VIC Melton South vs Werribee vs Geelong

Discussion in 'Where to Buy' started by Adi, 10th May, 2018.

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  1. Adi

    Adi Active Member

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    Hi All,

    Thanks to all of you who responded to my previous post. Being new here and in the market it does help to read your views and opinions.
    I have shortlisted the 3 suburbs for my first IP.
    Any advice on which one would you prefer for capital growth and with a decent rental yield.
    I am tilted towards Melton South because of train station, schools, house prices and average growth, distance to Mel CBD when compared to Geelong .

    Look forward to your thoughts.
     
  2. Jake Milne

    Jake Milne Well-Known Member

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    Hey Adi, hope you’re well.

    So the issue here isn’t as simple as comparing these three areas evenly because you’ll be wanting to add additional criteria.

    With that in mind, is it okay to rephrase your question?

    Assumed Question -
    “What combination of location and asset, that I can afford for less than $400,000 with a 20% deposit (no lmi, hence no postcode restrictions) will give me the highest capital growth rate over 25 years with a minimum yield of 4% (to cover most of my interest only loan of x%) with the mid term goal of refinancing this asset within 10 years to purchase my next property from equity?”

    Would this be more in line what you’re wanting to ask?

    Next, as I’m not 100% sure you’d agree with the above how about a framework for comparing a shortlist rather than a direct answer?

    The 4 levers Framework:
    Q.Q.C.C

    #1 Quality - the location of the land and how close it is to jobs. Simplified: Jobs = $$$. Money = growth.
    #2 Quantity - the size of your land. More quantity = more scarcity. More scarcity = lower supply.
    #3 Configuration - How many bedrooms, bathrooms, car spaces. 3/2/2 = demand. Low supply + high demand = capital growth
    #4 Condition - How ‘nice’ is the property. Condition = higher rent. High rent = high yield.

    You want to base your decision based on these levers with the most weight given to the Q’s and less weight to the C’s.

    Example: buying a...
    2 bedroom house in average condition on 600sqm, 5km from a major job hub is better than buying a...
    4 bedroom townhouse in excellent condition on 150sqm, 20km from a major job hub.

    Extra thoughts:
    Being close (in time) to jobs is key.
    Public transport only matters when there is congestion and it takes more time to get to jobs than driving does.
    Being close to schools isn’t as important as being close to “reputable” schools.
     
    Last edited: 11th May, 2018
  3. Adi

    Adi Active Member

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  4. Aussie1980

    Aussie1980 Well-Known Member

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    Werribee gets my vote. Due to infrastructure in future . But i have not researched geelong or melton
     
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  5. NWHT

    NWHT Well-Known Member

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    Fantastic response Jake, I'm going to save for future thought.

    IMO my vote goes to Geelong @Adi for the following reasons, but not limited to;
    1. Employment Hubs - There's current a large amount of government and residential construction being undertaken, creating jobs and adding to the local economy. (WorkSafe, NDIS and TAC are being establish in Geelong)
    2. Very strong population growth (set to grow by 36.5% to over 320,000 in under 20 years and more than double in size to over 500,000 by 2050. )
    3. Affordability - Housing is still relatively affordable. Pockets such as Hamlyn Heights and Herne Hill still have good opportunities if you're willing to roll up the sleeves and perform basic renovations - suburbs such as Norlane and Corio have a mixture of renovated and unrenovated properties where value uplift can be achieved.
    4. Low vacancy rates
    5. Location, location, location! - Proximity to Melbourne, but also the surf coast.
    6. Growth - Geelong median home values increased 35.26% over 2017, and 2018 is looking to be no different.

    All indicators such as vacancy rates, rent, vendor discounting, listing duration suggest it isn't slowing down anytime soon.

    I'll admit though I have a conflict of interest on the matter as I have an IP in Geelong and I'm looking to invest again there.
     
  6. Jake Milne

    Jake Milne Well-Known Member

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    Adi wrote: “wow! That’s good.. couldn’t have summed it up any better .. exactly my question and great points to consider ..
    From just a location/ suburb perspective what’s ur pick ? I understand the other 3 points you touched on would vary from individual property or property and that’s imp too ..”
    ——
    For less than $400k I’d buy a half block 3br house as close to Geelong’s centre as possible.

