Suburbs to buy house in Melbourne / Victoria for $650k

Hi guys

I'm from Sydney, very conservative, and never remotely contemplated the idea of investing interstate. After a recent land tax shock, I think it's time for me to venture out.

I've never lived in Melbourne, but been there for holidays a few times.

I would like to buy a brick (veneer) house, at least 2br, with a backyard.

Any recommendations for suburbs to help me get started with the research?

My DD so far is grossly deficient, relying mostly on google
eg: www.cityhobo.com/top-10/top-10-suburbs-and-best-schools
Based on this list, my budget can only accommodate Yarraville ...

Thank you all in advance!
 
Hi guys

I'm from Sydney, very conservative, and never remotely contemplated the idea of investing interstate. After a recent land tax shock, I think it's time for me to venture out.

I've never lived in Melbourne, but been there for holidays a few times.

I would like to buy a brick (veneer) house, at least 2br, with a backyard.

Any recommendations for suburbs to help me get started with the research?

My DD so far is grossly deficient, relying mostly on google
eg: www.cityhobo.com/top-10/top-10-suburbs-and-best-schools
Based on this list, my budget can only accommodate Yarraville ...

Thank you all in advance!

From what you've said, your decisions so far about property choice seem to be made on a whim? You got a land tax bill, thought of melbourne because you visited there, and then googled some schools?

Sounds quite the opposite of being conservative, if you meant that in a risk-averse sense.
 
Hi

If it were me and taking into consideration you are conservative I would do the following. Research both Glen Iris for small units up to $325,000 and also research Frankston for homes up to $325,000 and buy both which spreads your risk.

This way you get to buy a 2 bedroom home with a backyard with future development potential which keeps your options open and also have ownership of a nice little unit within the eastern suburbs.

Frankston is now earmarked for huge changes so it ?might? be the best time to buy. But I wouldn't spill $650,000 into Frankston unless it is for PPOR.

Regards,

alicudi
 
From what you've said, your decisions so far about property choice seem to be made on a whim? You got a land tax bill, thought of melbourne because you visited there, and then googled some schools?

Sounds quite the opposite of being conservative, if you meant that in a risk-averse sense.

I'm not in any capacity to buy on a whim. The bank needs to get involved :eek: and in my experience they take a long time and can be quite unpredictable.

I want to buy in Melb because it's more similar to Sydney than other big cities, in my humble opinion. Prefer to stick closer to what I know or think I know. Also prefer somewhere geographically closer to Sydney so it doesnt take too long to travel there if necessary.

Well, I don't actually have any close friend who's living in Melbourne right now that I could ask and I'm not in a position to fly down tomorrow and spend a few days driving around all the suburbs, so I thought Google might be a good way to get a very high level idea. The suburbs listed there under Sydney are good suburbs but I'm also aware of a dozen more suburbs that I would recommend if someone was considering buying in Sydney. I've contributed to threads where other people have asked similar questions about Sydney and I hope my responses were remotely helpful. So now I'm venturing into the unknown, I wanted to reach out to SS'ers who have significantly more knowledge and experience in the Melb area than me to provide a few initial pointers to help me kickstart my DD stage.

Yes you are 100% correct, I'm risk averse. I tend to think of myself as conservative in attitude so I may have mis-used the word. Hopefully SS'ers can look past my poor language skills :p
 
Hi

If it were me and taking into consideration you are conservative I would do the following. Research both Glen Iris for small units up to $325,000 and also research Frankston for homes up to $325,000 and buy both which spreads your risk.

This way you get to buy a 2 bedroom home with a backyard with future development potential which keeps your options open and also have ownership of a nice little unit within the eastern suburbs.

Frankston is now earmarked for huge changes so it ?might? be the best time to buy. But I wouldn't spill $650,000 into Frankston unless it is for PPOR.

Regards,

alicudi

Hi Alicudi thank you so much for your advice. Much appreciated. I shall research these suburbs now.

Based on what you said, it sounds like Eastern suburbs in Melb is considered very desirable? This is quite similar to Sydney actually where the Eastern suburbs tend to be the most expensive on a per sqm basis.

Will also look into Frankston.

Cheers
 
Yes you are 100% correct, I'm risk averse. I tend to think of myself as conservative in attitude so I may have mis-used the word. Hopefully SS'ers can look past my poor language skills :p

Need to understand your "definition" of risk (your profile).

