South Morang or Eastern Suburbs of Melbourne

[Fire The Boss]

I'm currently looking to purchase my 3rd IP and am considering buying in South Morang. My current properties (units) are in the eastern suburbs of Melbourne (Blackburn, Ringwood and PPOR in Ringwood East). I know the eastern suburbs reasonably well but I do like the feel of the South Morang, Mernda, Doreen (Laurimar) areas and am considering investing outside of my "comfort zone".

I've looked at and considered the west (Point Cook, Wyndham Vale), south-east (Pakenham and Berwick) north-west (Hillside) for a while but these growing areas in the north are appealing to me more. I'm looking at proximity to employment/industry (compared to south-east/Dandenong and west), infrastructure (existing and proposed), distance from CBD, performance of surrounding developments, % return, entry price and rental demand when considering the area.

I look at what 350K to 450K will buy me from Mitcham out in the east, and what it gets me in South Morang and I'm finding it hard to go past - (410 to 450K = new to 3yo 3-2-2 unit in Mitcham/Ringwood/Ringwood East) vs (350K to 380K for new to 3yo 3 or 4-2-2 house in South Morang). I'll most likely go for a 4-2-2 house (greater rental demand) that is 2 to 3 years old and ready to go/nothing to do.

My question ("finally" you may be saying) - Am I way off here? Should I be considering the area or sticking with what I know? Part of my current strategy is to get the 3rd IP now and 4th very soon after and buying at around the 350K mark will enable me to do this much sooner.

I'm a long term, buy and hold investor who isn't worried about short term projections and fluctuations. I'm starting to look at land component more which is why I'm considering houses over units, and looking at "bang for your buck" which is why I'm considering outer areas. I also believe in diversification so for me that will be the areas I invest in and the types of properties I buy.

Any thoughts or feedback would be greatly appreciated.

PS - I'm new to this forum and so far 70% of my time on it has been spent reading/searching, 25% contributing (I hope), and 5% composing this new thread. Be gentle.

 

[thyechen]

Compare to many other new areas, I think South Morang has a lot of trees around. Compare to the western suburds, I believe the west is closer to CBD by radius.

 

[gcad]

I'll offer my opinions - as a fellow eastern suburbs resident who used to travel to the northern suburbs for work. I've worked on a few of the estates in South Morang and one observation is that there is an enormous supply of vacant land there. It's going to take a really long time to develop it all which - although I'm no economist - could mean cheap land for a long time to come.

South Morang has a bit going for it. Nice new street-scapes, a new railway station on the way and a decent amount of shops. I dispute the claim that it has a lot of trees - this might be true if compared to the Sahara desert. My biggest problem with it is that it's like the Cranbourne of the northern suburbs, ie. Bucket-loads of cheap land which will always be cheap - despite proximity to excellent infrastructure.

If it were my money I'd travel about 4km or 5km south down Plenty Rd to Bundoora, it has trams, two universities (RMIT & La Trobe) and the Northern Ring Rd. Perhaps look at Greensborough, they have a railway station and a big shopping centre. I even think Diamond Creek has a lot to offer and it too has a railway station and some new estates.

 

[normailson]

not value

I haven't seen it for while now but my family has owned acreage in the north for many years so I made the drive through those areas many times.

Over the last ten years, I have marvelled how every time I drive up Plenty Road, developers appear to be cutting up a new piece of paddock in the direction towards Whittlesea. But even after ten years of solid development, there is still a lot of land on that stretch to carve up. It seemed that every few months, there was a new estate that popped up where previously there were grazing animals. And since it was all cultivated farmland...no – there were never many trees.

To me that is an inherent problem with the area. Plenty Road is a single lane each way into Whittlesea. To allow traffic from the the burgeoning developments onto Plenty Road, there are now traffics lights and roundabouts where previously it was a 100 km/h road. With limited ability to expand road infrastructure sideways (and a distinct bottleneck) - the further you go out, the more you will be strangled. Each estate centres around Plenty Road and with a void of shopping infrastructure, people will still have to go to Bundoora or South Morang.

The upshot of this is that I think in a few years time, it might not be a great place to live, particularly if you go to the newer Mernda estates. To me, around the $400K mark for houses in this area is not value.

Have to agree with gcad:
With proximity to shopping and employment such as Westfields, the University and the city, South Morang, which until recent years had an unsavoury reputation, will benefit from being the desirable end.

 

[snshami]

Slightly Different Perspective

Hi, I have a slightly different perspective. I have followed Doreen, Mernda and South Morang for the last seven years with a view to investing.

What I have learned over the years from some painful experiences is that when everyone thinks something is a good investment it is too late. The best way of getting into the ground floor of something is to be able to project and stategise.

A first things that are always true. Firstly land supply is finite. The Melbourne 2030 blueprint has made it even more so. Government will always try and promote the building industry, the Australian economy and population will continue to grow.

The good thing about the Melbourne 2030 plan is that it will attempt to create several CBDs and Activity Centres within Melbourne, which will mean that distances of suburbs will not be measured to the single CBD we currently have but rather to the major Activity Centres, freeways and to major geographical features such as the Yarra Ranges or the beach.

In my view those areas will be good investments that are pleasant places to live and bring up a family and are close to amenities. There will always be a premium on any suburb that has nice views and good houses. A classic example is Doreen and especially Laurimar.

In Melbourne's North, the main growth areas are Craigieburn, Beveridge, South, North Epping, Mernda and Doreen. South Morang has only one development left. In total the number of houses that can be accomodated in these three areas is around 120,000. At Melbourne's current growth trajectory and taking into account land available in the West and South East, these areas will be exhausted in around 15 to 20 years.

The things missing from the picture in Doreen, Mernda and South Morang are a complete set of amenities. I believe as soon as these are in place the value of these suburbs will shoot up. If you look at long range plans you will realise that Plenty road will be duplicated all the way to Whittlesea. Melbourne's outer ring road will connect Werribee to Craigieburn to Mernda and down to the Northern Ring Road. Train services will most likely be extended to Mernda and possibly to Doreen and Whittlesea by 2018.

In my view South Morang and Doreen represent good long term investments because of the way they are being developed.