Melbourne...the steady market in Australia?

I believe it has more than a couple years of growth in it. Over the years, the attention has been towards the east and up until recently, the west was forgotten. There is so much potential out in the west that will go on for many years to come. Due to immigration, second generation Australians and the lack of affordability out in the east, the west is becoming a far more appealing place to invest.

On a side note, the only thing a slight interest rise will do is flake off small time investors who probably shouldn't be investing in property in the first place.

 

And what makes you think so?

Regards

 

What about a large interest rate hike?? Rates are going up worldwide. Eventually this will trickle to Australia.

 

What makes me think so? Take a drive from the CBD to Pakenham and you'll see house after house after house. Take a drive from the CBD to Lara (which is also 61km out from the CBD) and you will see the abundance of land out there.

The Victorian government released a report last year that predicted by 2051 our population will double (I personally think it will be more than double by 2051). Where do you think these people will go? The Victorian government will soon follow suit with more infrastructure, amenities etc etc in these regions of growth which as we know, will drive investors in these regions. Now what regions are we talking about? The west (and as we speak, the north).

Now let's say interest rates double and thus, plenty of people will default. What will that mean for me? Bargains. What will I do about the high interest rates? No more smashed avocados for awhile.

 

I personally don't think they will hit double digits, but I assumed @namrata meant double digit when she mentioned the word 'large', so I just ran with that.

Of all the 7 points you mentioned above combined will do NOTHING to reduce house prices, and therefore as an investor, this is why I believe there is more than 2 years worth of growth here in Melbourne.

 

May be, may be not. I think what is important is to chose the right time to enter and exit.
Those who missed the boat might be the last ones to enter. But taking another 2 years time frame will be like applying for the cheapest lot in upcoming estate's first release.

 

Interest rates double. What time are you talking about 2051?

Melbourne at this point:
1. Offers the highest number of jobs.
2. Highest interstate migration.
3. Highest number of immigrants.
4. Affordable markets.
5. Highest growth (or just behind sydney).
6. Better lifestyle than Sydney and far better rentals.
7. Amongst the top 10 cities to live in the world.

Last 4 years, every man and his dog has gained by buying for living or investing.
Each property has grown from 50% to 80%.
Some propwrties have given 300-350% returns in last 10 years.

There is no doubt that market may stagnate for a while. The interest rates may rise by 2-3%.

But double? You are talking about 70's (as far as i recall). Rather, I think you just answered your own question by saying that population may double by 2051. The increasing population would need a house to rent or stay in.

From cbd to Pakenham, there is a house after house. Is any house empty? People are forced to buy further in clyde north and the buying continues. These are first home buyers, no investors.
Did you say about Lara? Are you aware of the prices and growth there that has happened over last 2 years.

With an average salary of 80k per house hold, people can afford a property worth 300-350k.
The mark has outgrown. However, Sydney continued to grow until the median reached 1 mil. Investors account for just 30% pf the market or less.

Afaik, there are less investors that fpcused in Melbourne and were concentrating in Brisbane. But what do i know, that is a mere observation. However, I know the following:

The house bought in 2016 march at 280k is now 410k. Rented at 375 per week.
The house bought in 2015 mid at 380k os now 450k and will be rented at 450 per week.
Two land and house bought earlier this year are up by 65k and 80k each.
With this growth, I feel these prices will never be achieved. If they are, yes, entire Australia is on the verge of a crash.

 

I think large is subjective and really hard to quantify.

For example - take the weekly articles and marketing I see on property investors and how many people use unrealized capital gains to purchase future properties along with the popularity of negative gearing. For individuals like that, I think a 2-3% rate hike in rates is considered large. For a IO loan, a 2% increase in rates will be a 40% increase in their monthly payment.

Personally, I would say large would be a change based the current rate. I consider a 100% increase large. But that only puts the rate at 8-9%. Do I see that happening in the near future - no.

But let me be clear, I am not saying it is going to result in a crash like what happened in the US. I think more of a correction will result at that level. With a fair bit of people dropping out of the property market. A correction also means an end to the 10-18% growth within the property market in a year.