from the beach in Frankston wasnt going to cut it until it was finished.

The concept of Pre-sales in my opinion would struggle in Frankston market for a while, especially for high value developments, unless there is something on the beachfront.

Harris
 
Harris said:
They have been wanting to sell it even before May - I have a development block in Denbigh St (closer to Kars St) that I am land banking, so have driven past this development almost every week.

I can understand why they didnt start selling till the project was almost completed. Effectively asking half a million bucks for a 3 bed townhouse of 17 sq at a fair distance from the beach in Frankston wasnt going to cut it until it was finished.

The concept of Pre-sales in my opinion would struggle in Frankston market for a while, especially for high value developments, unless there is something on the beachfront.

Harris
Click to expand...

I think they were only asking $425k before they went to MPRE.
 
Harris,

Do you think there is OR will become a 'two-tiered' market in Frankston (+ North/South), with properties in close proximity to CBD amenities and beach side reaching the exhorbitant price heights of neighbouring Mornington Peninsula suburbs like Mount Eliza and Mount Martha, and those further out, whilst showing some growth in the short-term, possibly stagnating in the longer-term.

My brief experience with Frankston on recent drive buys is that it is a very big area and that most of the amenity is concentrated in a very small area. You seem to be buying in the best areas, but a lot of investors are purchasing properties in very 'secondary' locations in Frankston. Possibly hoping to catch a 'ripple' from the centre of Frankston...

Having said that, Eastlink might make all these locations 'primary', as it brings metropolitan Melbourne that much closer to the Peninsula.

Will be interesting to see what happens as Eastlink nears completion...

I think the 'Frankston Bypass' will also be significant (positive or negative, depending on if and when it happens), as there seems to be a real bottle-neck of traffic as you enter Frankston on the freeway...
 
JIT said:
Harris,

Do you think there is OR will become a 'two-tiered' market in Frankston (+ North/South), with properties in close proximity to CBD amenities and beach side reaching the exhorbitant price heights of neighbouring Mornington Peninsula suburbs like Mount Eliza and Mount Martha, and those further out, whilst showing some growth in the short-term, possibly stagnating in the longer-term.
Click to expand...

Frankston is about 3 times of an average inner suburb size - both in terms of population and area. The variation in prop values is also extreme compared to any other suburb I have looked at in melbourne... so it is already a multi tiered market with different parts of frankston showing growth at different level in the last 12 mths.

Frankston Nth has appreciated the most, (correction at the bottom tier) in the last 12 months followed by central frankston and Karingal. Karingal is about 20% up.

Marylands and Lakeweood estates have also gone up albeit at a more slower rate.

Beachside of Frankston and Frankston South has also shown good growth however due to a very small number of prop coming to market, its hard to guage the true growth there.

Frankston South has lagged in the growth so far however I see it being the growth leader in the next 12 months.

Central Frankston and beachside should keep going up - Majority of new development activity is concentrated there and the street scape will be evolving with new high end developments gradually being finished.


So in short, the bottom tier has started the growth with the middle tier following and the premium parts of frankston sth especially the frankstion high school zone areas have to play catch up in increased values with a historical difference of around 30% for similar properties in Karingal.

JIT said:
You seem to be buying in the best areas, but a lot of investors are purchasing properties in very 'secondary' locations in Frankston. Possibly hoping to catch a 'ripple' from the centre of Frankston...
Click to expand...

I am not sure if there are any "secondary areas" that will lag behind in growth - The rate of increase in value should be more or less equivalent to middle and upper end as is the case in most suburbs, however due to very high value prop showing excellent equity build up, the wow factor makes one believe that they have appreciated somewhat faster than the lower end prop..(if it makes sense)


I have purchased everywhere - from Frank Nth and Frank central to Marylands, Karingal and development blocks in Frank Sth so portfolio is spread quite evenly - I see the growth starting from different areas and then ripples spreading evenly to adjoining areas. Any anomaly there and the astute investors will pick the areas showing late growth and hence bringing it in line with the rest with a quick growth spurt.

Harris
 
This pattern of growth in Frankston has existed ever since I started investing in this area (7 years approx.) and I would dare say, more than likely even before that. Frankston South, for what ever reason (maybe affordability), seems to always lag behind, then play catch up.

