Melbourne best performer 2016, to overtake Sydney

Totally agree with you, a strategy that is simple and works well, especially if developing.

Buyers like new shiny, they want affordable housing, this does not mean cr$p finishes/specs.

I think the expectations in terms of specifications need to be considered carefully, buyers want stone benchtops etc. years ago these were considered high end, now its the new norm.

Also another major consideration is that bread and butter areas will always be easier to sell because there will be far more buyers in the pool and also less risk if markets turn.

 

Re affordability - throw in the fact that all governments are now giving grants geared towards newer dwellings and you suddenly have the government helping that target market purchase these sorts of properties.

I was able to sell all of the dwellings @ Penrith so quickly because first home owners were buying properties with only a $14,000 deposit!

They were getting $15k FHOG (now its $10,000 like VIC) and paying zero stamp duty. This is at a 97% lend.

The funny thing is that the penny hasn't dropped for a lot of these developers that its not always best to build bigger and better. Thats why Im a big fan of what @Westminster is doing with the one bedders in WA.

 

Agree about smaller is better.

But doing developments in current cycle in NSW is fraught with risk...unless you are bringing a sharply priced product to market. Lots of vals are not coming up to scratch on off the plans in NSW.....watch this space...

 

But how small is too small though? I noticed that there are tons of 2 bedder homes/townhouses these days. Not so much 3 bedrooms? I think from investment point of view, 3 bedder homes is the best type of investment?

I was also tempted by some 4 bedders but I noticed that if it is a 4 bedder, most expect a second living room area, pushing the prices up

 

yup bahmi and pho in footscray. I wouldn't live in footscray though not really to my liking but the demographics are predominantly Vietnamese who are hard core savers. you talking guys who can work 80 hours a week to save money to pay off stuff and they're reknowned for buying in bulk numbers. A previous colleague of mine had 3 families buy a block of land in kew subdivide it and have one each (while in the meantime 3 families cramping into a 3 bedroom house. I was watching maidstone a bit which is the suburb after footscray and it's just crazy.

 

With the ageing of the population people want low maintenance..but still want a 3x2x2 with all the mod cons.

They also want very low maintenance gardens....this why artificial turf and stone gardens are making a comeback.

 

Yep that's it, Bahmi. The best, also the corner druggy hangout. Smack heads everywhere.
I also wouldn't want to live there but my work mates do, they love it.
I do love the all the great food restaurants around though.
I like Maidstone, closer to highpoint shopping centre is fine.

 

it is crazy in Melbourne - if you look at new brand townhouse units in 3x2x2 now in clayton, (800k-900k), burwood (900-1mil), mt Waverley(1.2-1.4 mil), Doncaster (900-1.2mil)

 

Yep...which presents lots of opportunities in cheaper suburbs...particularly..if you can put a product out there for 350-450k in Mlebourne now with all the mod cons with 40 klms of the city.

I needs to be well designed and have quality fittings...people will pay a small premium for this up to 50k for this .

 

Thanks @Shahin_Afarin . It's funny that Melbourne embraced smaller dwellings like 2 bedders quite awhile ago so it was bound to eventually catch on in WA It's been 3 bed or get out of town for so long here but the demographics of divorced families, waiting longer to have kids, downsizers, no sizers (minimalist people) etc etc who still want their own plot of land and not live in an apartments. WA is lucky to have a city wide policy giving density bonuses for 1 bedders to help achieve more diversity and affordability.

 

Yep massive change in demographics - from a finance perspective I am writing a lot of owner occupied loans in Sydney and finding that most are first home buyers and a lot of these buyers have migrated from overseas in the past 3-4 years. Now this is a limited pool of people when comparing to the total number of people purchasing but nevertheless its just my personal perspective.

These buyers fall into one of 2 categories; cash/deposit rich and servicing poor or servicing rich and equity poor.

So they have only say $40k-$60k deposit (which was a lot 4 years ago) and have been completed priced out of the market. They want to purchase a property and are sick of renting. Also with rates being so low its cheaper to own. They have excellent and secure jobs and can borrow up to $800k plus but again the deposit side of things is holding them back.

Then you have a lot of couples earning around $100k total income in the household (either the husband is earning $100k or they are both earning around $50k each) - servicing restricts them to a circa $450k budget.

These guys also don't want to live in a 200 unit complex with poor finishes.

So the sweet spot is the $350,000 to $450,000 market. Again its pretty powerful proving a product that allows first home buyers to purchase their first property with only $20,000 deposit.

This is why MTR has been so successful in selling her townhouses in Melbourne.

 

Good good to hear that info on demo that your lending too.
The bread and butter sweet spot 350-450k spot on.

So areas that are still relative distance to Melb CBD under 450k. Not sure if I've missed any.
So thoughts on best buys?

Frankston,
Carrum downs,
Cranbourne,
Broadmeadows,
Jacana
Dallas,
Medow heights,
Roxburg park,
Craigiburn,
Werribee,
Hoppers crossing,
Tarniet,
Wyndham vale,
Kings park,
Deer park,
Laverton,
Hampton park,
Melton,
Sunbury.

 

good list, will add Jacana

Guys don't worry too much about areas that are on the nose, I make money from areas that people avoid.

got to see past the cr$p, areas change, look at infrastructure, proximity to city and median prices of surrounding areas.

MTR

 

Just for fun as I had the day off, decided to start looking into Dallas a little. Called a couple agents to see what's going on, prices are also moving from last year. This below is asking 380-420. Can build at the rear. Lots of big blocks, brick houses demand more, cement homes cheaper. Not sure what rent it will achieve, assuming around 350/week.
Agent called it a poo hole area lol

45 Appollo Crescent, Dallas, Vic 3047 - House for Sale #123168822 - realestate.com.au

 

Word on the street is that Brisbane has taken the lead.

PS. GO Brisbane

 

I noticed in Melbourne, that there are different definitions for townhouses, units and apartments. Whereas in Sydney unit/apartment is pretty much the same. So when you said townhouse units, what do you mean?

 

@MTR, what do you think of Reservoir as a suburb? Would this be on your list too?

 

great area, zone 1, but it's been booming for some time now, I would be looking at other opportunities

 

I wasn't the person who wrote it but for me townhouse unit is 2 storey, villa units are one storey and apartments are apartments. Units unfortunately can mean sooo many things

 

Tooradin all the way