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VIC Best place to buy in Melbourne ~500-600k

Discussion in 'Where to Buy' started by Geoff, 2nd Jul, 2016.

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  1. Geoff

    Geoff New Member

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    Hi,

    I'm looking to jump into buying my first investment property after holding off for far too long. Have been very apprehensive despite working for 7-8 years for various reasons, ie. taking a gap year to travel etc
    I can probably afford around 500-600k, up to 650k maximum and am currently back at uni doing a bit more study for the next few years with some part time work.

    I've looked at places like Clifton Hill when I first started work and regret not buying then but those types of are suburbs are way out of my price range now.

    I'm looking for something with land, preferably something bigger than a unit which I know is hard at this price range. Are there any tips on which middle-outer ring suburbs would be worthwhile looking at for the best capital gains as well as rental yield to cover as much of the repayments as possible? Any boom suburbs left in Melbourne?

    I understand it's an unpredictable time right now with the elections, but Melbourne will keep growing fast I think.

    I am open to looking at Brisbane and Adelaide also, likely thru a buyers agent. What are the thoughts on the growth of Brisbane vs Melbourne for a similarly priced property? Will the 5-10 year medium term growths be very different?

    Thanks in advance.
     
  2. melbournian

    melbournian Well-Known Member

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    i would say go north (bundoora, preston, reservoir etc) or go west (maidstone, sunshine).
    if you have 500-600K budget then stay in melbourne i would forget abt brisbane unless you are looking for cashflow. growth wise brisbane can't see it following a sydney or melbourne boom as in the past.
     
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  3. JDP1

    JDP1 Well-Known Member

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    I dont remember where i saw the figures from, but the 500k or so bracket was the strongest performing price bracket in brisbame. This looks like it will continue. The question will be if the growth in this price bracket is going yo be more in brisbanr or Melbourne. No one can say for sure...from past performance (although no reliable inducator of future performane) I think brisbane provided its in the right areas ie ex oversupplied ans ex flood inmer and mid. 500-600k is still very possible in brisbane in thosr areas as this price range.
    Agree with your comment in yhat brisbane in general, cg averaged to include all, will not post sydney kinda numbers. ...despite the green grass, blue sky and azure blue waters of the brisbane river :)
    In Brisbane, and ive made this point before in another thread, there can and will be a large difference in CG in relatively closeby suburbs. Its important to pick carefully in brisbane- it aint like sydney where everything boomed...
     
  4. melbournian

    melbournian Well-Known Member

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    Of course there is winners in all states. U either go with macro or microeconomic view but personally I wouldn't buy 500-600k in Brisbane I would rather buy that in Melbourne. High prices require higher income which jobs wise is still not as high as Sydney or Melbourne. I say the 300-400k range is where it is good to buy in Brisbane if the budget is constrained

    If u choose a microeconomic view, If one buy couple years ago in suburbs below

    Balywn vic
    Glen Waverley Vic
    Sunnybank qld
    Chatswood nsw
    Eastwood nsw

    Anyone could make that 40-70% capital gain.
     
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  5. JDP1

    JDP1 Well-Known Member

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    I understand your point. .i would say thats applicable more for 900 plus not 500-600.
    It aint like there is no money up here. Salaries on avg are 10-15% lower than sydney.
     
  6. melbournian

    melbournian Well-Known Member

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    think abt it logically if you are saying 15% lower than sydney salary assuming 100K job is 115K job with 15K difference in brisbane, repayments for 300K interest only is ard 12K assuming 4% per year. that would make mean logically the cap is really up to 500Kish. how much further can it go if the income does not support it?
     
  7. JDP1

    JDP1 Well-Known Member

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    Assuming salary is the only income stream (and for most in the market i would think so) the equivalent sydney property is a helluva lot more than 15% for the brisbane equivalent. I would look at salary:cost ratio for similar properties.
    Sydney and mel also have opps that brisbane does noy have...and for some that is worth a lot...for some not so. I would say iys partly individual - how much you value options and opps. That is one big reason why syd and mel have been so popular in the past and even now.
     
