Time to sell Melbourne housing?

[keneth]

giddy up...apologies I didnt want to go into great detail but if you want the facts here they are below.

paid $190k January 2009.

Purchasing costs $8500 (stamp etc, conveyancer)

First Home owners Government Grant $21k. (thanks Kevin)

Cash contributed -$17,500 (10k mine, 7.5k mum)

Initial Loan $160k Amount

Rented property for first 6 months for $734 per month.

And lived rent free during this period overseas on work committments.

Interest rates were as low as 4.94% at one point. I managed to get the loan down to $140k , live in the property for 6 months, and then renovate in 3months, where I spent $20k.

So in the 15 months from purchase to sale the increase was 68% or $130k higher than what i paid.

If you take into account $20k renovation, 2 % selling fees which were $6500, and the stamp duty $8500, the total money spent on the property was $35k.

But then I guess I can also take into account $21k in government grants in which I received for free, so that reduces my total cost on the property to $14,000.

So my net profit is $116k in 15 months and all tax free as it was owner occupier.

Once I settled on the sale I paid my old lady back $7500 that she lent me to purchase the property initially.

So from my $10,000 the return I walked away with $109k in clear net profit form the whole project, which is a return of 1090%.

 

[Melbournian]

This.

I just got preapproval for 640k so I’ll be looking to buy this year. Also interesting that my broker thinks that interest rates are on their way down this year.

all the best - pretty sure you will find something.

 

[Melbournian]

Rented property for first 6 months for $734 per month.

And lived rent free during this period overseas on work committments.

.

if you rented it before you moved in - u have to ratio the period where you have to pay capital gains tax on the time. If you rented it after you lived in it. the situation would be different.

 

[Deltaberry]

I agree with the article to the extent that the Melbourne Metro market will be flat for the next 12/18 months and yields will remain low as a significant amount of supply, particularly apartments will hit the market during this time. Building approvals are up.

However the major regional centres like Ballarat Bendigo and Geelong is where the growth will be during this time. Vacancy rates are low and rental yields are above 6%, neutral cashflow is achievable in these areas. Theres also increased government funding in the tune of Billions being spent.

Flat for next 12-18 years

 

[Deltaberry]

Gross profit? Or revenue? Ask him what his ROI is on his money ie deposit.

Anyway, any distressed sellers looking to offload in Melbourne please PM me

Gross profit? Hahahahaa!! That's like saying income is $500 per week, on that's gross - I haven't deducted interest of $700 pw.

 

[dog]

Keep chanting the 7 - 10 year thing... everyone knows it is rubbish.

To quote the REIV, which normally go out of their way to say how great the market is:
"Melbourne's property market has posted one of its weakest opening quarters in a decade, a performance bound to fuel concerns that the recent softening in market conditions may be becoming a downturn.

The city's median house price fell 6 per cent to $565,000 in the March quarter, according to the Real Estate Institute of Victoria. The median unit price dropped 4.2 per cent to $460,000 over that time."

If you look at property prices in Melbourne from 89 - 99 they didnt double, they stagnated. Same with Sydney 2002 - 2008. If you think they are going to double again in the next 10 years after the run they have had over the last 10 years you really are dreaming.

Just having my 2c worth; do you not realise that we just came out of a mini boom granted to all of us by the government we love to hate?
It is a direct result of the first home buyers grant extension and the current prices are likely resultant of those buyers that bought their second/third homes after liquidating their smaller (read cheaper) homes to those first home buyers taking advantage of the government grant.
The supposed fall in median price is therefore likely a simple slowing of these second/third home purchases and a market returning to it's pre-FHOG-boosted levels. This coupled with a more even spread of buyers ( not weighted toward only those first home buyers from 2008 or those more recent sales figures represented by the second or third home buyers) represents the broader macro housing 'median'.

Every 'buying group' sways the market one way or the other and medians leave a lot to be desired regarding the true story.
Just imagine the stock market is a bull market - see the top end of town go into a buying frenzy and medians go through the roof!

Cycles are definitely 'averaged out' so if someone says 7-10 years is one cycle, you may wait 15 years for a massive rise to average out those figures etc. I do not disagree.

With the current market, I'm looking for dovelopment potential to build equity rather than wait for a lack luster growth cycle (that currently exists) to do it's thing.
And there's nothing wrong with offloading some stock - even in a down market provided you have held for long enough to build equity to cash in. I've done just that recently as the 'opportunity cost' of waiting for some magical CG to occur would proclude me from buying up in this 'buyers market' and capitalising on those blocks just begging someone to come along and subdivide them!
Proactive is my motto, only the dead sleep!