Sydney's struggle street

[Barracuda]

Oh OK

Sort of of related to this topic. A couple of weeks ago, I went to "new" Rouse Hill (next suburb from Kellyville) and had a look at their land and house offerings, just for curiousity. They are selling 280 - 390m2 blocks from 250K - 400k+. That is just crazy. Not to mention the cost of the house and you end up paying like 700K for a house on a very small block of land very far from Sydney. They could just buy those in Kellyville at a much cheaper price ......

They probably could by an existing house chepaer - but don't just blame 'greedy developers' - much of that 400K+ would be state govt development levies which are not negotiable.

Cheers,

 

[Cherry Pro]

Hi ..I live in Cherrybrook ... also relatively close to Kellyville and was gobsmacked to read the article in last weekend's SMH. Surely, to have paid $950 K for a 4 bedder in 2005 was just ridiculous

Was speaking to a friend who writes loans for CBA and he was saying that after Blacktown, the highest number of CBA's repossessions are in Kellyville ... reading the article confirmed his comments.

I agree with Edison and feel for all the Joneses who'll end up losing their Mcmansions.

 

[kamchatsky]

They probably could by an existing house chepaer - but don't just blame 'greedy developers' - much of that 400K+ would be state govt development levies which are not negotiable.

Cheers,

How much is the state government development levies anyway? Having said that the road around Rouse Hill are pretty new and wide ......

Actually I prefer to keep these state government levies high. This will keep existing house prices high as people just cannot build more and more far away cheaply. Also it encourage people to use existing land more effectively, which also means less infrastructure requirements ....... For example they would rather build more and more units/townhouses rather than houses ......

 

[Witzl]

I think the houses are all owned by people with the surname: "Jones."

knowing the area as well as I do... it's more likely to be the "Khumars". No offense to anyone intended.

Now.. "new" rouse hill - that is just a farken joke! That is literally HALF the land my Dad's 3bedder in Castle Hill, which is a 15 minute walk from castle towers!
Heck, you could smash down my dad's house and build a massive 4bed/2bath in its place for nearly the same price, and have double the land, all in a MUCH better suburb.....

.... Rouse Hill - what a RIP.

It's almost as crazy as Ropes Crossing! Out there you are paying around $300K for a block of land around 400sqm or less.
Now tell me that makes sense.


All this says to me is that the supply of new land in sydney is junk, and thus the demand for existing housing is certain to increase. Good news to me


Very interesting to hear all this info, as it's all so close to home for me

 

[lizzie]

How much is the state government development levies anyway?

about $170,000 per block in sydney ... that is state, federal and local governement levies combined. bit less in other areas - i think it's around $70,000 in newcastle.

 

[kamchatsky]

knowing the area as well as I do... it's more likely to be the "Khumars". No offense to anyone intended.

Now.. "new" rouse hill - that is just a farken joke! That is literally HALF the land my Dad's 3bedder in Castle Hill, which is a 15 minute walk from castle towers!
Heck, you could smash down my dad's house and build a massive 4bed/2bath in its place for nearly the same price, and have double the land, all in a MUCH better suburb.....

.... Rouse Hill - what a RIP.

It's almost as crazy as Ropes Crossing! Out there you are paying around $300K for a block of land around 400sqm or less.
Now tell me that makes sense.


All this says to me is that the supply of new land in sydney is junk, and thus the demand for existing housing is certain to increase. Good news to me


Very interesting to hear all this info, as it's all so close to home for me

Never been to Ropes Crossing myself I could not comment. Having a look at their website though, I didn't expect the land over there would be so expensive as you have quoted.

One thing I have to agreee though, Rouse Hill is way too expensive for where it is. Plus the size of the land is way too small to be anywhere useful. I asked the agent about land sizes (or the lack of) .... They just brushed off saying, these days people don't want a backyard etc etc etc ...... If that is the case, for the same money (700K) I would rather buy a townhouse somewhere at the North Shore ......

Castle Hill is definitely much better location. At least Castle Towers is well developed, full of people and much more alive than Rouse Hill. Not to mention that it is the future central commerical centre for Hills district. But then, you can say I am biased because I live in Cherrybrook .... Only 5 minutes from Castle Towers.

At the end, people should use existing land ...... Afterall I always see existing land on sale in all parts of Sydney ...... Maybe people should just buy those first before developing new areas.