  8. Judi

    Judi Member

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    I m looking to buy one or two IP in Brisbane, I haven't looked at the market very closely, but for 500-600k. In Brisbane you can buy blue chip property, in mel. It's speculating property, if it has any land. Brisbane as a macro market performance is yet to be determined, I think it's much to do with supple and demand. Rather than income levels. Population increase data could be useful, & demographic.

    That being said, I have a 600k north of Mel IP, I can see the market moved by 50-100k just over a year, by recent sales around the place, don't know if any other people have the same data, I was thinking this one will take quite a while to see equity gain.
    Is anyone feeling the east of Mel is very overpriced??
    Brisbane definitely seems like good value, more research to be done
     
  9. melbournian

    melbournian Well-Known Member

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    @Judi Maybe overpriced but not as overpriced as sydney.North and West are really the only areas within the 15km distance to CBD which is priced lower than the other areas. i like the northern suburbs personally which surrounds the pretty high end suburb like heidelberg, eaglemont which sell for millions.

    Brisbane - you have to navigate through the maze of flood zones, building etc, and the insurance rates are just so high. Demographics wise, in the logan for examples, yes it is cheap and positive geared, but it also has the highest pacific islander population in logan which represents the lower income revealed in the suburb. Similar to a suburb like doverton in melbourne, where it has lower incomes and also was the number one foreclosure capital in vic at one stage. I was looking at one of hocking stuart charts. interesting stats.

    upload_2016-7-4_11-9-42.png
     
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  10. Judi

    Judi Member

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    @melbournian
    very interesting statistic, is it this year's data though?,, &for cheaper housing in the city, it usually has the same problem, need to choose tenants very carefully.
     
  11. melbournian

    melbournian Well-Known Member

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    Yes this was taken at from a hocking Stuart brochure last sat auction. Recent stats
     
  12. Geoff

    Geoff New Member

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    Thanks so much for the replies guys. Very interesting discussion and certainly food for thought.
    Having done a bit more research, it does seem that many areas in Melbourne have gone up between 30-60% in the last 5 years, with places in the East like Burwood going up 30% in the last 12 months! Whereas, the growth in Brisbane has yet to hit anywhere near those figure. This sharp unsustainable rise in growth does suggest that perhaps Melbourne is too over-priced and I've missed the boat somewhat? I guess the main concern with an IP is always going to be - will it keep rising? and if I wait will the boat just be further out to sea?

    Whereas a colleague recently purchased in Everton Park which has had a median growth of 13% over 5 years, certainly much higher depending on the area/house. But will Brisbane outperform Melbourne with regards to growth?

    I guess in the 500-600k range the decision would be between a 100-150 square Unit in Melbourne in places such as Blackburn/Nunawading vs a full sized 600 square 3-4 bedroom house in the middle ring suburbs of Brisbane. Very hard to predict I know.

    Also@Judi, very interesting points regarding growth and equity vs potential value in Brisbane. I'm not from a finance background - what is meant by the macroeconomic and microeconomic conditions? I know that they are subjects in commerce degrees.

    Cheers
     
  13. melbournian

    melbournian Well-Known Member

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    As for macroeconomics it is in the view of looking at the employment rate, interest rate. median income so for e.g. looking at melbourne as a whole where else a microeconomic view is more looking at factors pertaining to the say a suburb or suburbs specifcally which could be specifc high school or demographics

    The suburbs you have mentioned in melbourne are really among the suburb that borders onto box hill and doncaster and is where the mainland chinese and the vast asian population targets. A suburb like burwood where deakin university is and borders onto box hill is no doubt a suburb that is highly sought after So it is more specific suburbs and i wouldn't be suprised if it grows in sunnybank or fortitude valley in brisbane to the same levels as burwood etc as the demographics are similar. Units may not necessarily be a bad thing. Take for e.g. camberwell, units now rise in auctions as people who are priced out of the suburb but want to be in the suburb settle for less exp units. a 2 bed landed unit in dec/jan fetched 1.1 million in camberwell, with similar occurences in mont albert north and balwyn.