Another pattern I have noticed is that around November to late January, prices often dip or stagnate, then pick up momentum early to mid Feb.

As all the developments for this area unfold and start to take shape and Frankston starts to loose its old image, this may change. Until then, from what I can see, Frankston is being Frankston.

Is this scenario common for such a large suburb or for that matter any suburb, wherein the cheaper part of the suburb seems to move before the higher end? Having said that I can see from your comments Harris that the highest end (Olivers Hill) is doing very well, but Frankston South (Frankston High School zone), is directly behind Olivers Hill. It baffles me a little.


Toni.
 
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Another local news paper update - Leader 17/12/07

Frankston's long-awaited aquatic, health and wellbeing centre "won't fit" at Monash University, Frankston Councillors have been told.

"The fact is, it won't fit... so we've looked at other locations," CR Judy Wachendorfer said at last Monday's council meeting.

Frankston Council cited issues, including car parking, land ownership, potential corporate structures and ownership and operation as reasons behind its decision last week to name Samuel Sherlock Reserve as its new preferred location.

The reserve is already home to the Frankston skate Park.

Frankston Mayer Alistair Wardle said the council looked beyond Monash University because the Aquatic Centre was an important project. "The Samuel Sherlock site rated the highest because of its proximity to public transport and the Frankston City Centre," he said. "In particular, the site offers an opportunity for a partnership with Chisholm TAFE and Peninsula Health under a joint venture arrangement."

The council plans to borrow the $20 million needed to cover its cost, general manager of assets, George Modrich, said. The balance of the funds will come from state and federal governments, a potential private operator and community fundraising.

"Project planning and detailed designing will be carried out during 2008 and early 2009," Mr. Modrich said.

"At this stage, it is expected construction will commence mid 2009 and be completed by the end of 2010."

Council's 2007-08 budget is $108 million, with just under $58 million coming from rates, just under $20 million for state and federal government grants, $15.3 million from permit charges, fees, fines and registrations and $15 million from other sources, including interest earned and sale of assets.

Frankston ratepayers' average residential rate bill this year was $930, a rise of 7.7 per cent from last year.

Toni
 
Is Frankston a Mortgage sensitvie suburb ??

Dear All,

"Ultimately, whether or not you list your property is your choice. I am simply saying that in 6 months prices will probably come down a lot" this is from one of the real estate company xxx's area manger in Frankston. Not that I want to list the property for sell BUT really interested to see how my IPs at Frankston South and North perform. Not sure she is referring to anticipate interest hike......

Recently, I have been approached (via email as I am in SG) for free property appraisals. 2 properties at Frankston were settled in July 2007. This manager appraised my 2 properties at the SAME selling price as in May 2007 when I bought the properties. NOT a single cent increment. Are we expecting this ? or Is this normal ?? this make me admire Harris's investment in Frankston, his figure is fantastic.


I thought with all these wonderful activities going on at Frankston, the price is heading North...well not as expected. One of these properties is at Frankston south, only 600m from the beach,Frankston Senior high school zone.....after half a year the selling price is still the same. This make me wonder..., have I bought them too high then, the seller agent inflated the price or this manager is under appraised my properties. appreciate your comment if any.

According to her,Not a single townhouse that has sold in Frankston South in the last 6 months for $450K. Many are struggling to sell at that price, have been on the market for many months and will eventually sell for about $380K-390K. That's despite the fact that these properties are brandnew.

My Land+house property in Frankston South can not even beat this town house ? have I missed something ?? have I make the wrong investment ?


yours enlightenment is much appreciated, thanks.

cheers,
Ming
 
Hi mingling,

I think I share similar situation as you. I bought a unit for 265k in Central/South Frankston back in August, and I doubt I'll get any increase in value if I get it revalued today. Harris and Toni have already mentioned that Frankston South seem to lag behind the rest of Frankston, so will probably just wait patiently. Another factor is that Xmas is here, so the sale activity slows down, and the price stays flat a bit or even drop a bit. You won't be able to see the full pic until next yr I think.

