What will happen to Property prices in VIC..

[DavidMc]

I am unsure what price I should offer or how I should approach it???

Unless you decide to leverage the time, skills and knowledge of a buyers agent, you need to learn Box Hill inside out yourself. You should get to a stage where you are reasonably able to predict sales prices with some degree of accuracy. Watch the market for a few months, visit LOTS of properties, note the actual sale prices and see how you are tracking. Once you have this level of knowledge, you can spot bargains if they exist. If not, you will still be able to accurately determine the market price for a given property in your area.

further more as an example, if my research indicates that the recent sales indicates that the property would be worht approx $435... how should I approach making offers????

This is simpler than you think. If you think it's worth $435k and they are asking $420k-460k, why not call up the agent and offer $420k to start with? Most PI books have sections on 'how to negotiate' if you are looking for specific tips. My personal view is that if you overpay slightly for a quality asset it's no huge deal.

 

[Debt Junkie]

Put it this way, if you're looking for someone to tell you 'you should buy property at so and so time because after that the boom will start', it's just not going to happen. Alex

Not entirely true ... somebody out there will be more than happy to tell you what / where / when to buy and how much you should pay for it ... Whether or not that person will have your best interests in mind is another matter.

If there's one thing I've noticed in my brief period on SS, the people on this forum are extremely helpful and will answer any and all questions posed to them.

But they won't make up your mind for you and they definately won't gloss over the risks and the realities.

I would suggest you take a couple of days away from the forum to absorb what you are learning - I think you may be in the position of having recently come across so much (good) information that you are having difficulty picking one of the many directions now available to you.

Good luck

DJ

 

[Arkay]

Buying well doesn't necessarily mean buying cheap. It's fine if you can do it but in the current market I would think only the experienced at research, negotiation etc would have a hope of doing it. You might miss out on a lot of growth waiting for a bargain as apposed to paying market value.

Cheap is not the only factor of buying well. Suburb choice, Location within that suburb, scarcity value etc are also factors of buying well. Assuming a rising market you also have to consider the opportunity cost of the time it would take you to adequately identify a good suburb and research it to the extent you are confident to buy into it.

In my case I chose to go with a BA as I did not have the time to spend on the identification and research components. I purchased nearly 4 months ago in Brighton via a BA. Reports suggest that there has been 10% growth since I bought. It cost me in BA fees but if the 10% is to be believed I'm well and truly better off for the decision. I won't know for sure for another 6 months but these are things you need to consider.

Cheers,

Arkay.

 

[TheAnalyst]

Buying well doesn't necessarily mean buying cheap. It's fine if you can do it but in the current market I would think only the experienced at research, negotiation etc would have a hope of doing it. You might miss out on a lot of growth waiting for a bargain as apposed to paying market value.

Cheap is not the only factor of buying well. Suburb choice, Location within that suburb, scarcity value etc are also factors of buying well. Assuming a rising market you also have to consider the opportunity cost of the time it would take you to adequately identify a good suburb and research it to the extent you are confident to buy into it.

In my case I chose to go with a BA as I did not have the time to spend on the identification and research components. I purchased nearly 4 months ago in Brighton via a BA. Reports suggest that there has been 10% growth since I bought. It cost me in BA fees but if the 10% is to be believed I'm well and truly better off for the decision. I won't know for sure for another 6 months but these are things you need to consider.

Cheers,

Arkay.

Do you really think Melbourne is booming? What has changed to have caused the booming?

We live in a funny country: Only Mining,retail, broking (finance, real estate) industry are booming, but the construction, agriculture, tech, manufacturing, high import and low export... are in the recession. The GDP is still growing 4% ---- I am seriously suspecting the figures from ABS and RBA. Where is the money from? from thin air?

In Melbourne, I believe nothing has changed: economy, employment,... what could suddenly boom? Only one reason: it seems cheap than Sydeney, Canbarra and maybe Perth.

