Understanding Blackburn Prices

[Neophyte]

I'm interested in any insights people can offer on a couple of properties that sold in Blackburn on the weekend.

http://realestateview.com.au/propertydata/vic/blackburn/index.html

In particular the Elm ($881K, 700sqm), Ernest ($786K, 640 sqm) and Francis St ($875K, 640 sqm).

From my quick glance over the ads all 3 look to either be due for decent amount of reno work or knock-down rebuild or subdivide.

My impression is that all of them seem to be priced based on sub-division potential. Can anyone confirm that?

Putting say 2 townhouses on them would suggest a land value for Elm or Francis st of close to $450K per townhouse close to another $200K to build. To make an acceptable development profit they would need to be selling for $700-750K. Does that seem reasonable?

 

[buzzlightyear]

Quick back of envelope calcs and thinking out aloud.

A purchase price of $880k + approx $48k in stamp duty + plan and permits which might be approx $20k. Others may be able to be more accurate about p&p cost.

Cost of construction and finished (of course depends on what sort of quality you go for) would be in the ball-park of 1500 per square metre. But this can become quite exxy quickly depending on which way you go. Say you build a 150 sqm townhouse, that means $225k, plus contingenct of say 10-20%, which adds another $33k. Of course, this doesn't include things like landscaping, demolition of existing dwelling, interest during construction.

You would want to target a profit of ~25%, so even without selling costs (assuming you are selling), you would be looking at a required selling price of ~$950k. Of course, this doesn't take into account the banks current attitude towards funding these projects.

Unless you are a builder, for many Melbourne metro and established suburbs, properties that are sold with 'development' potential, you need to hold for at least 3 and up to 5 years before it becomes worthwhile. Then you need to hold and in all likelihood negatively hear for that time.

 

[Neophyte]

That final sale price is even higher than I thought. I struggle to imagine even a pretty flash 3bdr townhouse selling for $950K in blackburn, maybe possibly into the 800s.

In terms of how long you'd have to hold. These sort of places were selling for high 500s about 18 months ago.

 

[meg ryan]

Just thought this might interest you Neophyte but brand new townhouses in blackburn have all been quoting around 800k now. See Baldwin Road, blackburn for example. I'm just amazed at why people would spend that kind of money for a half lot. I guess buying brand new has its attractions.

Cheers
meg

 

[Minx]

There are certain pockets in Blackburn which are sold for a premium.
I know of Francis st, as a friend bought a PPOR there and spent about a mill buying the place and renovating it about 2 years ago.
I also think those large properties around Blackburn lake go for about a mill also.

 

[zapoix.]

Blackburn / Box Hill all that area is quite expensive i think that the school area may be a factor close to P Transport and the city.

some people are not buying to make money off but to get into a good area to make the family home.
Out of my price range

 

[buzzlightyear]

some people are not buying to make money off but to get into a good area to make the family home.
Out of my price range

In fact, thats most people to be honest. Although I suspect, people also have an expectation that house prices will also rise over time, even if they aren't SS style property investors