VIC Invest in inner suburb units/apartments

Hi all,

I'm a starter in property investment. I read/heard from some places that investing in inner suburb units/apartments (I think suburbs within 10km radius of the CBD like Kew, Hawthorn, Surrey Hills are considered inner) would more likely to guarantee capital growth than investing the same amount of money to hoses in outer suburbs like Pakenham, Melton, or even closer like St. Albans, Sunshine.

However from price trend over the last 10 years provided on realestate.com.au I can see much more growth for outer suburbs' hourses than inner suburb unit/apartments so it's very unclear to me how good investing in inner suburb unit/apartments is.

I'm not sure if I missed something. I was wondering if there is anyone here who had invested in inner suburbs unit/apartments and what your experience/thoughts on that?

Thanks

 

What you've missed out on is the massive boom from 2015ish to now

Units, IMO, will grow faster than apartments in general in Melbourne. Land appreciates, structures don't. Art decos may be the exception. If I were you, I'd hold off on buying in metro Melbourne, things are cooling off at a fair pace, wait till 2019 and you're almost guaranteed to pick up some fire sales in the outer suburbs (think Wyndham Vale/Brookfield/Clyde/Wollert etc). There are still some good deals out Geelong (not Corio/Norlane) or Ballarat (not Sebastopol etc) ways.

Keep researching, trawl these forums like an ocean trawler and ask probing questions - best way to learn. Welcome to PC!

 

Who told you that? To the contrary investing in inner city suburb apartments is a far worse idea than investing in houses in the middle rings.
The Melbourne CBD has a serious oversupply issue and the suburbs you mentioned have and will very much in the future feel the burden of this oversupply.

Your money needs to be spent in the middle ring housing market. But stay away from areas such as Melton with land a plenty.

 

Thanks Westie for the advice. Much appreciate it. I was guessing so as well. However I found it pretty hard to compare the growth of units with that of houses because on realestate.com.au there are 2 price trend graphs one for houses and the other for "units" but I guess its for unit/apartment combination (if not then where is the one for apartments) so that is not quite accurate. I was wondering if you know any other source to find out about the price growth trend of units (excluding apartments)?

 

I read it from Michael Yardney property investment book and also heard from a couple of my colleagues but I couldn't make sense of it so that's why I was seeking for some opinions here

I think what you said makes a lot of sense. All the data I found actually supports it.

 

I could write a thesis to support the argument. Anyone who spruiks inner city apartments either has A) No Idea or B) Vested interest.

It’s also very shortsighted to look at purely capital growth unless you plan on being a negative gearing speculator. Apartments may typically have better yields but your betting on nothing but organic growth....to me that’s a dangerous game that sounds easy enough when you have had the boom we have.
A house opens up so many more options! Reno, subdivision, develop, dual occ so if the growth doesn’t come to you, you go to the growth.

I’ve been preaching these forums for years now saying the north west of Melbourne is the most undervalued real estate and even though the growth has been huge I would still have my money there. Just be prepared to weather less desirable tenants for 5 years

 

North and West of Melbourne or North West of Melbourne (Sunshine, St Albans, Caroline Springs, etc)?

 

North West. Starting around the Sunshine, StAlbans (yes technically fairly West) areas but swinging up to around Reservoir.

Get a pencil and connect Reservoir to Broady to Hillside to St.Albans and then connect that dot and the top dot into Melbourne CBD. Shade everything in between and this is where my focus would be. Then work out your budget and move out to those areas to look for a house.

 

Can you explain why North West? Not North, not South West?

 

I wouldn't be so hung up on this sorta data to plonk my money on. Research suburbs, probably like how @albanga said, pick a house that fits your budget. Have you narrowed down on areas? Budget? Goals?

 

Because these areas already have so many key drivers in place. Great infrastructure, CBD access, hospitals, schools in certain parts, shopping precincts and so on.

Take Broadmeadows for example. Very easy to dismiss on stigma alone and no doubt when you go there you see some sorts kicking around. But peel back the layers of that and take a closer at how established it is and the amenities it has in place. Gentrification of this area is inevitable (and has started) and when the rents rise and the riff raff move further out then it becomes more disireable and hence property prices increase. You can still get a splitter block in broady for 600k last time I checked.
Gimme that over an inner city apartment ANY day of the week.

 

Of course, I am not talking about apartments. My question is why you choose NW, not North (Lalor, Epping) or South West (Werribee). I do have stock in Broady so understand its potential. That's why I am curious when you pointed to NW only (the like of St Albans).

 

Because that corridor is just so much better established in terms of amenities and infrastructure AND has already been fully developed. You can’t just go buy a block of land like the other areas (especially) Weribee. When there is land for sale growth will usually always be suppressed.

 

@Westie I have a budget of $650k, goal is to invest for long term so I focus on capital growth. I'm willing to take negative gearing (can't avoid really unless it's an apartment/unit but that would suffer capital growth for sure). I've shortlisted a couple of western suburbs like St. Albans, Deer Park, Altona Meadows, Hopper Crossing (I have another thread about this here: VIC - Western suburb options so if you're interested please give me some advice on it too ). I'm not familiar with more North suburbs like Broady @albanga mentioned so will have a look at it as well.

 

I have been looking at broadmeadows too for my first IP, but it doesn't seem to have many (good) stocks and also house price is pretty high already! Do you think it will continue to grow? @albanga

 

Michael Yardney prefers an apartment in a blue chip location over any other type of property in a non blue chip location (inner ring), not saying whether he is right or wrong but might help to understand what he has said compared to data and comments above. He doesn't place as much emphasis on things such as gentrification trends, where is infrastructure spend going in the future etc etc compared to what others may place on it. He's all about getting into the blue chip areas, doesn't matter whether that be through buying an apartment, unit or house , but thats better than anything else further out to him. Personally my thoughts and strategy are around picking areas that will outperform the average, similiar to that mentioned above by albanga

 

Hi @Kone my experience with Broadmeadows is limited to driving around the streets a couple of Saturdays ago to check it out - currently looking for a property for me and my partner to live in for a year then rent out long term. I like Broadmeadows as its got a well established shopping precinct and there is definately things happening there in terms of old stock being knocked over and new stuff built. Access to parts of the suburb due to the river and train line can be a bit annoying I found. Glenroy is becoming more desirable and prices there are now very high which will force a new type of person to consider settling in Broadmeadows, you may have to put up with a few troubles with tenants for 5 or so years but i think in the long run it will see a big transformation from how it is now. Banking something on a plot of land now could give you something to work with in the long term too if you want to try and accelerate your journey with a development. My partner felt it was a bit unsafe for us to live in Broady so we won't consider it, if we were just buying a pure investment that we weren't going to live in initially then Broadmeadows would be up near the top of my list. The prices are 'high' there but it's all relative, it's still cheap when compared to nextdoor neighbour Glenroy which used to have a terrible name but is improving as i mentioned

 

Agree Broady is ripe for gentrification. Surprised it’s taken this long but definitely medium to long term potential.

Some info here: Unfairly branded: Locals says there's a new Broady

Can also take a look at Jacana. All the amenities of Glenroy & Broady, but much nicer then Broady.