TAS Hobart is absolutely flying

Yep Moonah is red hot! My parent's home in West Moonah which I lived in for over 20 years was on the market for about six months from mid last year where we kept getting low ball offers of around 350k. They settled start of last month for 430k on less than 550m2. Its on Twelfth Ave for those people interested. I tried to get my parents to hold off for as long as possible but unfortunately they needed the money for their dream retirement home where they brought a H+L package in Howrah for 400k (progressive payment though) and my sister has one too next to it for the 20k FHOG. Moonah was always going to boom next due its amenities with a Hobart council highly against development. I enjoyed living there because its close to the main bus interchange, close to Northgate and the foodie and large area along the main road, large store (no frills, food market, good guys) and retail range, and with a bike track all the way to the city (enjoyed the 40 mins ride to work). As an owner occupier I don't think I would go the city if I didn't work (MOST OF TASMANIANS ).

 

For those of you who own houses in Tassie, what are the Council rates, landlord insurance and water service costs like compared to the mainland?

Cheers,
Dave

 

My friend listed her house last Friday. Open Saturday. Over a dozen offers. All done by Sunday. Sale price was much higher than she anticipated.

 

@See Change could you please flesh out what you are doing with the 10 year averages? Are.yiu looking for those that haven't come.up to previous highs (if there's been a dip- as you've said in previous posts)? Or something different?

 

If you were looking at it from a share technical analysis view point , you can typically buy at two points . Either when the price makes a new high or where you think it's turning up for the bottom . In shares , if you buy at the bottom , you'll have ( or should have ) a " stop loss " , usually positioned just below the recent bottom. Goes below and you sell to minimise your loss

Property follows similar concepts , but because of the transaction cost , you don't get people trading in the same way you do with shares .

Reality is , depending on my aims and circumstances I will buy in different times in the market .

I like to buy at a time in the market when I think there is a good chance of a high percentage gain so I usually like to buy when the current average is below the preceding high but starting to move up . This is based on the assumption that in Australia most markets double each cycle .

We bought in manly and wynnum in late 2013
Wynnum Investment Property Market Data
Manly Investment Property Market Data

When we were buying there , we were buying nice places with the intention of keeping them long term . We wanted a choice of a variety of properties and wanted to be able to take out time to find good deals .

We bought in goodna in 2014
Goodna Investment Property Market Data
Prices were moving up , but still below the previous peak

We bought in Launceston in 2015
Launceston Investment Property Market Data
Same thing .

In both goodna and Launceston , while the prices were moving up , when I looked at properties on the web there was still a good range available , so at that stage you have time to look around , look for good deals and make low offers . If they knocked the offer back you'll have time to come back weeks late and make a further offer if you wanted to.

Check out these links for moonah in Hobart
Moonah Investment Property Market Data
New high , but nothing like a doubling .
Sqm is the other source I look at
SQM Research - Total Property Listings
So buying at this stage in moonah is the share market equivalent of buying on a breakout . Just made a new high and the stock on market is dropping .

If I was a betting person , I'd say that moonah would be one of the highest growth places in the next year .

However ..... the issue with the median figures quoted is they are a moving average for the last 12 months l . So when you look at the average for may this year , it's not the average price for sales in may , it's the average of prices for the 12 months finishing at the end of may .

If you really want to know what's happening you need to talk to agent and track what happens to properties . I start looking at a wide focus ( 10 year average ) and then zoom in to a close focus .

We recently tried to buy in moonah but just couldn't find a deal we were happy with . We also looked at Glenorchy but same thing . We ended up buying a bit further out in Claremont . My take , talking to agents was the wave was just starting to move out to there. In Claremont we're able to buy a place for under 270 which is renting for 330 so minimal holding costs . We could have paid more and bought in moonah , but it would have been moderately cash flow negative and with the number of properties we have , I try to avoid that .

The median average graph for Claremont isn't as clear cut as moonah , but the stock on market is dropping rapidly so I'm confident it will follow places closer to the CBD .


Cliff

 

@See Change With your Manly purchase in 2013, how did you know that the trend was going to breakout? Previous high peak would be 2008 and since then the trend line was just moving horizontally. So why did you correctly pick 2013 as a good time to buy as opposed to 2010 or 2012?

Also when you say prices double every cycle, do you mean they double from the previous peak or from the bottom after the peak?

 

Generally doubles from previous peak .

Eg Mt Druitt in current cycle

2770 going crazy
That whole thread makes interesting reading . Early on monalisa expressed surprise that some one would pay 240 for a house in Mt Druitt

The median price for Mt Druitt is now 630 ( though a typical houso's suburb like Hebersham in in low 500's ..... so that's more than doubling and the average yield is 3.2 % .

The price graph of Mt Druitt is a classic example of where not to buy .

Manly in 2013 ?

It's a nice area . At that stage we wanted to buy nice properties in nice areas with the intention of holding them long term . We could also buy those with returns of around six % gross return which is not normally a return you can get in nice areas.

It had peaked a few years before and had formed a base for the previous five years and each year was closer to moving up .

At that stage , based on the graph I didn't know when it was going to pick up . Talking to agents at the time they were saying that the market had picked up in terms of demand , time on the market was starting to decrease but prices hadn't picked up much . If I'd looked at the graph and seen a peak two years before I wouldn't have bought there .

If you look at the stock on market graph , you'll see that the stock was dropping in 2013 but then increased after 2014 and is now below the the bottom level in 2013 .

http://sqmresearch.com.au/total-property-listings.phpmode=p&postcode=4179&t=1

I don't know if Manly is booming yet . I haven't bothered chatting to any agents recently and not many forumites seem to buy there .

