First property purchase - apartment or townhouse?

Hi there,

Long time lurker here both the forum and the property market.

We are european migrants and after over 9 years spent in Melbourne, we finally came to the realisation that we should get into the property market...
Not something easy for us as the prices seem crazy compared to what we experience back home.

I'm posting today as I need a sounding board before making the jump.

I'll try and keep it short.
We work and live in Melbourne inner city. We don't want to move away to the outer suburbs, and with 2 kids and a budget of 800-850k our choices are fairly limited.

We recently came accross a duplex 3 beds appartment, 2000's built, top floor (3d), no lift. It's pretty rare that we see a 3 beds in our price range in these inner suburbs.

I'm concerned about the no lift thing. We wouldn't buy looking to make crazy CG if any at all, but obviously I'd like this property to maintain its value in real terms.
There's a lot of new buildings being built in the area, lots of new stock in the planning stages, very little 3 bedrooms though, and the one that do exist are sold OTP for $1M+.

I guess I answered my own question? Yes this 3 bedrooms could not compete with the new ones with all the bells and whistles but it would/could be a good option for a buyer wanting the space at a bargain?

It seems like so much money for an appartment ha!
What keeps me from jumping in the deep end is that in the past couple of months I have seen 2 townhouses 3 beds in the area go for below our budget... Should we focus our energy on snapping the next townhouse that would come on the market?

Appartment/light/stairs vs townhouse/small backyard/darker - That is my current debate!

 

If contemplating an apartment in Melbourne, just make sure you do your research. Depending on who you talk to there is either a slight or huge oversupply coming onto the market.

 

Seriously with your budget you are better off sacrificing being in the city to going a bit further out to inner city suburbs... North Melb, Footscray, W. Footscray, Maidstone, Kensington, Yarraville... while still being so close to the city (<25 mins) and being able to find 3 BD houses in your price range as it will generally give you better capital growth. Real Estate & Property For Sale between $650,000 and $850,000 in Footscray, VIC 3011, Maidstone, VIC 3012, Yarraville, VIC 3013, Kensington, VIC 3031 (Page 1) - realestate.com.au

 

Hi @ExcuseMyFrench - sounds like this is a purchase for you to live in? If so, doesn't it come down to what you are most comfortable living in and how much you are comfortable spending?

 

Go to preston or reservoir that budget will get you a nice house on a sizable plot of land. The only duplex 3 bedrooms apartments i know around that time that is also walk up is off Wells and Dodds Street in southbank. Some of those sell for 750K to 1 million though they are huge some 130-160sqm. That is size of a small house in the burbs.

Or maybe fitzroy north for one of those cottages where there is room for improvement to upper level extensions.

 

Yes it's in Fitzroy North. No idea of the actual internal size, so I'd need to double check that.

I didn't expect everyone to tell me to move further out haha. We have such a nice lifestyle at the moment, with my husband being able to walk to work (priceless IMO).
I'm not sure that a bigger house/place is worth sacrificing 5 hours a week stuck in traffic...

 

Budget is fixed, we are just sitting on the fence regarding the townhouse vs apartment decision. I would prefer the townhouse and husband would prefer the apartment. Stuck in a rut!

 

i'm in south melbourne which is 15 minutes walk to CBD. that is true but depends what your goals are, wealth creation or comfort zone.

With 800-850 you should be able to get a rundown cottage (not the ones which have been done up) around 160-200sqm in fitzroy north. i would avoid apartments in fitzroy it seems more trended towards those warehouse conversions, terraces and double storey victorians for CG etc.

 

Why don't you focus on getting something close-ish proximity to a train station and a bit further out, so it's only say 25 min train trip in. 850k buys a lot in that middle rung - 10-20km from CBD.

 

because thats an entirely different lifestyle to what the OP appears to enjoy.

i have never lived more than 6km from cbd in perth in the 11 years since i moved out of home, including 2 stints in a really old, run down apartment as thats all i could afford,

in the last 5 or so i have not lived further than 2km out. i wouldnt even remotely consider moving to a house further out for the same money no matter how big it is, it sounds like the OP is the same.

20km away means foregoing so much on a day to day basis that make melbourne a great city

 

Well, not really. Plenty of places within that ring that offer a similar lifestyle. I myself, have made a move the same a few months ago and am now 13km from CBD and it takes less time to get to the CBD and a lot less stress than when I was 4km from the CBD, but I was in between train stations. I have 3 inner city type cafes within a 5 min walk, I can hop on a train and be in the CBD in less than 25 minutes, I can get a uber home for around $16. You'd be surprised what's happening in some of these middle ring suburbs. Had the same discussion earlier tonight with my girlfriend, she takes a tram from hawthorn ~ 6km from CBD and it takes her 40 minutes some mornings.