Can you put in order of scariness (which one worries you most to least)
- no capital growth
- falling value
- high vacancy
- low rental yield


The Y-man
 
Need to understand your "definition" of risk (your profile).

Can you put in order of scariness (which one worries you most to least)
- no capital growth 3
- falling value 4
- high vacancy 1
- low rental yield 2


The Y-man

Hi y-man

I ranked them as per above.

I would like cash flow as I have equity but no serviceability :eek:

I don't want falling value. In Sydney it's uncommon to buy something at market price now that falls in value over the years. Yes it's nuts out here :eek:
I put it last as I'm envisaging I'll be paying market price and hold for a few years so it shouldn't happen?

Thanks in advance
Cheers
 
I bought an investment property in Melbourne while living in Perth and I used re.com.au and google to select suburbs I might be interested in. Then I organised a trip to ground truth my selections which resulted in me crossing many of those suburbs off my list. For example, I selected a great investment property in Heidelberg West but when I got there I found out Heidelberg West is complete slum! I could have saved myself some time if I simply googled "is Heidelberg West a slum".

Anyway, in re.com.au, I picked expensive areas near the City. Then I picked suburbs that are near to those with houses I could afford. I made a short list of those suburbs then checked out if there are new developments coming on line and also a range of rents for those areas. Within my shortlisted suburbs, I picked houses to look at that were near train stations, shops, schools or parks etc. Then I drove around those suburbs looking at the houses I shortlisted.

One big issue I ran into was that listed prices and sales prices were drastically different at the time. Most properties were being auctioned and were selling for up to $200,000 to $300,000 above list price at the time. I don't think this is usual now but be aware that list price and sales price can vary quite a lot in Melbourne. To get some idea of the suburbs you are looking at, make a note of some properties you are interested in and the list price, then check the auction results each week and make a note of the sales price. It is a bit time consuming but interesting too and very useful if you are serious about buying.

When I was looking, I really like Rosanna, McLeod and Bellfield but could only afford Heidelberg Heights, which wasn't as nice but still suited my investment strategy.
 
cadence, I think your idea is a good one i.e. Melbourne is bound to grow, it's a world-famous city, usually cited as one of the best cities in the world to live in, etc, etc.
And there's certainly nothing wrong with research before you actually land on the ground and start looking around. I would recommend both.
As for cashflow in Melbourne though .... hmmm. Yields are pretty low in Melbourne. I'm assuming that this has not improved recently with more buying going on.
alicudi's suggestion is a good one.
Another idea might be to go as inner west as you can, in search of yields. As a Sydney sider, you'd probably agree with me that the west will have better growth in time to come. Sunshine? However, that opportunity might not be there any more.
Not being a Victorian, I don't really know what's happening on the ground.
 
Thanks perthguy & wattleIdo! Great advice, really appreciate it. Definitely agree I should go with the 2 pronged approach, research at my desk first and then visit the shortlist of suburbs in person to get a feel.
I was researching western suburbs in Sydney one time and decided Tregear wouldnt be a bad place. Luckily went out to have a look ... Realised it wasn't really what I imagined it to be and the surrounding suburbs eg: Dharruk, St Claire, Colyton would be better. I'm sure lots of people would have made good money from Tregear, it just wasn't for my risk profile.
Will take all of your comments on board in my search. Thanks again!
Cheers
 
Good luck and have fun! I found the whole process really interesting.

Something I forgot was google streetview. It is invaluable for getting a preliminary feel for an area.
 
Hi

If it were me and taking into consideration you are conservative I would do the following. Research both Glen Iris for small units up to $325,000 and also research Frankston for homes up to $325,000 and buy both which spreads your risk.

Sorry, I categorically disagree with this. Glen Iris, albeit a conservative area, is not risk adverse if you spend $325,000 on a small apartment.

Glen Iris is mostly populated by home owners/buyers and does not perform all that well when it comes to rentals when compared to suburbs like Prahran that have a lower median age and more desirable lifestyle amenities.

Furthermore there are far superior apartments that can be bought for $450k - $600k in this area which most people (considering it's a middle class caucasian demographic) would prefer.

I doubt that if one bought a small 1BR apartment here that it'd do all that well. Better off buying a 2BR apartment that the young couple market will want to rent/purchase.


Secondly, Frankston isn't low risk either. Development is a much more risky strategy than buy and hold. Frankston does not fit a purely B&H strategy as there are other suburbs that are predicted to out perform it by several percent.
 
Hi

To: Jake Milne, thanks for your post. It opens my eyes and makes me see things and look at them from other perspectives which is always best to do when spending this sort of money.