 

[Arkay]

No. I don't think Melbourne is booming. Only parts of it. It's a little wierd but inner and bayside suburbs have show substantial growth in the last 12 months. It's confusing. I saw a post not long back with the economic clock that stated boom conditions represent capital appreciation of >25% pa (from memory). Many suburbs in Melbourne have done far greater than that in the last 12 months but it's patchy. Certainly different than 2002-2003. I wish I had a crystal ball to know if this is just the beginning of the upturn and that it will turn into a full boom in the next few years... It doesn't seem sustainable but I'd hate to miss possibly the biggest rise I'll ever see if it does occur. It does appear to be cheap in historic terms compared to other major capital cities.

The only advice I've seen that makes any sense is plan for the worst and hope for the best. All you can do at the moment.

Cheers,

Arkay.

 

[BayView]

O.K Akumaslair,

My 2c worth.

You want someone to tell you that if you buy now you won't get burnt.
Sorry, no-one can tell you that. You might get burnt.

BUT, if you do the research on your chosen area (Box Hill - I lived and worked there for 9 years and it's never going to go down), (and I see you've done some research), then find a nice property in a nice part of that suburb (somewhere near the train station, Whitehorse rd and the hospital; maybe a few streets south towards Wattle Park), and pay FAIR MARKET VALUE for it;

I can confidently predict that you will double your money in the next 7-10 years; probably less.

Happy now?

 

[The Y-man]

fair enough... if these type of questions are going to piss people off, then I will just stop asking about these ones...
thanks anyway

I don't think you are necessarily pissing people off - some may get frustrated - but I am sure there are more than a few who have the same worries as you, and have not articulated that into a post.

If I might ask an incredibly silly sounding question to you - What is it you fear in getting burnt?

While I am sure we all hate losing money, what is your worst case scenario?

My world view (...tunnel vision?)

Let's say you put off going out, worked a bit harder, went without a few of life's luxuries for a few years, and saved up some money. You "invested" it - an it turned bad and you lost the lot! Sure, it'd suck big time. But you know what, how much really worse off than your friends and colleagues (with all due respect to them) would you be? Yeah, you missed out on a few drunk nights (which they can't remember anyway), a few holidays, and your car ain't as new or as flash as the others. You don't lose your job, just because you made a bad investment decision (I hope!)

Let's say you really, really stuffed up big time - and you lost everything and then some..... so you just end up with your super, your job... and that's about it. Back to renting a hovel and maybe paying some creditors off over time.... Now that would seriously suck - and yet.... there would still be people in a worse situation than you!

As one of my favorite seminar presenters used to say - if the worst case scenario is being a beach bum in <insert name of warm coastline township with Centrelink ofice>, where is the risk?

Cheers,

The Y-man

 

[Property Meister]

fair enough... I don't have any IPs at the moment, so I guess its just the fear of being a first time buyer.......

 

[BayView]

fair enough... I don't have any IPs at the moment, so I guess its just the fear of being a first time buyer.......

I know how you feel (we all do), but just back yourself now; you've done the research, the suburb is a good one, you know the values - JUST DO IT!!

Make your next post an announcement - I bought one.

 

[Property Meister]

thanks...

my next annoucement will be.....

OFF TO BUY ONE!!!!!!!!!!!!!!!!!!!!!!

 

[Francesco]

The average vs the particular

I think you have decided and that is good. However, I have some comments about your thoughts on negativity suggested by reported property statistics or effect of share downside on your friends.

There were some discussions in the forum about reported statistics, about skewing due to data averaging and about the effect of higher prices of new developments. The most important factor is your price and choice of property - location, location, location. Hedge your choice appropriately by having a sufficient margin based on comparative market price - worst house best street.

Also about shares, I know some people have chosen geared managed funds and are ahead now, making up for all the losses during the recent pull back caused by sub-prime markets, and some more. For starters, choose well managed wholesale geared Australian share funds with good performance track record.