Besides, if you're still working daily in the CBD you still get to experience all 'Melbourne' has to offer, whenever you want it.

 

to each their own, you might be perfectly happy with that arrangement, someone else might not.

like you say, there are 3 cafes within a 5 min walk where you are now. fitzroy would have 20?30? 40?

i go to melbourne pretty often, monthly atm and possibly moving there for 6-9 months soon. our office is in cremorne and i usually stay with my partner in richmond. while i personally prefer the inner north there is no way i would be just as happy being a further 10km away in return for a larger property.

ultimately at the end of a day at work i personally, and many others in melbourne based on popularity of the inner ring, want the ability to walk out my door and have a vibrant local area right on my door step with heaps of options.

the middle ring, while greatly improved in some parts, does not in any way offer the same level of amenity. like comparing a holden statesman to an S class. sure theyre both luxury vehicles and the statesman is surprisingly good but theyre not even in the same ballpark.

for some people the extra space and house is worth sacrificing the amenity, for many it isnt.

as for cbd, its certainly a vibrant area but a vastly different vibe and feel to the popular inner suburbs which for many people is ultimately melbourne's appeal

 

What about buying in another more affordable market, then use the higher rental yield to pay for the rent you pay in Melbourne inner city?

I go to work in Sydney CBD and live a 15 minute train ride away, but plan to buy my first property in outer brisbane instead.

 

Thanks for your tips. I haven't seen many rundown cottages but perhaps that's because I haven't been focussed on those.
Goal is comfort zone. We have invested elsewhere for wealth creation.

That's a good idea, not ideal for us but worth investigating.

Wow now you're opening a whole new perspective on things. I'd have no idea where to start though but I guess the forum is a good starting point...
We would be very happy to stay put in our rental. Landlords are friends so we have a good arrangement and we can do pretty much what we like with the place so it does feel like home and we don't feel the need to buy.
It just feels silly to have that much deposit aside loosing value on a bank account with interest rate so low...

 

If goal is comfort that you should get a place in freshwater place or the eureka or east melbourne

 

Wow. Have you come to the right place.


Being happy renting with a great landlord can be the best way to live. It's a beautiful thing when both parties "get it" and help each other.

If you're only buying for buying's sake you might well be better of renting and investing else where.

The best place to start that journey (in the whole country) is right here.

 

Just offering some friendly advice - if you are buying Strata titled property go through the AGM minutes and budget with a fine tooth comb.

A lot of the newer apartments may have faults that show up a few years down the track and if you're levies (sinking and admin funds) are not managed correctly or are not cashed up you may end up in trouble. Just go over all the details of the building and it's history.

Something I unfortunately encountered and think it's not emphasised enough for first time apartment buyers.

 

I'm so glad I came to this forum to get some opinions on our buying project.

It completely flipped it on its head! After a long discussion with the husband, we reviewed our priorities and agreed on buying a house on a block of land in a further suburb. It took some convincing for me, but I got there.

What convinced me is that we could be a mere 20 min tram ride away from our current location if we buy next to public transport. My own commute would stay the same because I'll have access to the citylink however it means an extra $2k in commuting costs.

Also having the option to renovate and make an average house into our perfect home is a very attractive idea. I didn't realize how limited we would be by BC rules.
@BCR I went through that and that is what gave me cold feet. Can't put a storage cage in the garage, can't put floorboards down even with proper sound proofing, etc.

Which takes me to my next question...
There's a art deco house on a 450 sm block not far away from PT. Seems to fit our budget. It's clean but hasn't been renovated. The garden is a jungle.

So let's say we buy it this house with the plan on doing renovations to it.
Should we purchase under an IO loan and after a couple of years, once we have enough cash in the offset account, use this cash to do the reno?
What happens afer that, do you revalue the house and enter a new "normal" loan?

I'm just trying to get my head around how we could do major renovations to the house if spent all of our hard saved $150k on a deposit.

Thanks!

 

Appartment got PI at 750 and subsequently sold at 775
8/86 Queens Parade Fitzroy North Vic 3068 - Townhouse for Sale #122562082 - realestate.com.au

 

There are a massive number of apartments being built in Melbourne CBD at the moment, with many more in the pipeline. According to an article in the AFR, many are selling at a loss.

If the market has a downturn, then it would probably affect valuations in the inner suburbs. The Fitzroy North place looked tidy, but it's nothing special, and Melbourne is full of similar places.

Moving out to get a house seems like a better idea. I'm not that familiar with Melbourne, so I can't make that many suggestions, but Yarraville has a number of cafés, prices are probably around your budget, and is a short train ride from the CBD.

The other thing to consider is that if rental yields are around 3%, you might be as well staying where you are for now. It'd be cheaper than buying.