Thoughts on St Albans

S

skogs

Hey everyone. Just wanted to canvas some opinions on St Albans as a location for a first IP. From my reading so far it is somewhere that has performed pretty well growth wise over the last 5-10 years but has dropped fairly precipitously over the last 12 months (9-10% in the red over 12 months according to API).

However, I think it is somewhere that may well be on the move due to the capital development occurring at Sunshine Hospital (which is physically in St Albans) - due for completion this year. That coupled to the overall expectation of increased population growth in Melbourne's West and gradual gentrification of established, previously unfashionable suburbs (Footscray, Maribyrnong, Yarraville etc).

Sunshine is a suburb that is tipped to do well and I would be interested to hear people's thoughts on a ripple effect in the area.

My apparent pros are:
- proximity to Sunshine Hospital capital development
- proximity to public transport
- expected population shift westward
- reasonable vacancy rates at the moment

Cons
- dodgy reputation, potential for dodgy tenants
- significant property value falls recently (though this could be considered as a pro?)

Any thoughts? Anyone with property in the area? My strategy would probably be a buy and hold (+/- cosmetic reno).
 
Hi,

I spoke to some agents last week and they say market has come off a lot from peak..

If u want to make money, they recommended blocks with plans n permits for 3 or more units.

When market turns those would take off early as compared to townhouses or units.

Approx price range; 360-420k

Depends what your goals are negative gearing with CG or cash flow neutral.
 
skogs said:
Hey everyone. Just wanted to canvas some opinions on St Albans as a location for a first IP. From my reading so far it is somewhere that has performed pretty well growth wise over the last 5-10 years but has dropped fairly precipitously over the last 12 months (9-10% in the red over 12 months according to API).

However, I think it is somewhere that may well be on the move due to the capital development occurring at Sunshine Hospital (which is physically in St Albans) - due for completion this year. That coupled to the overall expectation of increased population growth in Melbourne's West and gradual gentrification of established, previously unfashionable suburbs (Footscray, Maribyrnong, Yarraville etc).

Sunshine is a suburb that is tipped to do well and I would be interested to hear people's thoughts on a ripple effect in the area.

My apparent pros are:
- proximity to Sunshine Hospital capital development
- proximity to public transport
- expected population shift westward
- reasonable vacancy rates at the moment

Cons
- dodgy reputation, potential for dodgy tenants
- significant property value falls recently (though this could be considered as a pro?)

Any thoughts? Anyone with property in the area? My strategy would probably be a buy and hold (+/- cosmetic reno).
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Grew up in area for over 18 years - only relatively recently moved to Sydney for work & folks went into a retirement village. Here are my opinions/thoughts:

- proximity to Sunshine Hospital capital development

This is good and will probably rival Monash Hospital in 10 years - given the population boom westwards. Still unsure if this has an effect on property price.

- proximity to public transport

Definitely good amenity and will continue to get better with government dumping in more money to improve it. From St. Albans station, you're probably looking at 35 mins max to Flinders Street Station.

- dodgy reputation, potential for dodgy tenants

True, but can be overcome if you price yourself correctly (that is, not too low) and screen tenants well. Don't just accept first tenants that apply regardless of what the agent thinks and tries to push you to sign.

- significant property value falls recently (though this could be considered as a pro?)

The suburb/region itself has NEVER been a popular investment area. CG has been low, but I believe it will change in 5-10 years. The school is definitely working it's way up the ranks which will again drive property prices up. Peak like everywhere else was probably 2009-2010. I do see this as another Maribrynong type zone, however.

I see St Albans's growth more sustainable in the long run vs. boom suburbs like Box Hill, Glen Waverley filled with Asian immigrants transplanting their money, hence creating a bubble.
 
I personally would avoid the outer west of Melbourne as a whole, although I would say St Albans is probably marginally better placed than some of the newer suburbs out that way. Not because of the demographics but more due to the lack of infrastructure and real drawcards in the area.

