VIC Full VIC write up.

Discussion in 'Where to Buy' started by Jake Milne, 21st Feb, 2016.

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  1. ross100

    ross100 Well-Known Member

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    Great Post
     
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  2. Jake Milne

    Jake Milne Well-Known Member

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    Doing well, thanks! Haven't been there for a couple of years, work with Little Skater from Somersoft now at Qura. What's new on your end Lloyd? (Maybe PM me)
     
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  3. Jake Milne

    Jake Milne Well-Known Member

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    Thanks so much Ross!
     
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  4. bythebay

    bythebay Well-Known Member

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    Hi @Jake Milne
    Great post, so much interesting info.
    From your stats, it seems Frankston LGA showed good growth over last 12months.
    Did that surprise you? What do you think drove this?
    I recall early last year you weren't crash hot for Frankston the suburb and believed other suburbs had more growth potentials. Do you still think that's the case in the short term (next 3 years) or long term (7-10 years)?
     
  5. sash

    sash Well-Known Member

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    Hilarious I must say...buying in the inner suburbs is a mugs game at the moment. The returns are sub 4%......

    Whilst there is talk about all this land in the outer suburbs...what people don't realise is that nothing is available build immediately such is demand.

    This demand is coming from immigrants who love new homes. The price of land has gone up by 20% just this year in some Southeast, Northern, and Western suburbs.

    There is no factual evidence to show there is an oversupply looming in most new House and Land areas. Further more...some builders are taking the **** and increasing their prices every qtr. ....such is the demand.

    For example...my build for Trillium (Mickleham) will cost 305k turnkey...same product now starts at 350k non turnkey. The land was bought for 124k....the land now is around 165-170k mark. Same thing in Officer....find a decent block for a 3x2x2 for less than 180k again bought for 144k. I locked my build cost in Jan 2016...the build cost has now gone up 5k.
     
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  6. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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    Buy and hold vs building equity. IMHO scales are slowly tilting towards building equity. If investing in the current environment, I'll feel more comfortable in (apart from not doing anything) reducing risk and consequently dependence on NG and CG. Active investing might be the shift the market imposes on investors.
     
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  7. Jake Milne

    Jake Milne Well-Known Member

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    Thanks @bythebay, always nice to hear from you.

    Yes, really solid growth for a regional LGA.
    Not surprised that it grew as most of Victoria did, part of me thinks the result as primarily due to Grandad's SS posts ;)

    In all seriousness though, the actual growth rate, unfortunately is not surprising, let me explain why.


    Data Sets

    Frankston is classified as regional whereas the next LGA closer to the city, Kingston, is classified as urban. So by default, Frankston is the closest bay side regional LGA to the city. Even Wyndham is urban.

    [​IMG]
    City of Melbourne Interactive Map (CoMMaps)

    If you compare Frankston LGA with other urban LGA's of which there are 24 it would be positioned at rank #15... right after... you guessed it... Kingston (13.1%).

    Noting Bayside LGA, you'd see that the 19.2% 12 month growth is a substantially better result than Frankston's 12.8%. However, there is also a substantial difference in price point.

    Which brings me to...​

    What drove the growth?


    Primarily the same as everywhere else. Low interest rates.

    Secondly, proximity to the city and beach, which is why it's in line with Kingston's growth and better than Mornington's growth (9.4%)

    Finally, if you look at this map you'll see that the more expensive a suburb is the darker the shade of blue:
    [​IMG]
    REIV - Median House Prices

    Notice how Frankston and Seaford are the cheapest suburbs that aren't land locked?
    They're both in Frankston's LGA.

    Lower price points make this area more attractive to outside investors and developers which pushes prices up.

    The area is also more affordable for the local population than neighbouring waterside areas. Median mortgage repayments here are 36% of median income. As a comparison, Mornington Peninsula's affordability rate is at 41%.

    Conclusion
    My stance is still the same. I'm not convinced that Frankston is a good LGA for people who have capital growth focused strategies that encompass negative gearing in combination with buying and holding. People with this strategy should focus on urban LGA's that have better fundamentals and less socioeconomic problems (like a 5% higher rate than VIC for single female parents).

    Other strategies here are definitely viable though; primarily land banking and development.

    61 Screen Street Frankston Vic 3199 - House for Sale #121892634 - realestate.com.au
    Example of two properties worth ~$610,000 each that could host 7 townhouses (already done 2 doors up) that would retail for ~$350,000 - ~$450,000. Numbers that can stack up.

