Not enough money available for this crazy growth to continue in Melbourne?

Discussion in 'Property Market Economics' started by alicudi, 27th Dec, 2017.

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  1. melbournesky

    melbournesky Well-Known Member

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    Houses under $500k have been snapped up really fast (usually after first inspection) for the last 3 months in Cranbourne West and Cranbourne. A lot of people priced out and new set of families from all over and the median is still just $500k with everything people need in it.
    Regardless of what happens in the market, anything around $500k will be so competitive from FOMO. I think after the first quarter next year, we wont see any freestanding house under $500k in SE of Melbourne.
     
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  2. MTR

    MTR Well-Known Member

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    lets flag this:)
     
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  3. craigc

    craigc Well-Known Member

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    I think supply / demand will be the game changer with many ‘affordable’ areas getting further out where supply is coming on but again we are both hypothesising.
    Given the recent very strong employment numbers and unemployment rate continuing to fall and with increasing participation rate I believe wage growth will start to accelerate.

    No boom price wise but with the strong population growth & wages ticking up I believe will continue to see steady growth for the outer areas.

    As another option, if rental yields start to rise (not in Melb yet that I have seen) do you believe that could be the sign people are switching from buy to rent due to affordability constraints?
     
  4. nth brisbanite

    nth brisbanite Well-Known Member

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    373m2 for 400K!!! Yes, that is nuts!!! When I was in Melbourne recently, a local said that the city is now becoming unliveable. In Brisbane, you can live like a king/queen, for what Melbournites are paying for in real estate.
     
  5. Lemmy a fiver

    Lemmy a fiver Well-Known Member

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    301m2 listed for 420K in Kilsyth?
    Really? Are people willing to pay that much for a small vacant block in outer suburban Kilsyth these days?

    m.realestate.com.au/property-residential+land-vic-kilsyth-201952942
     
  6. Kangabanga

    Kangabanga Well-Known Member

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    People are willing to pay any amount when they are speculating. Just look at those paying thousands for just one bitcoin....
     
  7. Orion

    Orion Well-Known Member

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    Yes, unfortunately, it is becoming unliveable. Public transport and roads just can't keep up, and mid-to-outer ring houses are nearing $1M (for example, Wheelers Hill, Vermont, etc).
     
  8. Graeme

    Graeme Well-Known Member

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    A slightly late response, but $130K is the sort of salary a senior software engineer would earn. It'll also put a household in the top 10% of incomes.

    The average house in Melbourne is somewhere around $900K, with over a third (154 out of 402) of suburbs having a million dollar plus median. If you don't currently have a big chunk of housing equity, getting somewhere better than an outer suburbs new build is out of the question for 95% of the population.
     
  9. melbournesky

    melbournesky Well-Known Member

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    I really don't think it is going to get any cheaper in the near future.
     
  10. melbournesky

    melbournesky Well-Known Member

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    If you put it that way. Some people pay 2~3 million dollars just for the house on the same size block and it is only 20~30 min drive from Kilsyth. Beyond crazy... its just a house.
     
  11. highlighter

    highlighter Well-Known Member

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    think it's tough to say what prices will do in Melbourne. They're certainly slowing, but in the census Victoria was making up most of the country's population growth, so that's something to consider. It's not quite as silly as Sydney, but oversupply is a big issue. I certainly wouldn't be game to touch an apartment in Melbourne. Personally I think it will keep chugging along unless and until Sydney crashes.
     
  12. Illusivedreams

    Illusivedreams Well-Known Member

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    Melbourne was making up. Most of countries population growth.

    Hahahahah

    It was slightly edging Sydney for net inter state migration.

    Wow some. Serious misinformation being posted.
    Post all the figures I have to. See. Your version of sensis data.
     
  13. sash

    sash Well-Known Member

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    That is fact....Sydney has lost people to Melbourne.....that has been largely due to Melbourne being more affordable though it will slow as Melbourne has had massive growth in some suburbs.

    Having said that there are still lots of houses under 600k in Melbourne....
     
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  14. 2FAST4U

    2FAST4U Well-Known Member

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    I just got back from Brisbane. Apart from the weather (warm & sticky) Brisbane is very livable and is similar to Adelaide in terms of affordability albeit with slightly higher prices. I was amazed at the amount of development happening in the Gold Coast but I guess that's to be expected with the 2018 Commonwealth Games being hosted there. In Brisbane you can still get suburbs <25km from the CBD for around 300k e.g. Woodridge.

    As for Melbourne it's still cheaper than Sydney but I wouldn't call it affordable. As for people saying it's becoming unliveable I can see why- 100,000 extra people each year, more traffic, more congestion, more competition for jobs and escalating land prices. Jobs need to be created simply just to keep up with population growth. Perhaps it's just media sensationalism but youth crime also appears to be an issue. I watch the news and hear stories about car jackings, home invasions, and violent attacks on strangers and I just shake my head in disbelief. Australia's not supposed to be like that.
     
