VIC Geelong 2018

Got to disagree there...the market still have some ways to go....consider this you can still get into Geelong for well under $450k under 7 klms of the city. I have one in Melton Sth and it is worth $450k.....the other factor is I am stunned at how fast the beach side properties going. For example places like Clifton Springs are now flying out the door......you could not move these only 12 months ago.

 

Not sure if people do this as part of research but take a look at properties to rent on Domain and then track it over time.

Here's what's happening that shows a weak rental market: prices are being dropped. More places are pet friendly. Prices are flat from a year ago or lower. Some rentals are sitting vacant for weeks to months.

Then you can look at sale prices and see the rent yield. There are stupid sales going on. Dumb bubble money buying places that have 1% or less yield and are already so inflated it's hard to see how capital growth is going to happen.

When I can rent a million dollar property for $400 a week... there is something bad happening there.

There are people trying to rent out Armstrong Creek properties for $400 a week... but you can live in the city or near to it for that price... and often get a better house (ducted heating, etc).

I've seen a few properties now get sold and then thrown to the rental market... then they sit until the rent is reduced.

I've also noticed a hell of a lot of Armstrong Creek properties up for rent now.

 

Can't quite agree with this post.....yes some properties may sit if the vendor is unrealistic.

But the demand for Armstrong Creek is owner occupier driven. Primarily by people who commute to Melbourne as it is close to the ring road to Melbourne. The other side is because Torquay prices are high a lot of retirees are buying there and be within 10 minutes of Torquay and 15 minutes of central Geelong.

The other thing people are not realising is that Geelong is growing at about 6-8 people per year on average. That requires about 2500-4000 homes per year. This supply is not being met.

 

Yes agree price is still relatively affordable from price perspective, especially if you compare with where Melbourne is today. To that extent it may still suit owner occupier needs however for investors it's all about returns - measured by CG and yield.

CG might have a bit more puff to go and we have no idea when it will stop. However the rent is not catching up as there are more investors trying to rent out their IP. And if rent stays stagnant, that means yield will get worse and worse. In my reply to ARTIS we assumed an investment scenario of $400K purchase price with $300/week rental which is about 3.9% gross yield and it seem to be continuing trending south. At the current interest rate this is already negatively geared before tax, what's going to happen to holding cost when interest rate does goes up by 1, or 2 bp at some point in time in future?

Cheers,
David

 

Hot off the press and I'm sure @David Shih will be rubbing his hands together
Eat, pray, love — and invest in Geelong - Smart Property Investment

Not surprisingly really with credit tightening and median wage around $50k. I really can't see how you can go wrong investing here for the next year or two.

 

Agree with @David Shih regarding yeild.
Unless you got in early enough to have some capital growth (or value add via reno/improvements, yeilds will remain low or drop.
This is an increasing problem for investors, due to increased development (units and subdivisions) equalling increased supply of housing with a decrease in demand for rentals, sydney in parts is already suffering.

@sash & @euro73 have both been advising of getting as close to positively geared proporties for some time, we are starting to see these changes and when eventually interest rates increase yeilds will tighten further.

Like a boy scout "Be Prepared"

 

I will be a boy scout on my best behaviour!

 

Hi David,

Thanks for the detailed sheet, it is really helpful.

Estimated Expenses Weekly Monthly Annually
Council Rates $ 23.08 $ 100.00 $ 1,200.00
Strata Fees $ - $ - $ -
Water Rates $ 13.94 $ 60.39 $ 724.72
Insurance $ 21.15 $ 91.67 $ 1,100.00
Management Fees $ 21.00 $ 91.00 $ 1,092.00
Repayments $ 432.38 $ 1,873.67 $ 22,484.00
Landlord Insurance $ 15.38 $ 66.67 $ 800.00
Estimated Totals $ 526.94 $ 2,283.39 $ 27,400.72

The estimated expenses have two insurance factors,

can you please suggest what is the other insurance for?

regards,

Arti Sehgal

 

Perhaps building insurance and landlord insurance?

 

One is building and the other is landlord insurance. They are separated as building instance will not apply to apartments.

Cheers,
David

 

Thanks David and Hieund85

where do we get these figures from.

do you recommend any company over others?

 

The ones on my blog were originally taken with my QLD Logan shire investments where council rate are on the high side (they charge an investor premium ) and also PM fee are at 8.5% ex GST.

If you're doing feasibility for Geelong suburbs then council rate should be cheaper but I would still use these ballpark figures to give you some idea. Personally I like to calculate using worst case numbers but that's just me

P.S. If you like to know the exact figures and company/tradies I use just PM me - happy to share

Cheers,
David

 

Demand for office space puts Geelong developments in focus - realestate.com.au

More employer demand = more office space required = more high rise offices = more employment opportunities and jobs growth! Keep them coming

Cheers,
David

 

Hi David,

Thanks for explaining it so well.

yes I will be keen to get those figures and contact details of you.

Cheers '

Arti

 

There are a lot of insurers providing building and landlord insurance products. I have seen people recommending Terry Scheer and EBM here and I personally use EBM. Remember to ask for a discount for Property Chat member .

 

Interesting read, thanks David.
Peter's comments regarding existing businesses expanding and the influx of new businesses & agencies (Worksafe / NDIS) provides for an optimistic future for the Geelong CBD. The new tower at 44 Ryrie St as well as 1 Malop & 13-19 Malop Street are fantastic examples of new architecturally striking projects - certainly a beneficial change in the area IMO.

This piece written in Sept 2017 discusses potential developments to cater for 80,000 new residents over the next 20 years. I would only have assumed that large-scale developers perform extensive due diligence before investment and construction in a new region.
A new skyline and a new era for Geelong as builders look up - realestate.com.au

 

Ah I actually remember that article! Not because of the actual content but because of all those artist impressions which reminds me of glossy brochures...thanks for bringing up the memories

It's all good news, plus what @Dave3214 post today about the new Barwon Health North facility at Norlane - 80K new residents in the next 19 years should certainly be an achievable target.

Cheers,
David

 

Great news and thanks for the articles @David Shih and @Dave3214

I can see Geelong becoming Melbourne’s equivalent of Sydney’s Parramatta at some stage. Here’s to more glossy Geelong artist impressions!

 

Corio Bay >>> Parramatta River

 

I know Whittington gets left out of the Geelong discussion quite a bit (I have an interest there so I keep an eye on it) but it'll be interesting to see what this goes for.
55 Regent Street Whittington Vic 3219 - House for Sale #128664286 - realestate.com.au
It sold 12 months ago for $325k and I don't think they've done much more than a coat of paint.
Handy little profit