Reaching new heights - Inner Melbourne

[GoAnna!]

Hi Aussie,

Do you have a link to the property in Northcote ?

You have so made my day!! We purchased in Northcote in mid March and got a lot more for our money.

Land 10.4 x 70.6 - two street frontages - one on semi main road, 4 bedrooms, Victorian (with 1950's front) not in great condition but heaps of potential. Paid $710K at auction

An emotional buy but we knew the market was solid.

Wooohooo!

 

[jingo]

Hi Aussie,

Do you have a link to the property in Northcote ?

You have so made my day!! We purchased in Northcote in mid March and got a lot more for our money.

Land 10.4 x 70.6 - two street frontages - one on semi main road, 4 bedrooms, Victorian (with 1950's front) not in great condition but heaps of potential. Paid $710K at auction

An emotional buy but we knew the market was solid.

Wooohooo!

Congratulations GoAnna!

 

[jingo]

Underquoting Article - Herald Sun

Just got hold of Today's Herald Sun with yesterday's auction results. There is an article entitled 'Dreams Dashed' relating to buyers trying to secure properties in the inner areas. It features a number of properties across Melbourne that have achieved up to 80% over and above the quoted price.

14 Tilba St, Essendon - Quoted Price - $840,000 Sold $1,401,000

114 Victoria St, Brunswick - Quoted Price - $390,000 Sold $620,000

27 Pershing St, Reservoir - Quoted Price - $310,000 Sold $558,000

77 Leura Grove, Hawthorn East - Quoted Price - $950,000 Sold $1,470,000


I read the article in detail, and some of the properties had recent bank valuations that didn't come close to the sold price achieved!

 

[aussierogue]

Hi Goanna

Congrats on your buy!

Yep we have a unrenovated house in Northcote we bought 2 years ago so we also quite happy abt the current market.

The house that sold yesterday is in Henry St, Ruckers Hill district, on the southside kind off behind the Town Hall. I tried to find a link on realestate.com but its been removed and as yet hasnt been added to the sold house section. Noticed in the age today the resukt says undisclosed whihc is strange considering it sold at auction.

cheers
Aussie

 

[aussierogue]

found it

http://www.realestate.com.au/cgi-bi...eader=&c=25284342&s=vic&snf=rbs&tm=1177826955

hope this link works

 

[GoAnna!]

The link worked thanks

 

[traveller]

Jason,

Yes you are right that the area iam following is more then 10 kms form the cbd.

I really cant think paying 700K for a place 5 metres wide. I think that whole inner suburban market is blown up by the Buyers Agents and media which regularly interview the same people with the same ideas and theories and people who are happy to outsource there investing chores to them.

And its not that i have not lived in the inner city and dont know the lifestyle. I stayed there for almost 6 years and still have 30 mins travelling time now on train earlier it was on tram. In other countries like US the areas close to the city tend to be the worst and the houses like these not at all expensive...
A decade or so earlier if remember correctly these areas were not very expensive even in australia...

It might just be another fad which will pass...

 

[jingo]

Jason,

Yes you are right that the area iam following is more then 10 kms form the cbd.

I really cant think paying 700K for a place 5 metres wide. I think that whole inner suburban market is blown up by the Buyers Agents and media which regularly interview the same people with the same ideas and theories and people who are happy to outsource there investing chores to them.

And its not that i have not lived in the inner city and dont know the lifestyle. I stayed there for almost 6 years and still have 30 mins travelling time now on train earlier it was on tram. In other countries like US the areas close to the city tend to be the worst and the houses like these not at all expensive...
A decade or so earlier if remember correctly these areas were not very expensive even in australia...

It might just be another fad which will pass...

Hi Traveller,

You raise some interesting points pertaining to the inner suburban market. Prices in the inner suburbs seem very high in relation to the land component and building size. I guess time will tell whether the attraction to the inner city is just another fad which will pass.

However, its hard to ignore the writings of many commentators who keep mentioning the rising cost of fuel, and the convenience of living closer to city work places. Our freeways are becoming more and more congested - especially in Melbourne. It only takes one or two accidents to bring the city to a stand still. Perhaps that in itself will attract people to continue buying in the inner areas. Not to mention the better amenities (public transport, parks, major hospitals, universities, schools, etc).

Having IP's in both the inner and outer suburbs, I have been watching the inner market with interest for a few years now. I have seen no growth in the IPs in the outer areas, and substantial growth in those closer to the city.

I too used to doubt the credibility of Buyers Agents, etc. However, its pretty hard to argue with the ever increasing prices that are being achieved for property in the inner suburbs. Its also interesting to note that these prices have been achieved post property boom. Or are we entering another growth cycle???

Please note that not only do I hold IPs in the outer areas, I also live in an outer suburb.

 

[DavidMc]

Interesting that you don't know about the BC fees. For me when I'm looking at apartments that is the first thing I ask.

I was quite busy at that time in my life (broke up with my girlfriend). The Wakelins and their solicitors did the due diligence for me on the BC situation and said nothing was unusual and that it all seemed fine. In my view it's a minor thing in the scheme of things (although you are spot on in that sometimes there can be little traps in there to watch out for!).

I just checked the doco then and they are ~$1500pa.

I spent most of my time looking at the growth aspects of the equation and how I can best finance the asset - those were the two main things important to me.

 

[pricey]

St Kilda

Does anyone have any idea on how St kilda is moving along?

I bought the most under perfoming realestate in melbourne...even Dandenong has had better growth!I paid $495k in jan 2004 for a 2brm 2bathroom appartment in St Kilda on Marine Pde opposite the marina.