F

 

[Property Meister]

Francescp: What do you mean by worst house best street,

can you please explain.. I have some idea, but just want t obe 100%

 

[Minx]

Francescp: What do you mean by worst house best street,

can you please explain.. I have some idea, but just want t obe 100%

Best house on worst street. Lets just say we are buying in Balwyn. Excellent area, inner east, zoned for Balwyn High School, public transport (bus's and trams), close to the city, and has prestiege.

A crap house in Balwyn will set you back around 800-900k. The bigger the block the better it's potential (for subdivision). These sort of areas will always be in demand and will always be expensive and incrrease.

IMHO if property prices do drop in Vic it will not be in inner city Melb.

Edit: The prices that I have given for Balwyn are ones that I have researched for myself personally. I am looking at buying, and everything that I require is that price so you may find something cheaper but again I gave the price based on what I was looking for personally.

 

[Property Meister]

sorry, I still am not 100% sure...

are you saying to buy the best house in the worst street or worst house in the best street...

 

[Francesco]

Hi Akumaslair

It is the worst house best street strategy. Let your neighbours lead the price rise in the street with periodic renovation and rebuilding. If you are on the right street, it is close to highly desirable amenities so much so that residents show their long term confidence and will want to build bigger and better houses. The price values of these houses will contribute to the average price increase in the suburb and your worst house (at low entry price) benefits from this trend.

F

 

[geoffw]

Francescp: What do you mean by worst house best street,

can you please explain.. I have some idea, but just want t obe 100%

here is one example of the "worst house" on the best street

In reality- if you can buy a house in very poor condition in a very good neighbourhood, you can possibly get a much better result (renovate it to match the surrounding houses) than by buying a very good house in a very bad neighbourhood (you are unlikely to be able to add much to the value in the short term).

 

[Property Meister]

funny geoffw!

Thanks francesco, exactly what I was thinking except for the renovation bit, as I probably won't renovate....

 

[yieldmatters]

fair enough... if these type of questions are going to piss people off, then I will just stop asking about these ones...
thanks anyway

This is the right place to ask them - in the Property Market Economics section. People should expect questions like that here (in my view anyway - am I wrong?).

I think the whole asset category is overvalued for the foreseable future - only question for me is whether it will be a drop in real terms (flat property prices with high inflation) or a nominal drop. Either way in my view it is a bad time to dive in. It costs you to hold it while you hope that prices move from record highs to even greater record highs.

Buy as I've learnt on these forums there are pockets for other local reasons you can still do well in. I don't agree that these pockets are completely isolated from the big picture but they are not 100% correlated either. Might be something there.

 

[Kennethkohsg]

I think the whole asset category is overvalued for the foreseable future - only question for me is whether it will be a drop in real terms (flat property prices with high inflation) or a nominal drop. Either way in my view it is a bad time to dive in. It costs you to hold it while you hope that prices move from record highs to even greater record highs.

&&&&&&&&&&&&&&&&&&&
Dear Yieldmatters,

1. You said the whole property asset class (in Australia?) is "over-valued" for a forseeable future. What is your basis for saying so?

2. You further said that the only question which you have for yourself would be a drop in real terms or a nomimal drop.

3. Are you then saying that you are in fact expecting an price correction for the property asset class NOW?... or "in the immediate near future?" . When exactly is this time frame which you are expecting the property prices to significantly come down in Melbourne property market?

4. Looking forward to learning further from you, please.

5. Thank you.

regards,
Kenneth KOH

 

[Bill.L]

Hi all,

Yieldmatters,

Either way in my view it is a bad time to dive in. It costs you to hold it while you hope that prices move from record highs to even greater record highs.

When was it a good time to dive in, in the last 30 years???

There was always a very good reason NOT to enter the market, yet throughout that period any buy in property in the capital cities would have been good in almost all cases.

bye