VIC Full VIC write up.

They were saying that in the 90s abt frangas, Footscray, Brunswick, Richmond, Preston though the rest has taken off but with an hour+ on the train it doesn't help

 

Just saw a titled block in Pakenham is asking for $190k for 600sqm.

 

Couldn't tell you Larry! But my personal belief is it's held back by it's station and main precinct. Many of the homes/shops are fibro-esque, while the location is imo superior to Casey it doesn't have the same vibe. Apples and oranges, Frankston reminds me of Dandenong more than Berwick. I believe both are better located than Berwick/Beaconsfield but are comprised of inferior housing stock and amenities (moreso the cosmetic appeal/vibe around the amenities).

Also I'm hoping it's simply behind Berwick ripplewise (as is the area we've bought in). Frankston, Upper Beaconsfield and Pakenham all have 4% 10yr averages, and seem to historically go up after Berwick (Pakenham last peaked in 2012), Berwick/Narre usually go up once inwards of the Eastlink become too expensive. I'd assume Frankston and Pakenham would grow line in line or Frankston slightly beforehand. Demographics of these area's are usually owner occupier/middle class families (and FHB in the new estates), whereas Dandenong (not sure of Frankston) is more investor and multicultural driven.

I'm not sure how much longer Melbourne has, but it is my belief it's very outskirts are yet to catch all their growth. Even though Melbourne has clearly peaked I have faith these area's will catch up also, as they seem to every time!

 

Can't wait to drive around these areas and see for myself.

 

Excellent research and delivery @Jake Milne . So much useful information for me to digest. Information and a considered opinion are so powerful - can be taken in, thought over and added to or subtractracted from as seen fit.
I whole-heartedly agree with your projections for continued growth in Vic and Melbourne this year and next. Putting it very simply, it's still not 7 years since the last peak. Thank you for all the graphs, especially the one with the peak clusters - that is useful for me.
I have never found you anti-Frankston and pretty much agree with things you've said in this thread and others. On the one hand the yield is lack-lustre when compared to a lot of places in Australia e.g. Parkes NSW at least 6 or 7%+. On the other hand, 4.5% beats a lot of Melbourne.
I would not call the capital growth in Frankston either steady or exciting, and much of Melbourne has had great CG. On the other hand, the growth is healthy and there is a good mix of investors and fhb's clearly interested atm. Not bad at all for the buy-in price. Better than many. Certainly I am very relieved to see some real growth occurring at last.
Thanks again for presenting that info.

 

I think different opinions expressed here helps a lot when I'm there for the Easter long weekend.

 

Those statistics view Berwick as the suburb it is now in 2016. That includes all the Cranbourne homes along Clyde rd (south of the rail) and beyond Eden Rise. They also include Timbarra, and half of Ernst Wanke. Which have remained stagnant or relative, because they are Narre Warren estates under a Berwick postcode. These paddock estates make up well over 60% of Berwicks housing stock, probably far more.

If you can picture real Berwick (how it was before 1990) you'll find every estate has grown exponentially more than Frankston. Frankston is all it was before 1990, with no additional stock to distort growth stats. Take a look at those pockets I mentioned. Once you zone Frankston Nth into Frankston as you do Narre/Cranbourne into Berwick, it doesn't look as impressive. Berwick is 2 suburbs, one cloaking the true growth of the other

Olivers Hill also comes under a Frankston postcode. I'd argue it has no relation and doesn't speak for the Queen St central homes that are generally 1/3rd of the price! I'd argue growth in Olivers hill would ripple to Portsea before it drives Frankston central!

 

Guys, thanks for contributing!

@JamesP - I agree with you that Frankston's overall capital growth is not amazing, however as a LGA last year was quite good; I'd not buy there personally for CG Buy & Hold. Also agree with you regarding, Berwick / Narre Warren / Beaconsfield. I mean just look at their median's now. That being said, there are plenty of blocks going for $550k+ in Frankston now, providing they've got development potential (I'm actively looking for sites there at the moment.)

@larrylarry - Hope you enjoy your Melbourne trip!

@WattleIdo - Thank you, glad we're on the same page, really appreciate your feedback! Completely agree that AUS has better yields on offer but yeah, Melbourne, not so much 4.5%-5% is good here.

@melbournian - you're right about Frankston. Still has the stigma, still has shady types everywhere. Stats also support this too.

@Caltan - I disagree. The developers create oversupply and the council allows it. The only thing stopping price corrections is that the developers are the larger companies that have the capacity to hold lots of vacant stock and drip feed it to the market as they seem fit. The growth the area will experience in price is somewhat developer controlled.