 

[alexlee]

One thing I have to agreee though, Rouse Hill is way too expensive for where it is. Plus the size of the land is way too small to be anywhere useful. I asked the agent about land sizes (or the lack of) .... They just brushed off saying, these days people don't want a backyard etc etc etc ...... If that is the case, for the same money (700K) I would rather buy a townhouse somewhere at the North Shore ......

So ask yourself, why didn’t people buy a townhouse on the north shore instead? Because they wanted a house. They might not want a back yard, but they want the big rooms, the spas, the double (or triple) garage.

Castle Hill is definitely much better location. At least Castle Towers is well developed, full of people and much more alive than Rouse Hill. Not to mention that it is the future central commerical centre for Hills district. But then, you can say I am biased because I live in Cherrybrook .... Only 5 minutes from Castle Towers.

Rouse Hill is cheaper than a comparable property in Castle Hill and Cherrybook, no? West Pennant Hills and Carlingford are more expensive, and Beecroft / Epping more expensive again. It’s always a balance of property type, price and distance.

At the end, people should use existing land ...... Afterall I always see existing land on sale in all parts of Sydney ...... Maybe people should just buy those first before developing new areas.

Yes, but I still believe people want houses. That’s why the new areas sold. People saw these spanking new houses and fell in love with them, against the backdrop of never-ending price rises.
Alex

 

[Witzl]

ok... so i might have the ropes crossing numbers a little mixed up.
I decided to call up and make an enquiry to be sure

So, for just a block of land.... it STARTS at $220K for 312sqm!! How can you build a house on that????
So i asked what the largest is..... $325-360K (depending on location) for 680sqm

Thats JUST LAND.
Like you suggested edison, it makes existing land SO much more viable than building new out in the middle of whoop-whoop - cos lets face it, neither Ropes Crossing or Rouse Hill are really near anything.

Makes buying older house and land a lot more attractive to me

 

[Witzl]

Rouse Hill is cheaper than a comparable property in Castle Hill and Cherrybook, no? West Pennant Hills and Carlingford are more expensive, and Beecroft / Epping more expensive again. It’s always a balance of property type, price and distance.

For an already built property, yes Rouse Hill is cheaper than Castle Hill, and so it should be. The point i think edison was making (i know im making this point too) is that building a NEW house out there ends up costing more than an equivalent existing house in Castle Hill - but in CH you get bigger land and better location... all you get in RH is a "new" house, sitting on top of next door's house.

 

[alexlee]

Yeah, but you get a brand new house...... don't get me wrong, I agree that it's better to get an old house in a better suburb. I bought a 30 year old house for my PPOR in the Hills on 900sqm, when for the same price I could have bought a new house in a suburb further out.

However, we are not the norm. When analysing the market we have to consider about how 'normal' people think. And 'normal' people get seduced by the idea of 'new'. I look at the glossy property mags and see houses 5-10kms further out that I could get for the same price as mine, and I get jealous. I can only imagine how people who aren't financially literate think.
Alex

 

[Witzl]

good point alex... and well noted.
Indeed it is scary to think what the financially illiterate think.

 

[Kennethkohsg]

That street is next to my street for my IP in Kellyville

The 950k price is way overpriced.
But the 490k price is also a bargain....
Realistically these properties should be around 520 to 550k.

Nevertheless an interesting article.

BTW - You can now get rent of around 520 to 550pw there - so the rental reality looks pretty good right now.

&&&&&&&&&&&&&&&&&&&&&&&
Dear Perky29 as well as other informed members,

1. Thank you for your local feedback.

2. I am wondering if you could also tell us at which stage of the property cycle, do you think, the Kellyville suburb is presently in? Has its median house price stablised yet or is it still falling drastically each quarter?

3. ...Has the Kellyville suburb fully bottomed out from its last property boom in 2003? Has it started to recover already since Dec 2007? How do you see this suburb performing in 2008 and 2009?

4. How many houses in the Kellyville suburb are being listed for sale? How many of these house listing are re-possessions sales by the mortgage lenders? What is the usual volume of house sale achieved each year/quarter, on the average?

5. Is the current trend on the number of house listings for sale, presently on the increase, flat or on a decrease? How long does it take a listed house in the Kellyville suburb to sell on the average? Is the present number of days taken still on the increase, flat or has it been on the decrease?

6. Looking forward to learn further from you,please.

7. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

I think a lot of people were desperate to get into housing and ended up paying too much. I agree that you can't build at the 490k price today....thus why my point that newer housing in your standard mom and pop suburbs are overpriced but the older stuff is a bargain.