Most of the buys I make don't boom straight away . Sometime you will see a place that is about to boom but if you consistently wait to buy at that point it can be hard to buy reasonable properties especially if you want to buy a few . I prefer to buy when there's plenty of choice and vendors are open to negotiation.

What I do try to avoid are places that are still falling or are a cycle away from booming

Cliff

 

Bought a property 12 months ago to live in and to flip. Cosmetic makeover: Paint, deck, landscaping, light fittings etc. professionally styled.

Suburb: Mount Stuart (Inner ring).
Property: Weeatherboard 3br, two sun rooms, 1 bathroom, views.
Paid: $468k
Costs: $50k Stamp duty, Agent fees and cosmetic makeover costs.
Sold: $620k cash offer. Migrant from France. Three offers all above $600k.
Profit: $100k no CGT as lived in property.

Was listed for sale for a couple of days before open home. And had three other people who wanted to put offers in following week.

The market is going hang busters down here. At the moment I believe the competeion is being driven by cashed up investors. At lest 60% of properties that are sold within the inner ring suburbs are being advertised for rent the following week after settlement. I follow the market quite closely. We are living in a rental from bought by Melbourne investor.

There are still a large number of owner/occupiers trying to get into The market, but in general they are being outbid by investors. Locals generally don't have the capacity to offer above $500k and on demand properties around the city are selling in the high fives and six's at the moment.

I think there will be a significant drop off over the next 6 months. As once the investors start to fade out due to tighter regulations and looking into other markets the majority of buyers will be locals with a lower ceiling limit. Prices will slowly correct.

 

Hi John

IMHO it's only just started .

The regulation changes were brought in a while ago and didn't stop Sydney or Melbourne .

Consider the size of the markets in Sydney and Melbourne which are at or close to their peaks . Then think of how much money is needed to move Hobart by similar amount .

The changes in lending aren't aimed to stop lending , just slow the growth .

At this time would you pay 500 k for a 3 % return or 270 for a 6 % return in Claremont ?

Some where like Moonah has only broken above its previous peak in the last year .

Hang on to your hat . If you're out of the market , thinking it will correct and you can buy in cheaper , you may be disappointed .

Cliff

 

Great comments @John Ferguson and @See Change , thanks for your input.

It is interesting these results are coming through in the traditionally quieter winter months (although I'm not sure if there are 'quieter' months anymore....)

 

@See Change Thank you so much for taking the time to type out all of that. Very kind of you.

 

John
Your making some dangerous assumptions regarding tax position
You might want to look into it a bit deeper ..
Cheers
I do tend to agree with your comments on potential price ceilings.
The locals are limited so any further inner growth would be dependant on melb/ sydney i reckon
Inner city may see some retirees from mainland but outer areas might run out of steam once buying price vs yield is only 5%

 

Off topic for Tassie but I think if Manly Qld is anything like Birkdale, it hasn't happened yet. Still flat. But I'm seeing good things in Scarborough over in Moreton Bay council. Looks to have moved quite a lot. Very hard to get better prices there now.

 

I would always buy the $500k 3% return if my cash flow allowed it and I was in accumulation stage. I would never buy property in Claremont as an investment for a 6% return. If I was looking for yield I'd put my money in shares. In my opinikn property is only good for a less volatile option of wealth accumulation.

In 14 years (2 cycles) Claremont has gone from median price $127k to today $233k. That is an annual return of less than 5% - 2% inflation - tax on income. Personally with all the hassle of holding property I don't see the point of investing for those returns in a suburb such as Claremont just to get a yield of 6% minus holding costs and interest. So you're basically holding an investment for between 2-3% growth not taking into account of building upkeep.

 

I see a lot of people (not only in Hobart) chasing less than ideal areas to invest in because the primary stomping grounds have become more unaffordable/expensive.

Personally, I would rather wait for the hype to die down in places like Moonah, West Moonah, Mount Stuart etc (if we're talking about Hobart) - and it will die down - then dive in at an advantageous time when the cycle is at an ebb.

 

Kicking myself for not purchasing a good property in West Moonah last year.

 

Fine John

Time will tell . The reality is it's gone sideways for the last few years and that's part of the reason why I've bought now .

What you're describing is typically what happens every boom .

Maybe I'm wrong this time , but every time I've bought interstate ( with the exception of Goodna , no ones given me any crap on that ) locals have ridiculed my expectations . Once the market starts moving strongly it rarely stops .

We already own a block of four units in New Town which we are keeping long term . My expectation with Claremont is that we'll get good growth in the medium term . Sell it and help pay down other properties .



Cliff

 

Easy to see things in retrospect .

But don't stop that from buying somewhere now , where ever it is .( as long as it's not in Sydney .....)

Cliff

 

Interested in the good old West Launceston or thereabouts, but sorting out better rates at the moment to improve my cashflow. Thanks for the many tip/ information of the area btw.

 

Wasn't giving you crap. You put up a scenario and I gave you my response. That's what this forum is about.

I can't tell what Investment will do what and when. All I do is based my increment choices on historical data and trends based around my investment strategy. Everyone is different in their objectives, goals and needs. Im sure people can make money in Claremont or any suburb, if they buy well below value, add value or get lucky.

And data has historically shown that when Hobart booms the outer suburbs will see some growth for one to two years due to undersupply, then developers subdivide land, offer h&l packages and there is a massive over supply.

So you just need to be careful in these outer suburbs as the only thing driving growth is a temporary undersupply.

So you're making a large investment with high get in and get costs for maybe 10-15% profit in a 12 month period. Them if you sell that 15% is lost with associated costs. And if you hold Then the next 10 years is flat until stock is obsorbed.

Just my investment opinions and what I consider when investing in property.

Best of luck