Where to buy in Melbourne Thread.

[albanga]

Hey All,

I am reading A LOT of where to buy in Sydney and Brisbane threads but none for Melbourne. A couple of recent reports I have read has Melbourne tipped to outperform all other capitals this year.

Are people considering Melbourne this year and if so where?
Me personally I think the west and north are becoming good propsects due to affordability, block sizes and infrastructure.
Suburbs like oak park, broadmeadows, thomastown, fawkner up north.
To the west, sunshine, Albion, St.Albans

A few mentioned do have some stigma attached but these are slowly starting to go away.

 

[Peter_Tersteeg]

Shortly before Christmas I was suspecting that Melbourne would be leveling off. The market appeared to peak late November, it wasn't really doing too much from there to Christmas. Late January the market started to get busy again and with the recent rate cut I suspect the Melbourne market will show some increases over the next 12 months.

Looking at the market in general, the average price point in Melboune is well above a comfortable level of affordability. $800k plus is a lot of money for most people and that's where the prices start for a 3 bedroom house in an Eastern or South Eastern middle ring suburb. The inner West is almost as expensive. Rental yields in these areas are below 3% for the same houses.

Smaller units are at a cheaper price point, but still quite expensive. Rental yields are also better, but still low when compared with other markets.

For more affordable price points you've got to go to the outer suburbs or the less prestigious areas. The outer suburbs have plenty of ongoing supply. Most of the other affordable suburbs have other reasons I wouldn't want to invest there.

Demand is about the only thing really going for Melbourne. Net immigration is still quite high and there's still a significant under supply of housing. The real problem for investors is that the rent is so far behind property value (and it's not catching up any time soon) that it makes the holding costs extremely high.

In short, it's possible and certainly feasible to invest in Melbourne, but I think there's better opportunities elsewhere.

 

[WattleIdo]

Demand is about the only thing really going for Melbourne. Net immigration is still quite high and there's still a significant under supply of housing. The real problem for investors is that the rent is so far behind property value (and it's not catching up any time soon) that it makes the holding costs extremely high.

In short, it's possible and certainly feasible to invest in Melbourne, but I think there's better opportunities elsewhere.

Yes, the yield is definitely below par. Maybe this will be an even greater draw-card for Melbourne over other capital cities before too long.
Timing wise, Melbourne had it's own quirky boom 5 years ago. I'm hoping it'll go off again in about 18 months-2 years.
I have no doubt that Sunshine and some of those northern suburbs mentioned will continue to grow regardless.

 

[Peter_Tersteeg]

Timing wise, Melbourne had it's own quirky boom 5 years ago. I'm hoping it'll go off again in about 18 months-2 years.
I have no doubt that Sunshine and some of those northern suburbs mentioned will continue to grow regardless.

Do you mean it'll go up over the next year or two then reach a peak, or are you anticipating it to not increase in the immediate future and then start to rise in 18 months to 2 years? The wording above is very obtuse.

Personally I think there's going to be further rises this year driven by rate cuts. In 18 months to 2 years we might see a correction, possibly even be in bubble burst territory.

People buying today are buying heavily negative cash flow properties when interest rates are 4.5%. In a healthy economy where rates would go up to 7%, that sort of cash flow would become a disaster.

I agree with the Sunshine & North assessment, but I also think supply in these directions is unlimited. This will always make these areas the poor cousins of the East and South East.

 

[WattleIdo]

Do you mean it'll go up over the next year or two then reach a peak, or are you anticipating it to not increase in the immediate future and then start to rise in 18 months to 2 years? The wording above is very obtuse.

chill out
How would I know?

 

[Peter_Tersteeg]

I'm genuinely interested in what you think and why. I'm just not clear on what you've said.

 

[WattleIdo]

'Obtuse' is one of those words I'd love to throw around more often but don't.
However, maybe some of my post reads that way because I started learning about Melbourne after I bought a 4 bedder in Frankston.
The fact is, I'm still learning and don't know all that much.
So of course am glad to see you still have faith in the SE (though not a great fan of the outer suburbs).
Melbourne is really only a boom or two behind Sydney. The best I can do is compare it to Sydney before the western suburbs became a matter or survival and now the investment du jour.
My way of thinking is that people will get tired of the rat-race in Sydney and look for alternatives. At the moment, there are so many!
Melbourne is sitting there quietly at the moment with unexciting yields. Eventually, anything within a stone's throw of the CBD will be prime real-estate. Hopefully sooner rather than later - 7 years rather than 10 (since last boom).
That's the best I can do....

 

[JamesP]

Unless my eyes are mistaking me Clayton medians have recently jumped from 600k-800k

http://house.ksou.cn/his_price.php?q=Clayton&sta=vic

It has shot up rapidly over the last few months.. does anyone know why? I live nearby and it was always regarded as a hole, and it's pretty far out from the city. It now has similiar medians to superior suburbs like Oakleigh looks like the ships already sailed there unfortunately.

 

[The Y-man]

Unless my eyes are mistaking me Clayton medians have recently jumped from 600k-800k

http://house.ksou.cn/his_price.php?q=Clayton&sta=vic

It has shot up rapidly over the last few months.. does anyone know why? I live nearby and it was always regarded as a hole, and it's pretty far out from the city. It now has similiar medians to superior suburbs like Oakleigh looks like the ships already sailed there unfortunately.