    Brisbane is quite far behind in terms of jobs, universities, schools income levels, population growth and infratsructure compared to melbourne and sydney.. What pushes those suburbs you mentioned are that people who have money (whether overseas or from income levels that are high enough to do so). Simliar to the mining boom in WA, demand has to also exceed supply for prices to rise. If for e.g. u say logan in brisbane (with the largest pacific islander population in the whole of brisbane which is also the lowest median income), are you expecting the price to touch 700-1mil where else you have buyers fighting out for a crappy 2 bedroom unit in camberwell for 1.1 mil . Doesn't help that pauline hanson now holds some seats in qld, way to go for multiculturalism and attracting foreign investments.
     
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  14. Jessie

    Jessie New Member

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    Hey guys,

    I'm new to the site and completely gobsmacked by the absolute wealth of information on here. I'm in a similar situation to Geoff and would be most grateful for any advice you might have.

    I'm also looking to purchase my first IP and have a similar budget of approximately 500-600k, possibly 650k at an absolute stretch (preferably a free-standing house). I am mainly tossing up between middle ring suburbs in Brissy and somewhere in Melb, though the prices in Melb seem prohibitive and the rental yields disappointing.

    I understand that Brisbane lags behind it's larger East Coast siblings in Sydney and Melbourne in some of the key growth drivers, as discussed above, and is unlikely to see growth in the same league as Melb or Syd.

    However, as was alluded to above, Brissy presents the appealing prospect of purchasing in some solid suburbs within 5-10km of the CBD at this accessible price point, with the bonus of strong rental yields to keep holding costs down and hopefully optimise borrowing capacity for subsequent purchases.

    Ideally, I would love to purchase a free-standing property in Melbourne but I don't know where to start in terms of which suburbs to target, and specifically, which suburbs are likely to offer string growth potential yet still be accessible within this limited budget.

    Similarly, I would be most interested to hear your thoughts regarding projected comparative growth potential between a middle ring property in Brissy at this price point vs. Melbourne houses for the same 500-600k budget in any of the suburbs that you may suggest at this price point.

    Thanks in advance. Lots to learn!
     
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  15. JamesP

    JamesP Well-Known Member

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    What about the illustrious Beaconsfield Upper?

    Rents are high. Growth is not.
     
  16. Geoff

    Geoff New Member

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    Great discussion so far, thanks! These are my main questions too.
     
  17. Matt Ad

    Matt Ad Well-Known Member

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    What about the property clock!
    Do you guys consider the idea of boom/bust? If so, I would say Mel is obviously hight, where as Bris as places to go... I feel people expect large returns now becouse of Syd and Mel but the truth is even 8-10%pa is very good, which makes me (a not very experienced investor) lean towards looking into Bris more.
     
  18. mpiyer

    mpiyer Member

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    Coburg North, West Footscary and Altona North would be my targets in Melbourne in this price range. Competition always leads to higher prices in the mid to long term so I would rather invest in Melbourne or Sydney than other cities in Australia. Brisbane is ok but it does not have an Auction culture like Melbourne or Sydney. This will hurt from a longer term perspective.
     
  19. sofman

    sofman Member

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    food for thought-
    NSW - pop 7.6m %of land in Aust = 10.5%
    VIC - pop 6.9m %of land in Aust = 3%
    QLD - pop 4.7m %of land in Aust = 22%
     
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  20. Coota9

    Coota9 Well-Known Member Premium Member

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    Its not the amount of land per say but the amount of "developable" land available which limits supply as in turn puts pressure on the different markets..