    Cash flow strategies can also work in this area:

    SUBURB / Vacancy Rate
    Carrum Downs / 1.1%
    Seaford / 1.4%
    Frankston North / 1.2%
    Frankston / 1.9%

    SUBURB / Yield
    Carrum Downs / 5.1%
    Seaford / 4.2%
    Frankston North / 5%
    Frankston / 4.5%
    Source: Residex Suburb Reports

    The key though for CF strategies here is to make sure you purchase something that can have value manufactured. Renovation to create an extra bedroom or taking a run down home and installing new wet-rooms along with basic aesthetic improvements is key to creating equity as capital growth, long term, is likely to be minimal.

    Hope that helps :)






     
    Last edited: 24th Feb, 2016
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  8. Jake Milne

    Jake Milne Well-Known Member

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    I'm not sure what your point is with your whole post as it seems like a complaint about the building industry's pricing but with regards to the quote above, I think you just haven't done the research yet, it's all there, plain as day if you look.

    Hope that doesn't come off as rude, just bluntly stating that there is factual evidence of properties being built, properties being approved, prices of sales, volume of sales, current population, average persons per household, population growth, etc, etc, etc. Anyone can deduce rough housing oversupply/ undersupply figures if they try.

    If values had really gone up 20% then they'd be in the top LGA list that is provided. I'm not disputing that prices in H&L areas go up however I think you should be more careful when quoting statistics, for the sake of newer readers.
     
    Last edited: 24th Feb, 2016
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  9. sash

    sash Well-Known Member

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    Not rude at all....your opinion. Would love to hear your track record...

    By the same token....let me ask a question...you work for Qura....it offers buyers agency services....so question...what was the purpose of your post??
     
  10. Jake Milne

    Jake Milne Well-Known Member

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    Oh dear, the conspiracy/ alternate agenda suspicion arises.

    I don't think I need to justify why I've shared completely factual and unbiased information complete with sources for everyone to easily check themselves.

    Though, for you Sash I will. There is no mention of where to buy, or even that people should buy in Victoria, as clearly stated in the first part of the post. People can make those decisions for themselves.

    Additionally, I'm not a business member of this forum by choice as I feel it takes away from the purity of the content that we so freely shared on Ss. I've never once on this forum actively brought up my role although I'm happy for people to want to work with me, naturally.

    I support Simon and the relevant admins, and am thankful for their time, they deserve to be paid for hosting such a great resource. I may change my stance and pay for this forum at a later stage, but I don't feel comfortable with it yet.
     
    Last edited: 24th Feb, 2016
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  11. sash

    sash Well-Known Member

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    No conspiracy theories..just facts....I have bought in Werribee,...Officer...Mickleham....Armstrong Creek.....Hoppers Crossing...Melton South....working on 2 more deals...but not at liberty to post.

    Have you physically been out to some of the estates and the infrastructure being put in. For example you could not give away land at Truganania or Tarneit a couple of years ago for 130k ...now they are charging 200k plus for 300sqm....that is starting to rival places like Cranbourne. The number one reason for this is because of the infrastructure being put in. Some people say the Westgate is a car park...but now they are creating jobs locally.

    The other factor is Melbourne is expected to bypass Sydney in terms of population. Let me tell you I know heaps of people moving to Melbourne. A mate of mine was on over 250k in Sydney moved to Melbourne so they can have a decent house...and they ain't living in the inner suburbs but the outer North...still only less than 30 klms out.

     
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  12. Jake Milne

    Jake Milne Well-Known Member

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    Sash. You're not making sense. Please think before you write.

    First,
    Example of nonsensical conversation:
    What do your purchases have to do with my sharing of information?​

    Secondly,
    Why are you bringing up Truganina and Tarneit?
    What relevance do your anecdotes have to do with the initial thread's information?
    Is your intention to comment on Housing Oversupply in House and Land areas?​

    Finally,
    Let me set you straight with regards to Tarneit and Truganina, (see two complimentary Residex reports attached) summary below:​

    Suburb / 12 month Growth
    All Melbourne @13%
    Truganina, @7.3%
    Tarneit, @4.7%

    Tarneit and Truganina are in Wyndham's LGA.
    Wyndham grew by 7.0%. in 2014-2015.
    That's the lowest 12 month capital growth of any of the 24 urban LGA's.​


    Future housing supply:

    Tarneit is expected to grow in population to 65,711 in 2036.
    Average of 3.03 persons per house.
    That means there needs to be only 21,452 houses to accommodate every person.
    The forecast for number of dwellings in Tarneit by 2036 is 23,725.
    Vacancy rate is forecast to be at 8.8% in 2036.
    Hence one could deduce, immediate & foreseeable oversupply of stock.
    See graphs below:

    [​IMG]


    [​IMG]
    If you can't talk sense to me in an amicable fashion from now on I will simply ignore anything further you have to say.

