Where to buy in Melbourne??

[Alice_D]

Very broad question.. but can anyone provide some guidance on which suburbs they think are good to buy an investment property (which I plan to live in)? I'd prefer the Eastern suburbs (within 5km of CBD) like Richmond, Abbotsford, however I understand that the CG may not be as high as the outer suburbs.
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[zed_kid]

Very broad question.. but can anyone provide some guidance on which suburbs they think are good to buy an investment property (which I plan to live in)? I'd prefer the Eastern suburbs (within 5km of CBD) like Richmond, Abbotsford, however I understand that the CG may not be as high as the outer suburbs.
AD

Why do you think CG in inner suburbs will be less than outer? Are you talking absolute figure or % CG?

Also the important stuff. Whats your budget? Apartment or house?

 

[johnkerr]

How long are you going to use it as an IP before converting to PPOR or visa versa?

 

[Fifth]

If you plan to live in it then it's not really an investment property, it's a PPOR. Though most people view their PPOR as an investment, unless you plan to live in it for only a short time, your PPOR is foremost a home. If you're buying a home, then buy where you want to live. If you're buying an investment, your decision should be based solely on yields and/or your belief in future capital gains. As you're planning on living in the property, yields are obviously irrelevant. So... capital gains. You list two suburbs you'd like to 'invest' in yet you don't see much prospect for capital gains compared with other areas. I fail to see how this is an investment at all.

I wouldn't consider either Richmond or Abbotsford east, especially the latter, but that's unimportant. What's important is that you choose an investment which will maximise your returns. If you believe the outer suburbs are a better bet, then buy in the outer suburbs.

As Zed pointed out, you haven't even stated a price range or a property type. You should be posing questions to yourself rather than forumites.

 

[Alice_D]

Zed-kid: I assumed that the potential for growth in the outer suburbs would be much higher than the inner suburbs due to the inner suburbs already experiencing high growth?

johnkerr: I'm not 100% certain. The reason I plan to move into the property is that I would like to move out of my rental property in the next year, and I would also like to avoid paying CGT. How long am I able to rent out the property before I move into it to avoid paying CGT?

Budget is up to $800k.. would prefer a townhouse/house, however I would consider a large apartment if BC fees were reasonable.
Ideally I would like to purchase a property under $750k, so that I could obtain the FHOG.

Fifth: I call it an investment as I deem an investment anything I put money into with the aim to receive a return. I understand that it's not a true IP, however I was asking the question that of the city fringe/inner suburbs if there were any particular ones that people see as returning higher growth than others in the future. This will be my third property, my first two IP's are both products and in areas that I would not consider living in, and given the stage of where I am at in my life I have decided that my next purchase needs to be in an area that I want to live in.

 

[Melbournian]

Zed-kid: I assumed that the potential for growth in the outer suburbs would be much higher than the inner suburbs due to the inner suburbs already experiencing high growth?

johnkerr: I'm not 100% certain. The reason I plan to move into the property is that I would like to move out of my rental property in the next year, and I would also like to avoid paying CGT. How long am I able to rent out the property before I move into it to avoid paying CGT?

Budget is up to $800k.. would prefer a townhouse/house, however I would consider a large apartment if BC fees were reasonable.
Ideally I would like to purchase a property under $750k, so that I could obtain the FHOG.

it really depends for 800K - there are plenty of choice townhouses, houses or apartments.
as for renting it out before you move in - u will have to pay CGT if you sell it. if you move in and rent it out and not have any other PPOR -then you do not pay CGT.

 

[Aaron_C]

Hi Alice,

If you are looking at Richmond with a budget of $800k, you have a lot of options. I think you are incorrect to say that Richmond/Abbotsford don't have as much growth potential as the outer-suburbs - after all, if YOU (and people like you) want to live in these suburbs, isn't that the whole predication of why housing prices go up?

Just bear in mind though that Richmond has A LOT of apartments - either being constructed or having planning approval. Off the top of my head I can think of many - Dimmy's, 4 apartment complexes near IKEA alone, Garfield Street (approval for 200 apartments), the old Channel Nine site on Bendigo Street (potential for literally 1000+ apartments), the IKON development on Bridge Road, the redevelopment of Richmond Plaza....

You are better off buying a townhouse with those funds or a Victorian Terrace - either of which you can easily find something for $800k.

 

[zed_kid]

Alice,

Usually inner suburbs experience more CG basically due to demand and scarcity. With your budget I’d definitely go an inner suburb terrace house. Being a PPOR this seals the deal for me

IMO, Richmond has bolted, Prahran is a nicer suburb, better than Richmond and samey price point

 

[RightValue]

I'd prefer the Eastern suburbs (within 5km of CBD) like Richmond, Abbotsford, however I understand that the CG may not be as high as the outer suburbs.
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Capital Growth is almost always better in the inner than the outer suburbs. Far less supply in the inner than the outer.

 

[Deltaberry]

I thought there's a massive supply shortage of outer suburb houses.

 

[JWR]

I disagree with inner/outer.

Inner suburbs have established areas where nothing much will happen in general (though one or two within may grow more than others due to gentrification etc...)

Basically they will plod along...

Outer suburbs have the greatest chance for growth due to urban sprawl, new infrastructure, new development and from your houses perspective a good chance to subdivide. Not that you can't do this in inner suburbs (i.e. reno) but its more likely to be bigger blocks in outer areas.

They have far greater chance of quick growth due to changes in circumstance.

Look at established suburbs in Sydney (i.e. Bondi compared to Blacktown the past 10-15 years) Bondi did ok and blacktown did great. This will continue to be the case imo as Bondi is established (nothing doing) and Blacktown has population growth,new infra etc...

I understand some people have concerns about investing in dodgy areas - but its better to buy in the right areas and make money than to buy in the nice areas and not make much money.

 

[Aaron_C]

A typical house in Bondi may cost you say $1m, whereas a house in Blacktown would cost you ~$250,000. If Bondi went up 5%, that would be $50,000 - which is 20% of the Blacktown's property. That is why the rich get richer, and the poor get poorer in capitalism. It's a simple numbers game - which is why I like to invest where the numbers are bigger.

 

[JWR]

Yeah but you just buy 4 in Blacktown.

And properties cost a little more than $1M round here.

You could buy 80k houses in Blacktown just before 2001-2004 boom. They quadripled in 3ish years. Its done nothing for 8 years mind you - but it will soon!

That thing doesn't happen in 'established' areas. Redfern in Syd gentrified in the past 10 years but compared to outer areas didn't do much.