I think the initial influx of migrants to a particular area, generally speaking, puts upward pressure on prices. It's when it becomes too highly dominated by one particular culture that it starts to become undervalued over time. There are many places like this in Sydney and Campsie was also the one that sprung immediately to my mind. Happens in all price brackets. Chatswood vs Lindfield for example.
Why Lakemba is so low in prices
- Thread starter sanjayag
- Start date
I think the initial influx of migrants to a particular area, generally speaking, puts upward pressure on prices. It's when it becomes too highly dominated by one particular culture that it starts to become undervalued over time. There are many places like this in Sydney and Campsie was also the one that sprung immediately to my mind. Happens in all price brackets. Chatswood vs Lindfield for example.
Peter Spann's book has an observation about people being attracted to suburbs because it has people 'just like us'.
The exception is 'pioneers' who move into a run-down area just because it is cheap (even if it is mostly inhabited by people different to them (eg migrants, old people, unemployed etc) and start the gentrification process.
The family migration program reinforces these settlement patterns.
Ditto for the refugee program, but with a bias towards the cheaper suburbs.
The skilled migration program less so as the people coming over have skills and money.
Nevertheless everyone (whether insterstate or overseas migrants) will want to (at least initially) settle in an area where the shopkeepers speak their language.
When migrants get established they may move out of a cheap suburb (eg Noble Park) to a better area eg Glen Waverley or Box Hill. Their successful offspring may push up school scores in these areas as well.
When a suburb is so tightly associated with a particular ethnic group or religion that it goes from monoculture to multiculture to monoculture then that suburb's destiny is related to the characteristics of its ethnic group.
Someone once said 'Demographics is Destiny' and I would agree.
Supposing a suburb attracted lots of new refugee migrants but the more successful people (some being refugees who made good themselves) moved out. That suburb would be degentrifying and its average incomes would stagnate. Similar economic patterns happened to suburbs like Doveton and Broadmeadows when we deindustrialised since the 1970s as long term unemployed replaced manual labourers and factory workers.
Another case might be a cheapish suburb full of European migrants. As Europe recovered from WWII in the 1950s onwards the number coming here from continental Europe declined. Their ethnic communities aged and died. They're being replaced either by gentrifier young couples of any ethnic group (eg Brunswick/Coburg) or settlers from newer migrant sources eg Asia & middle east (eg Fawkner).
In both cases if the people are moving into a suburb are poorer than those moving out you might not want to invest there.
Then there are suburbs that are becoming more ethnically-based but are attracting skilled migrants from overseas. While such suburbs may be shunned by what John Howard might call 'mainstream Australians', their prices may be supported becase the origin countries (notably in Asia) remain major migrant sources for Australia and the people settling are not poor. Also these areas might be attractive to migrants who have made it in the cheaper migrant-based 'enclaves' (like Lakemba, Noble Park, St Albans, Broadmeadows, Mirrabooka etc).
So it would seem to be that if you seek to understand the social structure of Muslims and identify suburbs where the more established / successful ones go, then you might get quite high capital gain. The 'ethnic' reputation of the suburb might not be a hindrance to capital growth if the 'tap' of migration continues and the proportion of Muslims grows as a percentage of the population (which is likely).
So the question for Lakemba is what happens to those Lebanse who have 'made it'. Do they stay or do they leave the suburb as soon as they can? And if the latter, maybe it's better to buy in the place they're moving to?
Are his books any good? I was at one stage going to acquire one but they didn't have it at any of my local book stores.
There's a Leb belt in Sydney going from Brighton Le sands (on Botany Bay) out to Chester Hill.
Generally they stay - this will change over time, but suburbs like yagoona (inner Bankstown) are pretty nice these days. Lots of modern 2 storey homes going up. Generally some of the Leb areas are gentrifying. Also there's a split between muslim lebs and christian lebs. Christian lebs like Burwood which is a really nice multicultural area. You wouldn't say it's a Leb area. Got a bit of everyone and it's quite pricy.
Personally, I'd look at Auburn before Lakemba.
Its closer to Parramatta, Newington, Homebush Bay and will benefit more from economic hubs that start to grow in the Hills District and further growth in Parramatta.
More 'white collar' workers, more multicultural and similar prices to Lakemba.
Its closer to Parramatta, Newington, Homebush Bay and will benefit more from economic hubs that start to grow in the Hills District and further growth in Parramatta.
More 'white collar' workers, more multicultural and similar prices to Lakemba.