My appartment has full marina views and is the middle appartment of three levels. There is six appartments at the front. The appartments were new in july 98 and are still quite modern and well kept. My appartment was $395 july 98 and is apparently now only worth 550k to 575k!!!

Does anyone have anythoughts as to why realestate with full marina views would have such low growth over 9 years? I also would have thought 395k would have been considered big bucks back in 98...so what happened? my neighbours would love to know the answer to this!

 

[GoAnna!]

Hiya Pricey,

According to REIV St Kilda houses (I know yours is an apartment) have risen 58% since 2002. Given yours is not performing consistant to this perhaps it was overpriced at the initial purchase and as the "shine" came off the new product it dropped even further in value. It would be interesting to see how much they were selling for arond 2000. St Kilda is not my stomping ground so I can only hazard a guess that it would be hard to cmpete in an area with so many apartments. On www.realestate.com.au right now there are 166 apartments for sale up to $600K in St Kilda. Thats a heap of competition! Brighton has 24 and Williamstown 20. In the rental area the numbers are similar....apartments available for rent in any price bracket are 190 is St Kilda, 22 in Brighton and 13 in Williamstown.

On the plus side you have seen some growth since your purchase date.

BTW do you live in your apartment or do you rent it out?

 

[Twitch]

Interesting reading in Saturdays Age. Apparently Melbourne prices fell by 3.3% in the March quarter

Despite the fall, suburbs within 10kms of the CBD are up 15% for the past year whilst those >10kms are up 5% for the year.

 

[Twitch]

I looked at the reiv site and noticed that the Melbourne median price took a dip in the March quarter in each of the previous 5 years.

The data only goes back that far so not sure if the trend goes back even further.

 

[DavidMc]

495k -> 575k from Jan 2004 -> Jan 2007 is just over 5% CG pa. During that average period (you would have bought pretty close to the peak) I would say you could have done far worse!!

I would agree with GoAnna, the initial sale price would have had at a bare minimum 10-15% ‘developer margin’ in it. That (and possibly a lack of scarcity) would have explained its performance, as I’m sure the demand side of the equation is there.

 

[DavidMc]

On the plus side by purchasing this type of property second hand you’ve not only avoided the developer margin but you’ll be able to have the benefits of a newish property. In addition, it would be an interesting exercise to separate the land / building / ‘wow’ / developer profit components.

A bit of maths just for fun:

(Assuming 15% developer margin when purchased new - value over true second hand market value of a comparable unit)

1998 price 335k
…
2007 price 575k

Average growth ~6.25%pa.

I might be doing this calculation on the place I just purchased! (assuming some % overpaying on the day).

 

[jingo]

North Melbourne - heating up

Hi everyone,

Just found out an auction result from the weekend that really surprised me. A very ordinary 2 bedroom and study Terrace home situated in Errol Street sold at auction for $535,000.

The Terrace was a single fronted weatherboard Terrace which needed major renovation. It had ROW at the rear, but in reality only a motor cycle could enter!

The property was advertised as $390+. I asked the agent what they expected it to go for, and he said high $400's. He also mentioned on the phone that properties in North Melbourne (Single fronted Terrace Homes) had moved into the $500,000+ bracket.

Luckily for me I had purchased a terrace in North Melbourne about a month ago for $447,000. Seems like there may be some equity there!! Yeah!!

 

[pski]

Hi everyone,

Just found out an auction result from the weekend that really surprised me. A very ordinary 2 bedroom and study Terrace home situated in Errol Street sold at auction for $535,000.

The Terrace was a single fronted weatherboard Terrace which needed major renovation. It had ROW at the rear, but in reality only a motor cycle could enter!

The property was advertised as $390+. I asked the agent what they expected it to go for, and he said high $400's. He also mentioned on the phone that properties in North Melbourne (Single fronted Terrace Homes) had moved into the $500,000+ bracket.

Same story in Richmond this weekend. Nothing under 500k for a 2br place.

 

[ozi]

I looked at a property in West Footscray about 6-7 months ago, initially advertised for $300k+. A couple of weeks before the auction the property was pulled off the market, then re-listed again about 6 weeks ago. Now they were quoting $320k+. Two weeks to go till the auction, they increased the price to $340k+ due to huge interest. The auction was last weekend. There were over a hundred people at the auction with several bidders. The property was called on the market at $370k. It sold for $517,500!!! Couldn't believe it. I was expecting it to go for around $400k.

It has been a similar story in Seddon and Yarraville with properties reaching new highs. There have been a number of sales in the $600-$800k range, way over quoting price.

Cheers,
Ozi

 

[pski]

Any idea what’s driving this market higher?

 

[jingo]

I looked at a property in West Footscray about 6-7 months ago, initially advertised for $300k+. A couple of weeks before the auction the property was pulled off the market, then re-listed again about 6 weeks ago. Now they were quoting $320k+. Two weeks to go till the auction, they increased the price to $340k+ due to huge interest. The auction was last weekend. There were over a hundred people at the auction with several bidders. The property was called on the market at $370k. It sold for $517,500!!! Couldn't believe it. I was expecting it to go for around $400k.

It has been a similar story in Seddon and Yarraville with properties reaching new highs. There have been a number of sales in the $600-$800k range, way over quoting price.

Cheers,
Ozi

Wow Ozi! Seems that the price increases in the Melbourne market are gradually spreading throughout the suburbs. I know the Eastern suburbs have been hot for quiet some time (since last year). Did you manage to buy anything Ozi??