I haven't checked recently but the last time I looked there was an oversupply of rentals and the potential yield and CG are both low IMO. Public transport links are good to have but most public transport users in Melbourne live in the inner suburbs so it's not as great as some may think although obviously better than not having it at all.
 
cimbom said:
I personally would avoid the outer west of Melbourne as a whole, although I would say St Albans is probably marginally better placed than some of the newer suburbs out that way. Not because of the demographics but more due to the lack of infrastructure and real drawcards in the area.

I haven't checked recently but the last time I looked there was an oversupply of rentals and the potential yield and CG are both low IMO. Public transport links are good to have but most public transport users in Melbourne live in the inner suburbs so it's not as great as some may think although obviously better than not having it at all.
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Lack of Infrastructure? Compare St. Albans to say a Box Hill, what does it lack exactly?
 
Ok, lets not make this into a west v east debate....

2011 Box Hill Census Data

2011 St Albans Census Data

Both are Zone 2 re public transport. I dont know St Albans as well, except a good friend used to live there and always jokes about its "issues". But then again the purchase price will reflect its area, so its more about the change in demographics that is happening in an area, rather than what it is today.

Council websites have good information also spending by state/federal government infrastructure is also well worth while looking at, whilst private companies moving into or moving out of areas is also worthwhile knowing. There is a significant change in infrastructure spending happening in the west & north generally that "Joe Public" is not aware of, and the issues of today tend to predominate the perception of desirability of an area. Does that make St Albans a good place to invest? Don't know because I am not familiar with the area
 
If you are a professional or office worker, where are you going to work in St Albans or nearby? There is very little of that kind of employment in the area - you would need to travel into the city and by the time you get to the station, travel to the city and go to your workplace, it's a 1 hour commute each way. I have previously done temp work in Box Hill and know there is also good employment in suburbs close by. St Albans doesn't even have a major factory or manufacturing plant. There is nothing that would catch my attention.

Btw, this is coming from someone who up until two years ago, lived in the outer west of Melbourne.
 
As you know, if you're looking to park money in St. Alban's you're not investing, you're speculating.

The reason I say it is a speculative area is because:
1. The clearance rate is 38% which is very low
2. Volume is moderate-high at +$150mil over the last 12 months.
3. Properties being sold there are mainly new house and land packages that have no historical growth patterns.
4. The suburb is highly volatile dropping 9.7% over the last 12 months
5. Capital works may or may not have an effect on property value​

If you're aware that speculating is not investing and are comfortable with the high risk nature of the former then by all means put your money here.

In my opinion, only established investors who have a strong base of at least 3 properties should think about high-risk/high-return assets.

If you haven't set yourself up with a portfolio foundation I'd suggest looking to more established suburbs first to which please refer to my other recent post: http://somersoft.com/forums/showthread.php?t=81632
 
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Aaron_C said:
So....which is better? Canberra or the West of Melbourne?
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The main thing I liked about the western suburbs is the food. The weather is also a bit better (but that's the whole of Melbourne really) :p

Canberra does a better job of urban planning (lots of self-contained "town centres" rather than everything being centralised in the CBD), much shorter commutes and the salary is better than what I would get working in the private sector in Melbourne.
 
Jake @ infolio said:
As you know, if you're looking to park money in St. Alban's you're not investing, you're speculating.

The reason I say it is a speculative area is because:
1. The clearance rate is 38% which is very low
2. Volume is moderate-high at +$150mil over the last 12 months.
3. Properties being sold there are mainly new house and land packages that have no historical growth patterns.
4. The suburb is highly volatile dropping 9.7% over the last 12 months
5. Capital works may or may not have an effect on property value​

If you're aware that speculating is not investing and are comfortable with the high risk nature of the former then by all means put your money here.

In our opinion, only established investors who have a strong base of at least 3 properties should think about high-risk/high-return assets.

If you haven't set yourself up with a portfolio foundation I'd suggest looking to more established suburbs first to which please refer to my other recent post: http://somersoft.com/forums/showthread.php?t=81632
Click to expand...