Dd
sanjayag .. people on this forum talk about dd .. & viewing this forum certainly isn't dd - it's a ragbag of opinions ... opinions of a wide variety of people with various investment stategies & agendas ..
if you're serious about investing & don't know the area then get on a plane & go visit .. it'll cost $300 or so & you can do it in a day - a bargain & insurance against making a bad decision - like you, i was attracted to lakemba by yield, low prices & potential capital growth - however i got on a plane & went over there for the day (i'm in adelaide) - walked the streets, spoke to the local agents & got a feel for the area - as a result i bought in an adjacent suburb where i felt the 'vibe' & fundamentals were better - there are some streets in lakemba that i wouldn't touch with a barge pole - & now i know where they are & what they look like - there are also good streets & i'd buy there again if the right place came up
as for the lebanese .. i got the feeling that many have moved on & the predominant ethnic grouping seemed to be bangladeshi
cheers
sanjayag .. people on this forum talk about dd .. & viewing this forum certainly isn't dd - it's a ragbag of opinions ... opinions of a wide variety of people with various investment stategies & agendas ..
if you're serious about investing & don't know the area then get on a plane & go visit .. it'll cost $300 or so & you can do it in a day - a bargain & insurance against making a bad decision - like you, i was attracted to lakemba by yield, low prices & potential capital growth - however i got on a plane & went over there for the day (i'm in adelaide) - walked the streets, spoke to the local agents & got a feel for the area - as a result i bought in an adjacent suburb where i felt the 'vibe' & fundamentals were better - there are some streets in lakemba that i wouldn't touch with a barge pole - & now i know where they are & what they look like - there are also good streets & i'd buy there again if the right place came up
as for the lebanese .. i got the feeling that many have moved on & the predominant ethnic grouping seemed to be bangladeshi
cheers
I'd also look at Auburn before Lakemba (my personal bias)...Auburn seems to be improving rapidly and is close to Parrramatta and not too far from the city.
Lakemba has better rental yields (although both suburbs have good yields).
If the suburb has a large Lebanese population then get a Lebanese property manager and keep your contact with the tenants to a minimum. That way you are not trying to work across cultural divides/misunderstandings when issues arise.
My former tenants in Auburn (of a medium/small 2 bedroom unit) purchased a 3 bedroom unit in Lakemba with FHOG.
Lakemba has better rental yields (although both suburbs have good yields).
If the suburb has a large Lebanese population then get a Lebanese property manager and keep your contact with the tenants to a minimum. That way you are not trying to work across cultural divides/misunderstandings when issues arise.
My former tenants in Auburn (of a medium/small 2 bedroom unit) purchased a 3 bedroom unit in Lakemba with FHOG.
Thanx Ajax. You have made a good point to counter the cultural issues by hiring a same culture PM.
Many year back the area was an area we call a trouble area with lot of unemployment most people there is living with our tax money. Now it's different, most of the people live there is a new arrival from middle east,China and Indian. This people is working in the Service secter. in the next few year this people would start to buying their property. this will make the property in the area go up just like Campsie(5 min by car) Campsie 5 year ago no want want to buy it. now the property is about $100k higher than Lakemba and the rental is about $30-40 higher per week.
Not the best area to invest in.
Walk past and you'll see graffiti everywhere. No one who lives there gives a stuff about the property, especially the rentals.
Most are in pretty run down state and the owners dont want to fix it up, only because it will probably get broken in again.
Honestly, Lakemba is almost like a black hole, by that i mean look at the surrounding suburbs.
Usually its suburbs closer to the city that are higher in price, Belmore, Lakemba, Wiley Park, Punchbowl are pretty much the exception.
eg Canterbury is more expensive than Campsie. Campsie is more expensive than Belmore. Belmore = Lakemba = Wiley Park = Punchbowl.
Bankstown is cheaper than Campsie, but more expensive than those 4 suburbs mentioned.
Even guys i know who grew up in those areas try and move out of it as soon as they can. Its hard for an area to increase in value when most people choose not to go there out of fear and those who do go there do so because its what they can afford.
Walk past and you'll see graffiti everywhere. No one who lives there gives a stuff about the property, especially the rentals.
Most are in pretty run down state and the owners dont want to fix it up, only because it will probably get broken in again.
Honestly, Lakemba is almost like a black hole, by that i mean look at the surrounding suburbs.
Usually its suburbs closer to the city that are higher in price, Belmore, Lakemba, Wiley Park, Punchbowl are pretty much the exception.
eg Canterbury is more expensive than Campsie. Campsie is more expensive than Belmore. Belmore = Lakemba = Wiley Park = Punchbowl.