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  15. Luca

    Luca Well-Known Member

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    @2FAST4U I think it is the other way around...people migrating because there are jobs. In terms of competition I can assure you that it is nothing compared to 5 years ago, just to give you an example Lend Lease need to hire 500 engineers to keep up with the current jobs. There are a lot of jobs out there and no many people. Melbourne is going well as the fundamentals are there: jobs, migration, universities and quality of life. All the rest are consequences. No one knows what will happen in future however a lot of people say Melbourne will surpass Sydney in terms of population and house prices which means there is still lot of steam left.
     
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  16. JDP1

    JDP1 Well-Known Member

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    Sure Melbourne has jobs.. But I disagree with you in that there are not candidates.
    There are qualified candidates. If there were not, there would be strong wage inflation... In both Sydney and Melbourne. That is certainly not the case, in both cities (and Australia in general), wage inflation has stalled and all reports point to similar in 2018. Both Sydney and Mel are driven by jobs (as they should be). When the jobs picture becomes less rosy, there will be real trouble... It's fine now, but the good times can never last forever ( and neither can the bad times).
     
  17. highlighter

    highlighter Well-Known Member

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    I'm sorry you doubt this, but it was right there in the census. Are you perhaps confusing growth numbers with growth rates? NSW saw more immigration as a raw volume, but the rate was one of the lowest in the country, and far lower than in previous years. It isn't numbers, but rate, that matters because only around 0.5% can make a difference between infrastructure and prices coping or not coping with population adjustments (keep in mind population always grows, and cities expand with it. However, if population expands faster than the city, that can cause prices to rise. If it expands more slowly than rapid building, prices can drop).

    "Overall, Australia's population grew by 388,100 people, or 1.6 per cent, to reach 24.6 million by the end of June 2017. Victoria was the fastest growing state or territory, with a population increase of 2.3 per cent, followed by the Australian Capital Territory, 1.7 per cent." (ABS)

    A growth rate of 1.6%, by the way, is actually relatively low (well below the rate in recent years which peaked at 2.25% in 2009, and far, far below the rate of 3% and higher experienced in the 60s and 70s, though slightly higher than the recent 2016 low of 1.4%). The bulk of the growth rate is down to Victoria's rate of increase (2.3%, which is quite fast historically speaking). NSW and Qld were equal on 1.6%, which is a sharp drop from recent years. SA and Tas 0.6%, WA 0.8%, NT 0.1% and ACT 1.7%. (stats direct from the 2016 census and ABS June quarter results). Population growth rate stats have been trending down since 2009 and only remain bouyant in Victoria and to a lesser extent ACT.

    NSW also grew at the third-slowest rate by state over a ten year period, edging out only SA and Tas. WA, Vic and Qld had the most rapid growth by far.

    Note the above includes net interstate migration states as well as net overseas migration stats, however since you specifically mentioned those: over the past decade Qld is the only state to have made NIM gains from 26,600 trending down to 6,400 (so NIM has been falling, but people who are moving interstate are mostly going to Qld). NSW has recorded annual NIM losses for a decade. Victoria has recorded NIM losses too, but only for the last 3 years. (Hence most of the growth is occurring from births and NOM.) This doesn't mean people aren't moving interstate, just that it's not enough to raise population growth rates.

    This post is not 'misinformation' any more than your general feel of the market is a population statistic. The ABS actually counts this stuff, and it is publically available.
     
    Last edited: 30th Dec, 2017
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  18. Luca

    Luca Well-Known Member

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    For what I can see there is a wage inflation in construction and IT, not sure about other industries. Construction industry will be driving the boom for the next 4/5 years. What happens after that who knows. Qualified candidates? Generally speaking yes however I know a lot of companies recruiting from overseas and people migrating from Perth, Sydney and Brisbane, still construction industry. Lot of graduates around who unfortunately the market doesn`t like. House prices: yes they are expensive but not like Sydney yet. I see an organic boom around, started from the central areas and reaching regional towns. Next step? People will probably migrate somewhere else when prices are not affordable anymore.

    A bit of snapshots of what I saw on the ground:

    - I want to live in Melbourne, happy to buy $500k at 40km from the cbd and travel 2 hours per day for work. People compromise. New estates booming, North South West, doesn`t matter if they are in the middle of nowhere.
    - I want to live central: let`s buy a townhouse (I think townhouses will out perform in the next future)
    - Do I buy $1.2 in Melbourne or $600 the equivalent in Brisbane? Let`s move the family to Brisbane. $600k for a young couple is a lot of money probably worth changing city.
     
  19. Illusivedreams

    Illusivedreams Well-Known Member

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    Please past link to Data or tables
     
  20. sash

    sash Well-Known Member

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    I have said this a couple of times...people who are serious investors do not rely on past data...they get boots on ground.....
     
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