Unfortuntely, as I have said before this happens in every cycle!

&&&&&&&&&&&&&&&&
Dear Sash,

1. I agree with you that "Land appreciates, Building Depreciates" and that the older houses in the Kellyville suburb are probably a bargain as compared to the new houses that cannot be cost-effectively built for less than 490K under today market conditions.

2. However, I am also wondering why their owners would want to build the new houses there, at a potential "loss" at this point in time, when the present market is still not prepared to pay at its present house replacement value costs?

3. Who are these people who are presently building there at this point in time?

4. Is the Kellyville suburb due for some "gentritification" process or/and is there some sort of urban re-development/renewal projects presently being planned there in the near future?

5. Looking forward to learn further from you and the other more informed members who are familiar with this Kellyville suburb property market situation, please.

6. Thank you.

regards,
Kenneth KOH

 

[alexlee]

2. However, I am also wondering why their owners would want to build the new houses there, at a potential "loss" at this point in time, when the present market is still not prepared to pay at its present house replacement value costs?

3. Who are these people who are presently building there at this point in time?

4. Is the Kellyville suburb due for some "gentritification" process or/and is there some sort of urban re-development/renewal projects presently being planned there in the near future?

Kellyville is a pretty new suburb. It used to be just land. So there's no gentrification unless you count the change from rural.

As for why people would build new houses there at a loss...... I would imagine they're owner occupiers building their dream home. They probably started building when the market was still hot and they just got starry-eyed over those brand new finishings. They WANT a brand new home. I think as investors we underestimate just how much emotional value that has to people.

To us, it's obvious that the newer the property is, in general, the more your purchase price is going towards the building as opposed to the block of land underneath. However, owner occupiers, especially financially illiterate ones, don't think like that. That's most of the population.
Alex

 

[Kennethkohsg]

http://reports.rpdata.com.au/cgi-bi...n=4200112&iregion=4200112&insuburb=Kellyville

Have a look at the report from RPDATA on Kellyville house prices. The median price for houses for 2003 - 2008 is 500-600K ........ In fact, it fell between 2003 - 2005. So I don't understand why someone would pay almost 1 million for those houses in year 2005 when the prices already have stabilised and/or falling.

&&&&&&&&&&&&&&&&&&&&&&&
Dear Edison,

1. Thank you for sharing with us your RPdata for the Kellyville suburb.

2. According to the data provided by RPData, 85% of the houses are owner-occupied in Kellyville in 2006. Its present local population was last reported to be around 18,922 in 2006, thereby achieving a 38% p.a growth in its population over its previous 5 years from 2001.

3. Thus, on the basis of these 2 factors alone, it looks potentially "attractive" for me to consider investing there, all things being equal.

4. Consequently, are there some existing or potentially significant hidden adverse factors that we need to bear in mind when investing in the Kellyville suburb?

5. Can the local or/and more informed members, kindly enlighten us further, please.

6. Thank you.

regards,
Kenneth KOH

 

[Kennethkohsg]

Kellyville is a pretty new suburb. It used to be just land. So there's no gentrification unless you count the change from rural.

As for why people would build new houses there at a loss...... I would imagine they're owner occupiers building their dream home. They probably started building when the market was still hot and they just got starry-eyed over those brand new finishings. They WANT a brand new home. I think as investors we underestimate just how much emotional value that has to people.

To us, it's obvious that the newer the property is, in general, the more your purchase price is going towards the building as opposed to the block of land underneath. However, owner occupiers, especially financially illiterate ones, don't think like that. That's most of the population.

Alex

^^^^^^^^^^^^^^^^^^^^^^^
Dear Alex,

1. Beside the owner-occupiers who are settling down in the Kellyville suburb for the first time, as what you are probably suggesting, are there other categories of people who are presently building in Kellyville? such as the local building companies etc?

2. I would think that the existing homeowners who have lived there for some time, would tend/prefer to "renovate" their old houses, rather than to choose to build new houses for themselves, as it is probably more cost-effective for them to do so. Do you not agree?

3. Thus, I believe that there must be some "good" reasons why people are still presently building new houses there, at this point in time? What are their key motivations and real reasons for doing so?

4. Yes, I fully agree with you that as an owner-occupier, at times, we can also be more concerned about building a quality dream home to house our own families without due considerations to its costs, and are more willing to spend than what we would normally do as a property investor building/ purchasing the same new house to invest.

