Timing of where to buy SA or NSW?

J

jippa3000

Hi all,

I have searched as much as I can but haven't really found what im after.

We are looking to buy to investment props over the next 18 months. The suburbs/towns we have been looking at are;

Hackham/Hackham West SA
Christie Downs SA
Aldinga Beach SA
Elizibeth SA
Muswellbrook NSW

We follow Ms Lomas and her show on foxtel hence the areas we have chosen, and because they fit our budget of $200-300K per propertie. We just wanted to get peoples opinions on these towns or if they had any other suggestions that would be in the price bracket.

Also which should we shoot for first, is SA going to be ok to move on in 12 months and should we snap up Muswellbrook now etc.

Any feedback would be great and a BIG thank you in advance.

James
 
Adelaide has had some serious declines in values over the last 24 months, so yields are looking quite attractive and in my experience there are a LOT of investors/interstate investors who are now entering the Adelaide market. This is causing stock to be snapped up.

I'm quite fond of Elizabeth, as most Adelaide SS'ers would know. Great yields, great CG potential, large infrastructure, government services, health etc in the area. Lots of development (both Federal, State, Local council and private). Population increasing rapidly in the area and projected to for the coming decades.

I've actually been eyeing down Salisbury/Paralowie right now, many properties there were high 200's to early 300's two years ago, however there are 3 bedders on 600-700sqm for 200k-240k asking prices. Lots of opportunities.

I won't comment on Hackham/Christies too much, other than the yields are lower and there isn't a lot of industry/jobs down there. They have noticed some drops in prices in Hackham as of late too, however. Just not interested for that kind of yield, even if near beaches.
 
Capital Growth

G'day James,

The southern adelaide suburbs you are looking at are in a spot where some capital growth is a good possibility due to infrastructure works. Expressway and train line. But you probably know this, which is why your looking at them.

Both should be finished or close to it near the end of this year.

No idea on NSW.

Timing? good question, prices have been down for last couple of years, whether they start to move tomorrow or next year, that's the question. No idea. Depends on group dynamics, bank interest rates and lending criteria.

:) My guess is just as good/bad as the other blokes.

Buy something this year, old house, decent size block, with potential to develop. OR get a unit at a good price. I'm still looking at 7.5% return as a bottom line, there's a few to pick from, just take your time and don't buy just anything.

Cheers
Graeme
 
I too have been focusing some energy towards SA; specifically the resource-rich central towns of the state such as Coober Pedy. The risks are higher, property management (generally) poorer, but the returns and potential mid-term CG growth is huge. :rolleyes:

Has anyone had experience in the center of SA-state?
 
Not really fond of patches of dirt in the desert with holes around it. :)

Don't need to achieve potential returns that high to meet my targets. Risks of wipe out are too high imo.
 
CJay - thank you so much for your comments. In regards to Elizabeth are there certain areas we should stay away from, I have just heard that the area has a number of people on the doll...?
As we are from Melbourne, we are just trying to do all our homework before we make the trip over there. Ill look into the other suburbs you have mentioned also as we are totally open to suggestions.

Graeme - thank you so much for you feedback. Do you look at the 7.5% pa return as a bottom line minus expenses like rates, insurance etc.?

Thank you all again and look forward to listening to what you have to say.

James
 
Christies downs and surrounds

I've got my money where my mouth is, I bought in Morphett Vale at the begining of 2011 (next to Christies downs) for all the reasons mentioned recently- expressway duplication, near beach, shops, schools, low entry price (under $300,000).

Unfortunatelly the areas median value has gone downward from $290k to $270k over the last 24 months. I did however generate good positive equity through a simple subdivision.

Purchase price $290k, stamp/fees $15k, subdivision and holding costs $45k
Total outlay $350k all up, and the new bank valuation has come in at $240k for the existing house and $140k for the land = $30k equity.
So you can make money in these suburbs in a falling or flat market.
I've had no problems with tennants, the house with large block rented to a family for $320pw, now the back yard is cut off it rents to a young couple for $300 per week. Both times I advertised for rent I recieved 5 written applictions- I think rent demand in the area is still high.

If you are seriously considering suburbs in Southern Adelaide; my strategy is to purchase a large corner block, with enough room to cut off 300 mt. sq. at the rear, and do a cheap cosmetic renovation to the existing house.

If you then sell the vacant land or build on it is a seperate issue entirely- I am building on mine.

Just my 2 bobs, do your own due dilligence.
 
Hi James,

The nicest areas in Elizabeth generally cost the most, the slummiest the cheapest. The question is whether you are looking for the cheapest property possible, or something a little bit more expensive with less hassles.

Elizabeth Downs is by far the worst part of Elizabeth, and by far the cheapest. On the opposite end of the spectrum is Elizabeth Vale and Elizabeth Grove, which attract some of the highest prices in the area whilst being deemed the 'nicer end' of Elizabeth. I work with individuals who purchase in both ends, and have seen successful stories being achieved buying in either area.