I do agree that stat reports lag behind actual on the ground results. That being said Tarneit isn't exactly a new H&L area anymore, it's been built up for years now, houses as far as the eye can see, and the growth has been very below average.

As per your last point, and Sash's opinion that H&L areas prices go up; I do agree, and actually already said that in my earlier post before he argued the point - yes, prices will go up. They will not out perform other areas though because there will be too many houses and supply vs demand is controlled by the developers rather than having real growth like in areas that already have the amount of dwellings relatively capped. There is always going to be an oversupply as long as developers have the land and population growth to support building more houses. Still, to end on a positive note, people who have bought there will get growth, albeit slower than in the Eastern suburbs.

 

Keep it up, @JamesP - no need for GrandDad's Frankston spruiking with you around.

 

@Jake Milne
Just a simple thank-you for an absolutely fantastic factual update.

 

@Coota9 - Simple yet rewarding - thanks for taking the time to read it and comment too!

 

@Jake Milne

Another thing to consider is development land is now over $1m/ha, DCPs in some areas are as much as $300k/ha, Everythinf bought to develop now has GAIC at over $100k/ha. Civil construction and Consultant expenses go up every year. Interest rates can only go up. Developers wil no take any more presure on their margins. GST can only go up.

All of this will put upwards pressure on price coupled with the ripple effect from the inner suburbs.

i accept you say it will grow but not more than inner established. I don't necessarily disagree. However consider that what 10% growth to a $400k house and land package vs a %10 increase to a bayside property. Which is more sustainable in the long term?

 

Agree with everything you've just said.

Sustainability, East vs West that's an interesting one.
Consider Toorak for example, arguably Melbourne's most inaccessible property market.
In 2012, I listened to clients and others say that Toorak was too expensive and that it had peaked. No longer affordable. Negative growth expected from then on.

2013-2015:

Median prices went from $2.7mil to $3.6mil.
19.6% growth in 2013-14.​

Toorak

Median income is $8,590.53 per month.
Mortgage repayments are $2,700 per month
Affordability is 31.4%.​

Tarneit's affordability is 29.4%.
A nominal difference of 2%.

I'd also suggest that Tarneit's population growth, primarily coming from overseas migration may reduce the median income levels into the future, decreasing affordability. However that's just speculation.

Guess we'll just have to see.

 

@Be Developer do you have a link to the Adelaide thread, I can't seem to find what you were referring to?

 

Some valid points there.

IMHO though Toorak Portsea Brighton type suburbs will continue to grow strongly due to the fact we will start seeing a greater divide between the rich and the poor. Therefore always enough rich demand.

My thoughts are that ire the middle income suburbs that will see reduced growth in the long term. Whisky the lower cost suburbs begin to catch.

I think we will have three distinct tiers of suburbs in each geographical corridor. Inner belt will grow greater than middle belt. Middle belt will grow less that outer belt as a percentage but remain more aspirational than outer belt and therefore still more expensive but with less capital growth from today. Outer belt will grow at a quicker rate than middle until it can make the value proposition of middle better.

 

I purchased my development site in Croydon in June 2015, 1170 sqm for $520,000, they just sold similar site around the corner, similar size at auction 2 weeks ago for $760,000.

From my experience as a developer you make the money on the land, even if markets turn as long as you get the timing/price right it will protect your bottom line, get this wrong and a BIG OUCH

 

~35% return in 7-8 months, nice!

 

i think suburbs which income levels are below what would sufficient to service the loans would be the ones to worry abt - if sunshine goes crazy and sell blocks of 600sqm for 900K that would be rivalling even suburbs in the north and east. and can be something to worry abt. established areas in the east is unlilkely to have a huge impact though there is some weakening a bit. I saw maidstone sell 560sqm or something 20 Bosquet St, maidstone for 560K yesterday with plans for 3 townhouses. That is a crazy low price. I went to many auctions in maidstone and there and 484sqm sold for 632K last year and 725sqm in maidstone sold for 900K couple weeks ago. So if it is not an error it seems prices are slightly adjusting. Same in preston, where 725sqm of land in preston passed in at 655K though it was 2 meters from the train line.

I agree with H&L seeing growth in western suburbs i too hold a few there as that is the only affordable place for anyone to buy. my ptcook place was 375K last year and now is 430-440K so it's not too bad i presume.

 

Great post and very detailed awesome job jake

 

Glad you liked it, thank you!