5. Thank you.

Cheers,
Kenneth KOH

 

[kamchatsky]

&&&&&&&&&&&&&&&&&&&&&&&
Dear Edison,

1. Thank you for sharing with us your RPdata for the Kellyville suburb.

2. According to the data provided by RPData, 85% of the houses are owner-occupied in Kellyville in 2006. Its present local population was last reported to be around 18,922 in 2006, thereby achieving a 38% p.a growth in its population over its previous 5 years from 2001.

3. Thus, on the basis of these 2 factors alone, it looks potentially "attractive" for me to consider investing there, all things being equal.

4. Consequently, are there some existing or potentially significant hidden adverse factors that we need to bear in mind when investing in the Kellyville suburb?

5. Can the local or/and more informed members, kindly enlighten us further, please.

6. Thank you.

regards,
Kenneth KOH

Pleasure. Not a bad site to look at especially that the report is actually free.

The growth in the past does not represent the future growth. You need to remember that. In fact, the growth patten in all over Sydney is similar to what you see in Kellyville.

Kellyville
GOOD: Newly developed, new infrastructures (roads, schools, shops), mostly McMansions. Feel good factor.
BAD: Very far from Sydney, lack of good public transport (no rail), mostly McMansions (big house in small blocks), lots of repossessions in the area as people cannot afford interest rate rises, so keep the house price lower. You can almost say lack of character.

If others can list the good and bad of Kellyville please do not hesitate to add .....

 

[kamchatsky]

ok... so i might have the ropes crossing numbers a little mixed up.
I decided to call up and make an enquiry to be sure

So, for just a block of land.... it STARTS at $220K for 312sqm!! How can you build a house on that????
So i asked what the largest is..... $325-360K (depending on location) for 680sqm

Thats JUST LAND.
Like you suggested edison, it makes existing land SO much more viable than building new out in the middle of whoop-whoop - cos lets face it, neither Ropes Crossing or Rouse Hill are really near anything.

Makes buying older house and land a lot more attractive to me

If you think 312sqm is small, try Rouse Hill. The smallest ones starts at $250K for 285sqm!!!! The 410sqm costs like at least mid 300s ...... I think you should have a look there yourself ..... Not far from Castle Hill and you will be amazed how expensive it is! Not to mention paying the community fee ($250 per quarter) for buying your own land there ....... Then the cost of DA, site costs , building costs, etc etc etc ...... You get the drift.

 

[perky29]

Thanks for your comments Kenneth.

It depends on what you want to buy.

Are you now allowed to buy properties that are not just house and land as you did in Perth?
If so, then that would be much better than buying new.

Here is my example, for my place to give you a possibly better idea of Kellyville.

I bought it for 470k , settled on June 26th 2002. Negotiated a very large Air con unit (the ducts were already there) , probably saved me around 8k - by saying we would settle before end of financial year - which we did with days to spare.
We first saw the house around 2 months before it was due to be completed (was 85% finished at that stage).
The first 16 to 18 months were spectacular.
It rented for 480pw, and it was revalued at 650k in July 2003.
But then interest rate rises hit in Nov/Dec that year , and too many buildings brought about an oversupply soon after.

By 2005 / 2006 rents were down to 400pw.
Value of house was probably down to perhaps 560 to 580 ish.

But in last two years rent has gone to 440pw, and next rise will take it to 470pw - and we are being told 520 to 550pw is achievable.
However our tenant is great, they treat the house well, and have established a nice garden in the back yard - so will not raise it more.


In my opinion, the house may be worth anywhere between 520k and 550k (although myrpdata says it worth 640 - I don't think so !! )

So looking at that - the yields now achievable in Kellyville are now better than they were in 2002. Considering 2002 was 3/4 of the way through a boom , this represents very good value.

Prices may fall more with int rate rises as stated above, so hold out a little longer - but don't leave it too long.


Interestingly where I actually live in Baulkham Hills has had some growth in the last 12 months , and it is just 8 mins drive from Kellyville. However BH has blocks of land double the size and has an older demographic who don't owe as much money as their Kellyville counterparts !!

 

[asdf]

Wow! Thanks for giving us a rundown of your IP. Perhaps resi IP isn't the wealth creator us misguided sheeps should be perpetually chasing. $50-$80k capital growth in 6 years is pretty tough isn't it? After you take away $25k stamps & purch costs, $5k+ a year after tax holding costs, odd replacement items and you're not really left with much profit are you? Hmmm, interesting perspective indeed...