Melbourne outer (south) east IP 600-700K

Dear all,

interested in your comments about the value of properties (free standing 3-4Br houses) in the outer east as an investment. We are looking at the possibility of Rowville, Mulgrave and Scorseby. These are further out than wanted look initially but for our budget the other option on this side of city is a 2 bed apartment closer to the city and both the CG and the yields over the last 5 years look to have been better with houses out in these suburbs. It is possible they have benefited from east link and the increases in value will plateau. On the other hand, they should increase if there ever is a rail link built, bit this is a very big if.

 

Hi pbfitz,
I've done the numbers on houses like these vs. other areas for previous clients this year and it was found that capital growth is much better if you look to the Southern Corridor along the Bayside suburbs.

 

Hi @pbfitz - why Melbourne specifically? I see you are from Melbourne - but as an investment - why Melbourne? Australia is a very big country.... You might be interested in having a read of this - Melbourne: Job Losses & Over-Supply Likely To Push Property Prices Lower - Propertyology

 

Thanks Jake - I will have a look but presume we would need to get at least past Mentone to find anything in this right price bracket and this is getting a fair way out (although I suppose not that different from Rowville). Was this was you were referring to (Mentone - Frankston)?

 

Dear Bryan,

thanks for the link - I actually did read this the other day with some sense of worry! This is our first of what hopefully will grow into a portfolio of properties and although I am quite comfortable with buying interstate (and getting proper advice to support sensible decision making!) my spouse is less so at this time and I suspect starting interstate will prove a little hard for her. Our timeline (hold 10-15 years at least) probably makes some of the demographic trends less of a worry for me but makes me less inclined to rush and perhaps take some advantage of weakening prices if they come along. I have to balance this against getting to caught up in analysis and not getting on with things.

 

No problems - always interesting to see what process investors go through in making certain decisions. Particularly property investors - share investors are less likely to purchase a certain share just because they are comfortable (for example buying CBA shares just because it's who they bank with), yet property investors do it every day!

 

Melbourne: Job Losses & Over-Supply Likely To Push Property Prices Lower - Propertyology

interesting article - "
About Simon Pressley
Simon Pressley is Managing Director of Propertyology, a full time property market analyst, and accredited property investment advisor. Simon was also been awarded for excellence in the real estate industry as 2012+2013+2014 “Australian (REIA) Buyer's Agent of the Year” and “Queensland (REIQ) Buyer’s Agent of the Year”."



Obviously, one who is a buyers agent in Queensland ideally would be pushing to buy in QLD. You could have advocated tasmania as a place to buy too. i do agree with his analogy on jobs - especially Geelong but to compare Melbourne with Perth is so different as one is not a mining boom but a population boom. All the large headquarters of corporate firms majority lie in Victoria or NSW. We're talking the Big 4 accounting firms, the major banks, consulting etc. these are the people who have funds to purchase as oppose to people within the manufacturing areas who are factory workers or within the assembly line. No doubt certain suburbs esp geelong would be affected. In 2015, the only States that gained population were Victoria (10,190) and Queensland (6,417). Secondly, education is key factor for migration to victoria and nsw. Local schools and universities are a big thing for some people who come to melborne. which is why even central queensland university has a branch in melbourne.

 

Guys, my take is that we need to compare Australia to the rest of the world: yes, factories closing and so on...but the migration will still be high for the next 20/30 years at least. It is just a matter of choosing the right strategy for the right period. Melbourne: yes, oversupply in apartments, everyone knows it. House / Townhouses, well, I think there is still growth to come. Yes, there will be corrections here and there, especially where we registered massive growth recently. My take is will never see a -40% like Perth in Melbourne.

 

"Obviously" this is a very general statement made with a very simplistic thought process and absolutely no idea of the business model. Whilst many buyers agents only operate in the location/state where they live or where they have an office, when working with investors, shouldn't someone be providing advice/recommendations based on the clients best interest - not what's easiest for the advisor? I'm buying properties in 7 locations across 4 states currently. Less than 10% of properties I've purchased over the last 2 years have been in South East QLD and more than 60% haven't actually been in QLD at all.... So still not sure where the "ideally pushing QLD" comment comes from... When deciding on which BA is best for them, clients need to make sure they understand the service being provided and work out whether they see value in that particular service. As with any service in life, if you don't see value, don't pay them any money!

 

so you're a buyers agent as well? didn't see any description besides name and pic. No offence, Was talking more on the article and it's pros and cons and not anyone in particular hence did not even quote your member name.

 

That's fine - I'm here as an individual - but it is well outlined in my profile what I do and who I work for. I'm certainly not on PC to spruik our services or solicit work. I'm simply here because unfortunately there are some people who take everything they read as gospel and there are MANY myths and theories which are just completely untrue or have absolutely no basis to them. I'm contacted daily by clients who have 'read something' in a magazine or online and assumed it must be true. I'm just here to help open some people's eyes and make sure that anyone who is about to put hundreds and thousands of their hard earned dollars into an investment, does so with their eyes wide open. Whether someone does it by themselves or with a professional helping them, if they make a decision with all of the necessary information, there isn't much more we can do. Enjoy and good luck.

 

While I don't doubt the propertyology article as it makes a lot of sense, the manufacturing job loses will be concentrated in certain LGA's due to proximity to factories (Broadmeadows, Altona) so the decline should not be as great in other areas - though there may be a flow on effect as the closure of toyota and ford will affect smaller businesses too.

The apartment oversupply is evident in the abundance of construction happening all around Melbourne. But not everyone wants to live in apartments in every suburb. Sure, inner city people live in apartments but in the outer suburbs a house or unit may be preferable

Lastly, population growth in Melbourne is not slowing down so housing demand is not going away any time soon. The question is - what dwelling do people want to live in, and where

 

Skimmed over the Propertology report and to be honest I think most of it is spot on although I disagree with some slight stretching of the facts such as Geelong being counted as "Melbourne" when it's a Regional Victorian City.

The two main things I can't agree with on the post are:

1. Melbourne has an oversupply of 12,000 dwellings so it won't grow.

Nonsense. Melbourne had an oversupply of 24,000 - 36,000 dwellings in 2012 and prices have risen steadily. People just need to be careful to not buy in pro-development areas.
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2. Melbourne is very similar to Perth.

I don't even want to reply to this point as the cities are so drastically different in their economies, geographies, populations, government, infrastructure and anything else one can point a stick at.​