Btw, I'm also speculating the effect of Eastlink, bringing affluent ppl from NE/E to Frankston. There are 3 things going for Frankston South: water, mountain and most importantly, school :D
 
Hi Toony,

thanks for your feedback. I am a novice investor, frankly speaking, I do not know what to expect. I am still in the process of learning to play this game. ie
building IPs for retirement.

cheers,
Ming
 
Hi, FeiHong,
thanks for the sharing. I just do my due diligent to follow up as these properties were bought unsight and via the internet. I know property investment is a long term investment and need patience. Well, human nature, at time you are affected by -ve comment especially from real estate professional. This make me worry as I do not come from Mel. I rely a lot on this thread to get the latest update. Thanks All for keeping us posted and updated.
 
Be very careful of Real Estate Agents, particularly when you are so far away. I also have a property in Qld and have been told one story over the phone ($125,000) as a property owner looking to sell and a completely differant one when I travelled over there and pretended to be an interested buyer ($300,000)

Real Estates look after themselves, friends and family first, whilst I am sure this is highly illegal, I am not fully convinced it doesn't happen. Your best bet would be to ring and pretend to be interested in buying a property similar to your own and see what kind of response you get and maybe Harris might be interested in helping you ascertain what your property is worth.

I haven't been in the market for a while and whilst might have somewhat of an idea, it wouldn't be as up to date as Harris's. Harris is in the market and communicates regularly both with agents and people in general down here.

I would be happy to ring around for you if you give me a little more detail, but again, Harris would probably be the better one to help you.

Which Real Estate told you that property price will go down in 6 months. This, I would say is highly unlikely to happen. Expected performance here is very strong with alot of developments happening. I would be very careful about the advice this agent is giving you. It just doesn't sound right.

Toni
 
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feihong said:
Hi mingling,

I think I share similar situation as you. I bought a unit for 265k in Central/South Frankston back in August, and I doubt I'll get any increase in value if I get it revalued today. Harris and Toni have already mentioned that Frankston South seem to lag behind the rest of Frankston, so will probably just wait patiently. Another factor is that Xmas is here, so the sale activity slows down, and the price stays flat a bit or even drop a bit. You won't be able to see the full pic until next yr I think.

Btw, I'm also speculating the effect of Eastlink, bringing affluent ppl from NE/E to Frankston. There are 3 things going for Frankston South: water, mountain and most importantly, school :D
Click to expand...

I agree with all of what you have said, however, I settled on my new property late June 07 and have already gained over $50,000. This property was however a home and whether or not this differs to units/townhouses I am not sure. Frankston South maybe lagging in overall % growth in comparison to other parts of Frankston, but it is still going up in value on a month to month basis and remember Frankston South always catches up. It is the prime part of Frankston.

The exception to this would be the Christmas period, which historically for this area is low. But all parts of Frankston have been growing, so I would be very surprised if what this agent is telling you is correct.

Toni
 
Another example I would like to give you is; when I first moved to this area, I bought my home for $280,000. Six months later I was told by around 4 agents that my property was worth over $330,000. One agent, however, asked me how much I had purchased it for. When I told him, he told me that was all it was worth now and added that he might have an interested buyer if I was interested.

I never went back to him.:rolleyes:

Toni
 
Hi Toni:

I know I should be buying a house with land, but I wanted to buy in the premium part of Frankston (for the reasons I mentioned in my previous post) and the house is too expensive for me (400k+). I also realise that the holding cost of Frankston South is very high, with gross yield less than 4%. So I compromised with a unit. Frankston is still long way from full capital growth so naturally houses will go up first before units gradually catch up. The other reason why units won't do as well right now is because the amount of development that's being released to the market. I expect the new residential development activities to decrease if interest rate goes up by another 0.5%, and that will help the price of unit/townhouse to go up.

edit: When I said Frankston South, I was really referring to areas between Cliff Rd, Warringa Rd, Yule St and Daveys St
 
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Hi Toni,

thanks for your kind offer to help. I will PM you the Real est who comment that.

I believe, you and Harris are at the ground to pick the best property which are for sell. As for me, we get the left over property ie the land size is std....etc. as such there is no value added. Those properties that I bought via internet might be good riddance for seller and seller agent. On top of that,they can sell me at a good price as I only rely on what they told me on phone or a few picture on the net.

the is the BIG problem of remote purchase.

I think, those agents do take advantages of me as oversea purchase, I will PM the detail of what I bought then you will understand why I said this.
 

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