    Bell Park, bell post hill, Hamlyn Heights, herne hill are ideal.
    Secondary choices would be Belmont and Newcomb.
    ——

    I don’t think you can afford good quality in Werribee and I think the quantity of open land around Melton means it lacks scarcity.
     
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  7. Westie

    Westie Well-Known Member

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    Both Herne Hill and Hamlyn Heights are WELL past $400k. Whittington/Thomson might still slide into that sub-$400k price range. Bell Park and BPH are easily $450k+.
     
  8. Otie

    Otie Well-Known Member

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    I would go Werribee, then Melton South, then Geelong in that order. Melton has only just recently had its almost only ever boom. It could take another 30 years to go again. Having said that I am confident that it will do well with the migration and population forecasts for Melb, but i wouldnt risk my own money on it unless I couldn't afford Werribee.
     
  9. Westie

    Westie Well-Known Member

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    I'd venture further out to Lara instead of Werribee. Heavy investor activity in Werribee, should've seen those auctions over the past year, there was delirium.
     
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  10. Jake Milne

    Jake Milne Well-Known Member

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    I bought two properties in the last month in Bell Park for $400k or less. Like I said. Drop the quantity lever to increase the quality.
     
  11. Westie

    Westie Well-Known Member

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    You did well then. Were they standalone houses with sizable land component? FWIW, I cant find a sub-$400k house in these 2 'burbs on re.com.au in the past 3 months (with the exception of a dump or two).
     
    Last edited: 11th May, 2018
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  12. Jake Milne

    Jake Milne Well-Known Member

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    One 2br house (that used to be 3br) and one 3br house. Both on their own title, stand alone on 300-400 square meters.
    Prices were:
    $361 - 2br house - off market
    (Edit: Deleted price still subject to finance) 3br house - on market
    49 Bruce Street Bell Park Vic 3215 - House for Sale #128193194 - realestate.com.au

    I’ll post the other address when it’s unconditional
     
    Last edited: 11th May, 2018
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  13. Kone

    Kone Member

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    Hi Adi, I am in a similar situation as you, also looking for my first IP, considering the above three suburbs you listed. Been to Melton and surrounding suburbs and a few auctions there. The demand is there looking at how many people at each auction/openings and how quickly stocks were sold. However my concern is also the fact that Melton has this huge growth in the last year also, is there still any further space for growth?
     
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  14. private_number

    private_number Well-Known Member

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    The question here is what areas have factors that will help drive growth in population and house prices?

    Short answer - Geelong.
     
  15. Greyghost

    Greyghost Well-Known Member

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    Don't let low price appeal cloud your judgment.
    So much land.hiw is demand meant to grow if land is endless for the interim?
    Melton has been the 'next big thing' since I was born there in 1985.
    Don't fall for the hype....
     
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  16. Adi

    Adi Active Member

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    Thanks , I am now looking into these areas !
     
  17. Adi

    Adi Active Member

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  18. BST

    BST Member

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    @Jake Milne great contribution to this thread. Makes great reading and food for thought. Just curious as to what kind of long term percentage growth you'd be targeting on the above property you mentioned buying. Thanks
     
  19. meggala

    meggala New Member

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    i bought in melton 10 years ago . and have been watching the market closely there are opportunities there for large blocks 600 sqm +++ tradie etc like the big blocks for sheds etc consider that. rental market is flooded with new builds but they are on small blocks in small streets. i think there is also opportunity for for ppor or long tern hold and rent on 1-2000 sqm blocks and bigger with houses on to rent. no development opps but price growth. you need to check which area's to avoid its complex as there are great parts of melton.
    i have been a fan boy of this area. the growth took longer than expected but the rewards have been greater. lots going on. no need for electric rail vline is good and is currently getting the dual track upgrade. plus i would rather travel to the city or inner west from melton than werribee or geelong
    cheers
     
  20. Air_Bender

    Air_Bender Well-Known Member

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    I bought in Melton South a little over a year ago and although I haven't been in that market as long you have I've still made some very good gains. I do agree there are still some good bargains over there especially the larger blocks and preferably closer to the train station.

    Not sure if we'll see a lot of growth in the short to medium term but long term I'm confident Melton still has more room for growth.