    Sources:
    Residential development | Tarneit | forecast.id
    Population, households & dwellings | Tarneit | forecast.id
    Residex Reports attached.

    Disclaimer:
    A housing surplus, indicated by a positive figure for the Housing Surplus Estimate, causes housing values to stagnate or adjust slightly. Changes also cause housing formation numbers to alter. That is, if rental and housing purchase costs are generally unaffordable the population will have a tendency to increase the number of people per property. The only time a reasonably clear indicator of the number of people likely to be the basis of housing formation is at the Census date. Due to the above, it is not wise to aggregate shortages/surpluses year on year. It is better to simply identify or develop a broad understanding of what the current likely housing requirement is in the current
    year.
     

    Attached Files:

    Last edited: 25th Feb, 2016
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  13. MTR

    MTR Well-Known Member

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  14. JamesP

    JamesP Well-Known Member

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    Great post Jake. Although Frankston has so far grown poorly imo.. entire suburbs in the comparable Casey area have appreciated some 30%. This is my local area, more a place to live than invest, but has still shot way past Frankston/Seaford.

    These would be the last 2 area's in the east I'd look if money wasn't an option. Narre Warren, Berwick, Beaconsfield have all shot way past Frankston for good reasons. If you're looking at generalized data or LGA's you won't find this as Casey's median growth is distorted by a flood of new gen housing stock that comprise most the dwellings in the region.

    When you compare area's like Maramba Dr, Sweeney estate, Mansfield Dr to say the Queen St region.. or any other region in Frankston. You won't find homes selling hot for 550k+ that were only 290k less than 2 years ago. All the homes in Frankston that were 330-350k in the same period are only selling for mid-high 400's and have yet to see any over 550k. Homes in the Mansfield pocket were HOT 6 months ago, they went up from under 400k to 650k, some even selling closer to between 700-750k, one on the corner of Mansfield and Clyde rd sold for 907k! Was listed for 420k :rolleyes:
     
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  15. larrylarry

    larrylarry Well-Known Member

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    In your opinion why Frankston is not doing well even when it's near the bay/beach?
     
  16. melbournian

    melbournian Well-Known Member

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    Coz in my opinion it is a rough area I did my schooling in mt Eliza which is a suburb away from Frankston. Went back to do some work in a hospital close by a year ago and can't say it has improved. Hasn't change significantly from the late 90s. It may have a beach etc but for some groups it is not exactly a desirable place to live. No offence to anyone just an opinion.
     
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  17. larrylarry

    larrylarry Well-Known Member

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    Frangas crying out for gentrification.
     
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  18. melbournian

    melbournian Well-Known Member

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    I saw this that might be of interest

    Central Equity has spent $98 million on a property in Tarneit with the development potential for about 1500 lots, according to The Australian Financial Review.

    Central equity purchasing land in tarneit for 98 mil nearly 1 mil a hectare. They're known as the biggest apartment developer in Melbourne. they don't do something like this unless there is demand esp from their buyers.
     
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  19. S.T

    S.T Well-Known Member

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    Frankston houses 13.5% growth for 2015. Berwick houses 8.9% growth 2015 according to price finder. You're wrong.
     
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  20. Cactus

    Cactus Well-Known Member

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    Hi Jake some great info in your posts, but I have to agree with Sash on the state of the Melbourne Growth Areas.

    1. I don't believe developers and council planners will get the oversupply out prior to the demand surpassing the supply. This is based on my personal experiences not research.

    2. Data providers are behind the 8 ball. Sash is talking about what he(and I) are seeing on the ground. These price movements haven't even settled yet so won't be reflected in your residex reports. I'm seeing significant increase on values in the SE over the past 12 months. I bought a few blocks in Pakenham 9 months ago for $135k that would easily sell for $155k now and they still haven't titled so this won't show up yet. And when it does show up it will skew the values in Pakenham down unless it is resold. I bought in Cranbourne North some vlocks at $160k that are prob worth $200k now 6months later not yet titled.

    3. Again Sash is correct on building prices moving north unless you have titled stock (in the South East this does not exist).

    Just my 2cents.
     
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