The reasons I selected Glen Iris as it was one of the suburbs that has performed poorly in the past (thinking this may change) and is an area where one could buy a cheap unit today without as much risk as buying a cheap unit of similar value closer to the cbd that would most likely be in an area earmarked for a huge influx of higher density residential developments and in turn a possible oversupply in those particular areas closer to the cbd. Glen Iris is just out of this area and with a high amount of owner occupiers should be a nicer area for a tenant to want to live in. I am not sure if Prahran is also excluded from the higher residential density plans that have been implemented recently but is most certainly a nice area to live in.

In regards to Frankton I still see it excellent value to be able to buy a house and land for under $325,000...sometimes in the mid to high $200,000's with the opportunity to rent out today and subdivide in the future should the owner wish. I always keep in mind that Frankston is a bayside suburb with a beach and a train station which anybody can use as long as they wear a bullet proof vest!

Regards,

alicudi
 
I would like to buy a brick (veneer) house, at least 2br, with a backyard.

Hi Cadence,

Realistically $650k for a house is not going to get you into any Blue-Chip area (however it is the perfect budget for an apartment in such an area). There'll naturally be more perceived risk if you're buying into other pockets. From my knowledge of stats/predictions from the big data groups (RP-D, APM, & Residex) I'd suggest you look into the inner Northern suburbs of Melbourne if you're set on a house.

It'll be a tough ask but if you can get a little 2BR worker's cottage in Brunswick you'll have a chance at 6%-9% CG over the next 5-8 years. Problem with this is your budget will only buy you a house here that's either compromised in location or the state of accomodation.

Take this for example: http://www.realestate.com.au/property-house-vic-brunswick-118515571

Cute cottage in a reasonably good area that's close to shops, transport etc. This area has been a hotbed of late for auction results and rental demand. The proplem with this house is it's obvious 1970's kitsch. Also the bathroom is located at the rear of the property and relocating it towards the middle can cost a lot of money.

So pros and cons. Still it's worth checking out the surrounding suburbs, just stay underneath Bell Street in the North as the growth in suburbs above it dissipates very quickly.
 
To: Jake Milne, thanks for your post. It opens my eyes and makes me see things and look at them from other perspectives which is always best to do when spending this sort of money.

Alicudi, I like your thought process and can understand where you're coming from. I also agree that both areas you've suggested have potential.

If Cadence is open to the risks of development/division or purchasing a property that doesn't tend to fit the mould of a suburb's demographics then so be it, now he/she's aware of the possible up sides and down sides.

Hope you don't mind me putting my 2 cents in!
 
So pros and cons. Still it's worth checking out the surrounding suburbs, just stay underneath Bell Street in the North as the growth in suburbs above it dissipates very quickly.
I concur. My property is north of Bell Street and capital growth is definitely slower on my side of Bell Street. South of Bell Street is definitely better.
 
hi everyone thanks for all your comments and input much appreciated!

jack, I've seen that one already hehe ... I wasn't sure what kind of area Brunswick was, but I drew an imaginary circle around the CBD and set some parameters on domain and this one came up. you're correct, for my budget, most are non-brick cottages or small terraces like the one you linked to.

i prefer to stay away from the really old houses, as i'll be in sydney and worried about the ongoing repair & maintenance expenses.

i would like a 2 or 3br brick veneer house on a road thats not a main road, normalish block size (square or rectangle). what's the BEST area i can pick up something like this for?

i've been searching and found some suburbs which i can afford, but the problem is i have no context, i do not know what kind of suburbs they are, how desirable, what sort of demographic, etc. could be a housing commission area for all i know.

all your local knowledge and input is therefore GREATLY appreciated!
 
Cadence,

First of all I don't think Land tax alone is the best reason to make major investment decisions. However, given your post personally I think you have 2 options:

1: Put the brakes on any purchase decision and spend a few months reading and researching so you actually understand what kind of investment to buy, and where, and why. There are loads of books and of course this forum is 1 incredible place full of knowledge but you need to invest the time to read enough to increase your own skill and knowledge base. Then you will see where the right locations are for you, rather than throwing darts at cheap suburbs.

2: Consider an independent Buyers Agent. They can advise on fine tuning locations based on your stated goals and help reduce the risk of dud purchases. I have never met Jake Milne but he has a solid reputation and history as an independent BA and if you have decided on Melbourne you could do far worse than engaging his services.
 
Back
Top