Buy in Melb now or wait?

Hi Forum, I have been reading a number of posts and would love some advice. I am looking for IP in the West and have attended been attending auctions to get a feel for what is happening. The auctions are well attended and generally the properties sell above the expected prices. I am in two minds 1. Do I jump in and pay the going rates or 2. Do I wait until the new year when the Spring frenzy is over and see what happens. I've heard the saying 'the best time to buy is yesterday' but am also confused as the market is so hot at the moment. Any comments would be appreciated.

 

Something that has resonated with me is that there is deals to be made in any market at any stage of the cycle. - but not for the faint hearted!

I bought my first in melb at the peak of the 2008 cycle, had an approx 5% correction in price. Some time to gain lost equity back.
If I went back in time would I have still bought? Yes, just my suburb selection could have been slightly better.. I was 22 at the time..

My point is, still buy if you want, just be confident and have solid due diligence done and a solid strategy.
Don't just buy because of FIMO "fear of missing out"..

Good luck!!!

 

Xie,

You may find this report useful especially map on page 13 which highlights the proice boom in the Eastern suburbs which stretches from the south in Springvale/Noble Park all the way North to Plenty/Lower Plenty.
Not sure now close to CBD you are looking at buying on the West side but these area's have taken off also in the last 12 months..

The best time to buy property is-when you can afford to buy one!!

Research your targeted market,know your buying criteria and than pull the trigger

 

I think the market is very strong at the moment, but from my research what we are now seeing is investor activity reducing, however increase buyer activity from FHB market. I can see this clearly as my 4 townhouses that I am building would never ever sell prior to completion, only have 1 left to sell, all FHB.

I don't know what your strategy is??but my guess is we are nearing the peak. I don't believe in holding properties which are negatively geared unless there is an upside, potential for immediate gains/growth or potential to add value.

If you don't care about this then make sure you can hold the property/service debt comfortably as now its a different ball game, with Westpac firing the first shot... interest rate rise... ouch.

MTR

 

Thanks for the replies everyone. Your comments are much appreciated. It seems you are all saying that if it fits my strategy then go for it but buy well. Nothing new! I guess I just needed some reassurance. Coota9 I've had a quick look at the report, but being a newbie I was surprised to see mention of decreases when all the talk for a long time has been about how the Melb market has gone through the roof - I have sooo much to learn. The suburb figures are interesting but raised lots of questions for me i.e what are the factors that created these changes? As I said sooo much to learn.

It's interesting Greyghost that you mentioned 'fear of missing out'. You read my mind. I am feeling that I have to jump in to avoid having to pay more if I wait- hence my post. So clearly I am not alone and this is a common thought pattern among new investors. As a new investor I haven't seen house prices do anything except rise so not sure what to expect.

I guess I just have to keep taking baby steps because despite lots of reading and having a theoretical understanding of how it is better to buy positively geared or for fast gains/growth I am still not sure how to go about doing this. I feel like I have plateaued and suffering a tad from analysis paralysis. What are your strategies to take investing to the next level???

 

Should not buy for FMO. But if you find something you love and can afford it, it may not come up again if you miss it. Then again always something around corner

 

Why specifically Melbourne @Xie ?

Melbourne certainly has the potential to be the best performing capital city in Australia in 2016.

It also has all of the fundamentals of being the worst performing capital city in Australia in 2017 and possibly for a few years.

Melbourne is in a major construction boom (apartments in the inner city - and new housing/house and land estates on the outer suburbs). Furthermore, Melbourne has a heavy reliance on the Manufacturing industry. The manufacturing industry throughout Australia is not in great shape right now - in Melbourne it's even worse. 98,000 people will be losing their jobs during 2016-2017 as Ford, Holden and Toyota close their Victorian manufacturing plants.

This doesn't mean that these 98,000 people (plus partners, plus children etc) will need to sell their homes, but it will certainly create a lot of 'uncertainty'. A lack of confidence in any particular market means people won't put their hands in their pockets to spend hundreds of thousands of dollars on properties.

Just something to keep in mind.

 

Know the area well and can do lots of DD. Happy to wait for longer term CG and have confidence that the West still has some potential - but open to any suggestions.

 

It really depends on where you're looking in Melbourne, some parts of the market are becoming quite segmented.

There's the locations that have been in very high demand for the last year or two which have strong fundamentals (schools zones often drive growth) but are outside of peoples affordability which will possibly stagnate their growth for a period of time.

There's also areas which have had modest growth recently and will likely continue this trend for some time to come. This is probably where you can find reasonable opportunities.

And of course there's the inner city apartments which are completely over supplied and you wouldn't want to go near.

 

Hi, Have you bought any yet ?

 

I hope Xie purchased as Melb west, market in Melb is still a strong today

 

Any update @Xie

 

This is true of the jobs they are mainly located with the geelong area and one or two of suburbs of melbourne. A lot of these jobs are of jobs of a factory nature. people doing assembly of cars or certain niche products. These really should be performed overseas as the cost to do this in australia is too expensive. When the ford factory closes in geelong and broadmeadows in 2016, majority of these workers live close to the factory due to early hours of working (and long hours too). only people living there would be affected (one would not live in geelong and work in clayton for e.g. as it is 2.5 hours each way.)

Apartment markets yes oversupplied but still selling and new towers are still being built and sold. All the TV series of the block have yielded the highest sales in melbourne, prahan, south melbourne, port melbourne. They only had a offshoot in sydney but none in brisbane or perth (as there is more demand for these in melbourne. Melbourne has a very strong educational sector especially with their univerities and schools (grammar schools, public schools). Properties of certain suburbs can go nearly to 1million dollars from 500-600K a few years due to schools. I have gone to auctions in some surburbs during the GFC and boom periods and they just keep attracting demand. Population growths are also huge in melbourne and more and more people are immigrating from overseas. It is why the reason that Pt cook (where there is still land available) a suburb where you get new houses within the 400Ks has been the "top 2 selling suburbs" in the whole of Australia in the number of houses sold. there are also more direct international flights to melbourne compared to perth and brisbane, which brings in more tourism, more students, more immigrants, more investment and more dollars.

Then again, some suburbs may not perform it really is all about location, suburb and micro-economic views of niches in melbourne. If for e.g. you buy in doveton, i wonder if you see any growth however if you bought in a glen waverley even a unit (you will see a lot of upswing over the years)

 

Hi Everyone, I am still looking in the West. I have done loads of ground work and know my target area really well. I am just waiting now to pounce. I think what I took from the advice is that if I do my DD well enough then I can't go wrong.

 

All true..however the suburbs you refer to are already expensive and how much cg do they have left in the tank in the next 5 years?? Dont know..

 

This is a very valid point

However. A good deal in todays market may not be a good one in tomorrows

Say a 500k property you get 10k off due to awesome negotiations today.
If this property fell in value to 490k. You could use those awesome negotiation skills to get it for $480k

However investment is a gamble. And no one hasa crystal ball.
If i believed that the market was going to fall. Then id wait.

If i believed that the market would stay flat and buyers would dry up. I would wait.

If i wasnt sure. Id go for the best deal possible now

If i thought the market was going to boom id buy as much as i could at market price