VIC Melbourne locations for 425-500k

Any update on ur purchase hunt Anyhony?

I am on similar boat as yours. Currently considering Altona Meadows, Sunshine.

 

Hi almostthere.

Sorry, this turned out to be a long post.

I've purchased in St Albans - north west quadrant (settling in a few days).
~540k
~550sq.
Lucked out with it being just under 1km from the train station.

I would be amazed if you can get anything in sunshine for that price. Maybe a 185sq townhouse?
Altona Meadows also I think will be a stretch. Maybe you can get a 375sq property there? I think both of those areas are excellent locations for the long term, but right now I am not sure they are good purchases, and I think probably not possible for that budget.

I feel ok about my purchase, but definitely have some concerns. The same concerns as why I am not sure the two suburbs you mentioned are good purchases right now.

I had to purchase quickly because I am currently a non-resident and APRA is tightening things every month and I am the easiest for them to give the boot to. So this made things much more difficult in purchasing. Combined with it being a very hot market and that I had to buy quickly or face not buying for potentially a whole lot of years made it very difficult for me to be able to take time to sit and think for longer. I was/am unsure about Brisbane since Melbourne is a much bigger economic powerhouse (I am not saying this is correct, just my uneducated thoughts), and I am also somewhat concerned about a long term (15 year) B&H further out than ~20km, so for all these reasons I decided on Kings Park for up to 525k (expecting around $510-525k) or St Albans for up to $550k adding some of my own cash - if it was even possible to get something ok in St Albans at this price. My BA randomly stumbled upon a property for 540k and snapped it up.

I chose that location over further out suburbs because I think there will be some better growth over the long term. I expect it to be towards the end of the boom right now, so for that reason I don't expect much growth now and for quite a long while (read: years and years). But at the same time I don't think prices will drop (or drop much), plus the FHB and the high migration rate to Melbourne continuing and not slowing might keep values rising for these priced properties for another 6-18 months (though I am prepared for it to be at a peak now if that is the case, and you should be prepared for that if you plan to buy in Melbourne now).

Yield is terrible, which is a sign to not purchase even though we convince ourselves that it is not so important. I have another IP with a lot of equity (plus they would only lend me at about 68% LVR and only P&I), so overall my 2 properties will be a tiny bit cash flow positive, actually its so close lets just call it neutral, so it is less of a problem for me. It will become positive quickly as I am able to save a lot. I think yield is a pretty big consideration though that in hindsight I would have given a lot more weight to. Low yield is more than just a statistic to tell yourself "it doesn't matter because growth will take care of it eventually". It means that fundamentally something is out of whack. It means prices have risen much faster than rents to be totally overblown and need to correct. Generally property prices 'correct' by still increasing in value (this must be really confusing for most people - how does it correct and still rise?). It rises around the rate of inflation for a whole lot of years (4-8), which means in real value terms (after inflation) it is giving no return at all. The crap thing is that since prices don't tend to drop and even keep growing (but at the rate of inflation), it seems like you won't get bargains by waiting in that sense, it also means that you probably won't get any gains for a number of years. But of course as a first or second purchase, you are then thinking "wtf should I do with my money then?". If you hate shares like me, you are left with a bank account of 3% interest and no leverage or growth. The whole situation is a confusing mess.

The answer generally is to look to other markets or keep saving so that a few years into the downturn where prices are not moving and everyone says property is a crap investment, you can find properties below market value because no one wants to buy them. but yea as I said, for a first or second purchase, waiting a few YEARS is so god damn long!

I would like to say that I would consider a purchase in Brisbane, but I really don't know enough about Brisbane. Though I have a feeling that some parts of middle ring Brisbane might be right at the end of recovery, and if so it would mean it is one of the best places to purchase right before a possible boom. Worth at least looking for some further information for yourself if you have not done so yet.

Rental yields are low in all of Melbourne now. You might be able to get 4% in a well located property in Werribee, but my thought is that saving a few k a year in yield isn't worth it. Or you can look at it as being 50-100k cheaper which is a lot of money but then again you are actually getting something of value for that higher amount so it's not exactly money thrown away. Either way, it all sux similarly. For 425-500k, I think you are going to be restricted to Werribee though. You might find something in Deer Park but it is a tough call to choose that over Werribee with the gentrification of Werribee and the lack of it in Deer Park.

Sorry if this did not help much.

@melbournian is a true expert on the Melbourne property market. Maybe he will be kind enough to offer some thoughts of areas that suit your budget.

 

i'm no expert but for that budget I would stick to Werribee within that ACZ zone. Again you have to check what the prices are there now. You only have to look at the rest of the ACZs in Melbourne, sunshine, st albans what they are now million+ (needless to say the box hill, Dandenong, frankston, Doncaster) ACZs

https://www.wyndham.vic.gov.au/site...e Plan & Parking Plan Summary - June 2013.pdf
.

 

Thanks for the plan link @melbournian

I assune if Werribee is growing , it seems like a plus point for attached suburbs. Any thoughts on wyndham wale ?

 

no crystal ball - but basically all of Melbourne is up - it is more which areas have more or less.
being in the ACZ zone only helps to turbo boost your gain if you get to buy in cheap. (wyndham vale is no diff to other estates like pt cook etc which has already seen gains though may flatline abit)

 

Just received a random message from YPA, from a RE guy I bought a property from in may. We bought in Kings Park for 500k. Basically he asked me whether I want to sellthe the property. I was like WTF, we just bought it lol. Anyways he said he would be able to sell it for 580k and how he has zero properties available at the moment.

He said he would give me a call in month to see whether I changed my mind lol. Anyways, really nice surprise, 80k in a few months

On the other hand, really interesting to read in the news how prices went down over the last week. They are really desperate for stories.
Home prices slip as auction sales lift

 

new suburbs move that previously didn't - why go elsewhere in Aus when everything will move at some stage

 

I don't really think there is much steam left in Melbourne. Even for a cheap middle ring suburb like Kings Park, the prices started increasing years ago. Also yield is really low and will soon become Sidney low. Add onto this IR increases and credit tightening...

I can see prices increasing for another year or so and mostly in budget suburbs. After that, it's Brisbane time.

 

You have done well.
I think it all depends on where the next target suburb will be - I'll be looking to where the infrastructure is planned. Well it will be about time it moves but u are right for those chasing the yield best to stick to Brisbane. I will probably get one this year in the acz in a cheaper suburb