Given the yields in every Melbourne suburb, I'd argue that if you're investing in Melbourne, you're speculating rather than investing. From a CF perspective, St Albans is less of a speculative investment than the suburbs you referred to in your 'hotspots' thread.

Most of the suburbs on your 'hotspots' list were premium suburbs which, given the yields, are the most speculative investments of all. Unless you have tremendous loads of cash to put down as deposits, these investments are almost always NG and rely entirely upon capital growth.

Additionally, many investors cannot afford premium suburbs. Even the more average suburbs on your 'hotspots' list are unaffordable to the low-income investor. Coburg North has a median of about 500k, over 100k more than St Albans. Medians aside, St Albans has more entry-level (I won't say 'cheap') properties than Coburg North.

I don't know where you got the idea that the St Albans market is mostly house and land packages. This is not true at all. St Albans is actually an established suburb and the housing stock is mostly compromised of daggy retro brick veneers and whatnot.

I also notice that St Albans is a 'highly volatile' market because it has experienced price declines whilst you/Property Observer cherry picked statistics for your 'hotspots' suburbs. Why weren't medians all obtained from the same source? Why were they cherry picked? Many of the suburbs on your 'hotspots' list experienced equal price declines, some even more so. But they just 'softened' opposed to being 'highly volatile', eh?

My biggest problem with your above post is this 'our opinion' stuff instead of 'my opinion'. You're here representing a company which, to me, is not what this forum is about.
 
Thanks for your reply Fifth, sorry if by saying "our" I've ruffled your feathers. It's just a force of habit, I'll remember to say "I" or "my" next time. I've also edited the last post for you :)

I understand that you look at property from a cash flow positive perspective. I usually look from a NG perspective. Without entering into a debate about that I respect that you have a different opinion therein and accept your POV.

St. Albans currently has around 1,000 house and land packaged properties available on and off market right now. I understand that the area has a history and is land locked by it's neighbours but it is an area that has a lot of 'new' buildings with no history being sold by developers. This type of stock over recent years has more than doubled.

The statistics were not cherry picked. They were all from APM with the exceptions of the areas that were declared SNR to which I sought another source.

St. Albans is volatile because over the last ten years the price has fluctuated higher than established suburbs. There is a lack of any proven historical pattern as the suburb is going through change. Established suburbs show consistent growth however over the last 12-18 months prices have softened. Do you see the difference?

You're right about established properties having a higher entry point, if someone can't afford to get into blue chip stock then they can try something cheaper but it is at their own risk which is all I was saying. Sometimes it's better for people to generate wealth through methods they can afford such as bonds or bank deposits before they enter the property market, thus avoiding investing in areas that are compromised. Alternatively there are established regional areas with proven patterns that offer cheaper entry points. Still, that is up to the individuals circumstances and appetite for risk and return.
 
Further to my point here is what willister said that pretty much sums up: volatile + unproven + speculation all in one hit. Thanks for sharing your knowledge willister.

willister said:
Each to their own, the West imho is still undervalued. I grew up in St. Albans, lived there until I was 25 before I moved to Sydney for work. It' was vastly different from the St. Albans I grew up with....the road on getting into (McIntyre Road if I recall correctly) St. Albans wasn't even paved in 1987...

Overall, growth has been disappointing. The folks purchased in 1987 for $75,000 for a 4 bedder BV, about 1 km from Ginifer station. When they sold up in 2005, they fetched $260,000 or $185,000 over the span of 18 years or about $10,277 p/a. We had an uncle who purchased around the same time in Mount Waverley, similar house but a bigger sized block for $150,000, now worth around $1,000,000 or around $47,222 p/a - that is quadriple (4.59 times to be exact) the amount CG over the same period!

I can't comment on the rest, but from that list, I'm only familiar with Albion & St. Albans. I would say St. Albans will be the next boom town, give it 5 years and it'll become another $700K+ league.
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