Personally I prefer the mid range parts of Elizabeth such as Elizabeth, Eliz South, Parks and North as they appear to be receiving the most development of the entire area, are significantly cheaper than Grove/Vale, whilst still still not looking like a scene from Beyond Thunderdome.

Playford Council had 14% unemployment last time I checked, long term dole. Some of the best tenants can be unemployed/disability/single mothers however. The area was originally built to survive horror tenants for the Housing Trust and has stood well to the tests of time. Strong floorboards, many double brick builds. Provide clean, modest accommodation and you wouldn't have too much to worry about. Just don't go installing Caesarstone benchtops. :)

Similar to quoll, I look for 7.5% minimum gross rents on purchase price PRIOR to renovations or development potential. Quite achievable.
 
Coober Pedy- no thanks

Cameron- I've driven through Coober Pedy many times and have never stayed long, it is a s*#t hole, pardon my french, the one night we stayed there- it did not feel safe to be on the streets at night with the multiple drunken ferrals around.

I think buying realestate there is extremely high risk speculating.

I have a few friends who fly in and fly out of the their mining jobs in Roxby Downs who have no interest whatsoever in living there, and Roxby is quite a nice well established town with services and amenities compared to Coober pedy.
 
Hi Erica,

Thanks very much for the local insight! I was contemplating a trip to the central-SA region to do some research on the ground at some point.
I have heard that Coober Pedy is indeed one of the roughest areas of the country. I think in the coming twelve months we'll be given more certainty about the shale oil operations that are to establish over the coming years, since the discovery.

What will remain to be seen is whether workers for the shale oil mines will continue to commute from Roxby Downs, or will Coober Pedy embrace more property construction to house people there? I'm just curious because the median prices for Coober Pedy are a fraction of those of Roxby Downs (which may still offer appreciation potential, but does require a lot of upfront capital to 'play' in that market).
 
The shale oil prospects in Arkaringa are yEars behind the cooper basin in terms of exploration (moomba)
What's more - it is not a mine
It is not that labour intensive

Also roxby and coober are about 500 km apart

I wouldn't get too excited just yet still years for this to pan out. As to date there has not even been a commercial/ economic shale gas well drilled in Australia

That should give an indication how far off it is
 
I've been watching with interest the news on the Arcaroola basin oil find too, and think it is exciting and will be great for our state economy.

I would love an insite to where the working base might be set up, if or when, this find is developed, anyone know a board member of Linc Energy :p
 
market timing

Anyway, sorry to get off the OP's topic.

Hmm timing? ... Well hopefully the state stats - Adelaide +0.8 Dec Qtr, are an indicator of the bottom of the market being reached, I am hoping with the low interest rates, prices keep moving upwards.

The Stats for Morphett Vale (which by the way is metropolitan Adelaide's largest suburb with some 16000 odd households, so the quarterly sales figures are usually between 80 to 120 sales therefor a good indicator of real median)

Yr/Qtr, median$,
2011
1Q $290K
2Q $285
3Q $270
4Q $279
2012
1Q $281
2Q $280
3Q $273
4Q $270

Bottomed out?...who knows...I hope so!
 
Thank you all for the comments, Im talking to a few agents in the area and when we have a few to look at we'll make the trip over :)

CJay - Do you know any good agents I SHOULD be speaking to in the area?
And maybe PM me about your services?

Thanks again
James
 
The shale oil find has added to my interest in SA, where I was looking at Whyalla previously. I still am, but Elizabeth has now also piqued my interest because of the affordable prices.

There's not much doubt in my mind that SA, long term, will see the boom times like WA and QLD have seen already. The resources that the state has are too important to leave in the ground. But I do think that Adelaide presents a better long term investment because it is not reliant on resource-driven activities. As previous posters have pointed out, there's plenty of investment in the pipeline in the Playford area. Planning a little trip there pretty soon!

I think the boat has well and truly sailed with Muswellbrook. The Lower Hunter and Upper Hunter have become subdued of late because of the mining slowdown. Plenty of houses in the region are remaining vacant for some time and rents are falling. I've been very lucky to even rent my house in Maitland just this week.
I also recall a Muswellbrook news article saying that the conditions were forcing people to wait months for basic services like seeing the GP, so that is another detractor for encouraging people for the town.
But as always, do your due diligence, make sure the numbers stack up, and work out where and what investment you feel is best for you.
 
That property looks pretty good Jim, thats exactly the sort of thing we are looking for.

Dave R - Thanks for the insight and information about Muswellbrook, after everyone was swaying towards SA I figured that might have been the case. We are first time property investors so still learning the ropes and trying to find out what questions need to be asked, does anyone know if there is a thread or post on what sort of questions should be asked when looking into potential suburbs???

Thanks again for alllll the comments, its great to have such a knowledgeable group of people.

James
 
jippa3000 said:
That property looks pretty good Jim, thats exactly the sort of thing we are looking for.
Click to expand...

The one problem with these properties is they are offered for 3 months u to low income earners.If there are no takers,then it is put to mainstream sales.By then the property has had a lot of exposure.
 
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