One of Melbourne's premier and largest public hospitals, with surrounding specialist services.

Construction underway for new giganourmous Childrens hospital

Project to put railway underground to remove traffic hellhole.


The Y-man

 

[oc1]

A few mentioned do have some stigma attached but these are slowly starting to go away.

Meanwhile, the eastern and outer eastern suburbs keep chugging along nicely.

 

[strongy1986]

Unless my eyes are mistaking me Clayton medians have recently jumped from 600k-800k

http://house.ksou.cn/his_price.php?q=Clayton&sta=vic

It has shot up rapidly over the last few months.. does anyone know why? I live nearby and it was always regarded as a hole, and it's pretty far out from the city. It now has similiar medians to superior suburbs like Oakleigh looks like the ships already sailed there unfortunately.

Without starting a race riot.....

When you drive through clayton shops 90% of the people are from Asian backgrounds
I guess they like living there and there is demand for clayton for new migrants

 

[albanga]

No doubting north and west cannot compete with the likes of south, south east but the entry point into these suburbs for your standard investor is just not feasible.

Living in the north west myself (niddrie) I guess I keep a pretty close eye on things and am really starting to notice the ripple effect happening. Tullamarine is a real interesting one, you can get a 650 knockdown for 400k 18k from the CBD. It's close to westfield, essendon fields and can access a tram from some parts. I think what is holding it back is a lack of a train and also a good strip of shops.

Still though the point being for the same property at neighboring airport west your looking at 200k more. It's priced out for most people now which means they need to look further and ofcourse this will drive demand.

 

[Jake Milne]

Quick picks for the next 5 years:

Apartments:
St Kilda
Elwood
Brunswick
Fitzroy North
Carlton North
Hawthorn East

Villas/Units:
Brighton & Neighbouring Bay-side
Carnegie
Brunswick West
Kensington
Mount Waverly / Glen Waverly (But only original houses in that are now units in sub-div lots)

Townhouses:
Brunswick / Brunswick East
Alphington / Fairfield
St Kilda / St Kilda East
Windsor / Prahran
Yarraville / Seddon

Houses <$1mil:
Brunswick
Coburg
West Footscray
Sunshine
Wantirna / Wantirna South

Houses >$1mil
Elwood
St Kilda West
Hawthorn / Kew
Malvern
Carlton North

 

[willister]

One of Melbourne's premier and largest public hospitals, with surrounding specialist services.

Construction underway for new giganourmous Childrens hospital

Project to put railway underground to remove traffic hellhole.


The Y-man

I was there at an auction in July last year, a 600m2 block abt 1km from the station went for about $650K. I think it's worth about $750-$800K ish now, we dumped our cash in Chadstone instead. Was a bit more exxy, but if you look at the surrounds, way better.

Not quite sure how a children's hospital would help price increases??

 

[DinoJess]

Unless my eyes are mistaking me Clayton medians have recently jumped from 600k-800k

http://house.ksou.cn/his_price.php?q=Clayton&sta=vic

It has shot up rapidly over the last few months.. does anyone know why? I live nearby and it was always regarded as a hole, and it's pretty far out from the city. It now has similiar medians to superior suburbs like Oakleigh looks like the ships already sailed there unfortunately.

I'd attribute the recent gains in Clayton to the increase in developer interest due to having Monash University in the area and the huge influx of international students looking for a home away from home while they complete their studies. I grew up around there and there has been a lot of building/subdividing going on for the past 5 years at least.

 

[The Y-man]

Not quite sure how a children's hospital would help price increases??

It just used up a monumental chunk of land............ (including new car park)

The Y-man

 

[Deltaberry]

Selective pockets have already gone ballistic in Melbourne this year. These areas should match Sydney growth, while the city as a whole would be more subdued. Could be time to sell half the holdings in this pockets.

 

[Jake Milne]

Selective pockets have already gone ballistic in Melbourne this year. These areas should match Sydney growth, while the city as a whole would be more subdued. Could be time to sell half the holdings in this pockets.

Agree with you completely but why would you sell while interests rates are at the lowest level ever?
I'd say if you're thinking of selling try and hold until the first rate increase.

 

[The Y-man]

Not quite sure how a children's hospital would help price increases??

Sorry, I didn't have time to answer the question fully previously.

Basically, large hospitals such as the Monash carry a huge contigent of trainees and interns who rotate around various institutions. They also have a big contingent of visiting specialists etc on stints too.

All this means that areas around big hospitals have a huge demand for rental properties - especially within walking distance. For children's hospitals, there is also very sadly the need for housing where there are oncology and long term trauma units (so parents can be close to their children).

Investors know this and, in addition to the aforementioned use of land, drive up the prices.

Hope this answers the question. (My sister in law and hub are doctors - they lived near the Monash for this reason back in the rotation days before becoming GP's - nowadays as investors, they still look for properties near big hospital developments)

The Y-man

 

[natedog]

Vacant land on the fringes being snapped up like hotcakes!

Hi All,

Just an observation from on the ground in residential land sales in new estates on the fringe in the southeast of Melbourne.

It is selling at a rapid rate....most land agents are reporting big sales numbers in the southeast for the first 2 months of 2015.

Building boom to follow....watch the numbers flow through to permits issued in the next 12 months, as alot of the land is being sold off the plan with titles 6-12 months away there will be a lag, but builders forward order bins will fill up nicely.

Cheers