Bankstown is cheaper than Campsie, but more expensive than those 4 suburbs mentioned.
Even guys i know who grew up in those areas try and move out of it as soon as they can. Its hard for an area to increase in value when most people choose not to go there out of fear and those who do go there do so because its what they can afford.
It is residential owners that really drive the prices up for us investors.
If this isn't happening the answer is simple.
Supply exceeds demand.
Don't have to make it any more complex than this.
A few months have passed since the above statement and prices in Lakemba have increased as they have done in other suburbs.
Why buy in Lakemba? because it's affordable and because they don't make any more land close to the CBD so if a property costs me nothing to hold, I'm prepared to wait. Sooner or later prices will move again.
The demographics are changing, I was there the other day signing some docs at a Real estate Agent and although the Lebanese presence on the streets was obvious there were other people there as well.
The Lebanese presence didn't worry me at all and I didn't feel unsafe as I would have felt a few years ago
i agree with nek, a very undesirable area, and an area i wouldnt like to live in, because of the demographic living in that area and a few religious places of worship.... i am walking a tight rope here... (http://en.wikipedia.org/wiki/Lakemba,_New_South_Wales)
its not to say it wont change in the future, but because of the location of these places of worship i dont think the attitude of the area will ever change.
although canterbury has great suburbs, earlwoord, ashbury are my favourite, i would rate lakemba and punchbowl as the last on the list within the 15km cbd radius as suburbs to buy for PPOR ....for investement maybe consider it, as the prices are so tempting.
.. i am walking a tight rope here... (http://en.wikipedia.org/wiki/Lakemba,_New_South_Wales) its not to say it wont change in the future, but because of the location of these places of worship i dont think the attitude of the area will ever change.
although canterbury has great suburbs, earlwoord, ashbury are my favourite, i would rate lakemba and punchbowl as the last on the list within the 15km cbd radius as suburbs to buy for PPOR ....for investement maybe consider it, as the prices are so tempting.
It seems to me that people are mixing the "I don't want to live there" factor with an investment decision.
If prices are so cheap compared to other suburbs and yields are also much higher, then what is the risk? Capital growth can't be that much lower than surrounding suburbs over the long-term due to the price gap. Even if it is, the higher yield compensates.
It seems that long-term capital growth is not that much below average. (at least from the info here)
http://www.domain.com.au/public/suburbprofile.aspx?searchTerm=lakemba&mode=research
While cap growth is where the wealth gains occur, yield is important for borrowing capacity, ie. ability to purchase more properties.
Cheers,
If prices are so cheap compared to other suburbs and yields are also much higher, then what is the risk? Capital growth can't be that much lower than surrounding suburbs over the long-term due to the price gap. Even if it is, the higher yield compensates.
It seems that long-term capital growth is not that much below average. (at least from the info here)
http://www.domain.com.au/public/suburbprofile.aspx?searchTerm=lakemba&mode=research
While cap growth is where the wealth gains occur, yield is important for borrowing capacity, ie. ability to purchase more properties.
Cheers,
I agree with Bill. These areas are fine for IPs and the presence or otherwise of different peoples just makes it interesting.
I have never felt unsafe in any areas of any cities, even at night-time - maybe that is because I am big and tall and I must intimidate people or at least I don't look like an easy target
I used to work in an office that had Indians, French, UK, Russians, Yugoslavs, Chinese, Fijian Indian, and a few others + the odd couple of native born Aussies. Lunchtime was always interesting - but I do like different types of food and I enjoy talking with people of other cultures.
Today, in our Buyers' Agency we deal with all kinds of people from all over the world as well as clients from different cultures in other parts of the country. Understanding their background and their wants & needs is all part of a great learning experience and keeps it interesting as I've already mentioned.
I agree with House Keeper too. It is not about "would I want to live there?"
Like House Keeper said, don't confuse an investment decision based on where you want to live. There are obviously many people who would want to live in the area for various reasons. When I drive down the streets I don't see a heap of vacant properties.
Personally I would have no hesitation in purchasing there if something came up that fit my criterior at a time that I was looking to buy.
well i do apply the rule when buying an IP, if cant see myself living there then i dont buy, which if you put it another way, for those areas i overlook is someone else's gain.
i used to work with a character who lived in lakemba he would pronounce the suburb as "lake amber" he hated living there, i think i would aswell... but as said before its well priced for its location
Can I ask where you have purchased?
I wouldn't be adverse to living in a lot of places really and am open to making money anywhere.
