PPOR investing in Canberra - old or new ?

Hi all,

We are a 'relatively' young couple and we just sold our PPOR in Gungahlin and we got a very good offer. Time to go shop for a new place.

We got a sizeable amount from our previous house and we would like to keep 50k to invest in the future so we would buy a house cheaper than our current place.

We fell in love with the older suburbs in Belconnen that seems to have a potential for a good growth (we know which ones to avoid) and loads of space.

The houses are usually between 40 and 50 years old. It's fine with me I know that as long as the foundation and roof are fine the house should be fine, but all our friends and family are urging us NOT to buy old house and buy in Gungahlin.

The problem I see is that for our budget (600-630k), the house are getting sold for way over what they are really worth. It's not usual for example to see a tiny 330sqm land with a 135sqm house at a "prime" location sell for that much. For the same amount and even with some change left we could get a beautiful 4 bedrooms (170-190sqm) with 700sqm land in an established suburb.

We are only looking to live in the house for 3 years before moving interstate and I have a feeling that Belconnen area will boom within these 3 years. We would then be open to renovate or rebuild to maximise our dollars.

Are we doing a mistake?

Thank you for going through this and we look forward to hear your advice

 

I like your line of thought.

I'd buy old on a big block before buying new on a smaller block.

If you can find something that can be cosmetically renovated (paint, flooring, etc) then you can add some decent value quite cheaply.

Cheers

Jamie

 

I would go for bigger block in older suburbs
do consider the advices of close family and friends but at the end of the day make a decision that suit your life style and life choices.

Are all the people asking you to buy in that area live in that area?
watch out for endowment effect.

 

To answer your question, yes they live in the area or have investment properties in the area.

We do like the lifestyle and living in a small block is pretty sad according to us especially with a growing kid. The place we had was one of the newer sububs (3yo) and a 'decent' size compared to around Gungahlin but they tend to build house that maximize the block space so we end up with a tiny backyard ending barely 2 meters away from the house.

With a bigger one we could fulfill our daughter dream of a pool (upstanding) and trampoline without compromising space for the occasional parties and bbq's chooks, gardening and a pond and with enough free space for a sizeable lawn.

 

I don't think you can go too wrong with a house in Canberra at the moment both new and old seem to be doing well.

We have a ppor in the old for the lifestyle factor and small and shiny house in Gungahlin for the investment.

We currently are living in a townhouse with no yard or garden duties so not sure how i feel about going back to a big high maintenance block now.

 

Thank you for your input. As you mentioned high maintenance, how big is your block and what is the high maintenance part? We are looking at block from 700 to 1000sqm

 

We have gone from a 1100m2 with a huge backyard and pool to a 750m2 very steep block with no grass but lots of tiered garden beds and hedges etc. As we haven't lived there yet so i am not sure how much maintenance with the garden but my husband is happy about not having to take an hour to mow lawn now

 

as per most of my posts im a big fan of belco...not sure about 'boom' but i think it will have steady growth as its relatively good value / families are getting pushed out of the more expensive northern suburbs

but yes i like your thinking in terms of capital growth

 

I would love if someone had a complete opposite mindset and could let me know why, it would give me some food for thoughts

 

Don't buy new if you can handle it. If you want something newish for lifestyle, but something 2-5 years old that has lost lustre/value and then you will still have tax depreciation.

 

Canberra is strange. I am struggling with understanding exactly the same thing - I have a few theories:

1. Canberra always has (and continues...) to have new land releases and many Canberra people want something shiny and new.
2. Potential of larger block is limited - betterment tax and stringent regulation on multiple residences.
3. The people in Gunghalin have something over the ACT government as they are also getting a tram

The land component of a purchase in an established suburb is quite high - easy to test with My Fluffy blocks advertised for (in an example suburb) $650k and decent established houses for $750k.

We all know that land appreciates and building depreciate. As a long term play, larger land component should outperform, all things being equal.

 

Keep in mind Mr Fluffy blocks over 700 often can dual occ as the govt tries to drive the price higher

We're in a similar boat - big thing for us is EER, economical heating, school zones (two kids under four), and drive/ride/bus to work.

I hate having a yard - we spend most of our weekends out (cycling with the kids, questacon, playgrounds etc) or out of town - plus it's either too hot (super strong sun) or very cold for using a yard ( and theres the nature parks nearby). Takes time we'd rather spend doing fun stuff. I can't stand big houses either though (too much cleaning and storage to fill with crap). (Husband is total opposite - he'd love a 5/3/3 on a big block in Tuggeranong or outer Belco - I can't imagine anything worse, as I'd get stuck with cleaning and maintenance, plus not my type of area)

 

I know ! We're still new at it. Sold two places but never dwelled deeply into the investing part until now For example a house in Gungahlin with a UV of 234k sold for 730k this weekend. With a 180sqm 4bdr house with better inclusions costing a max of 400k to build nowadays so that means they paid 100k more over the UV.

 

We also spent most of our weekends out lol

But I am a big fan of gadgets and in my old place everything was automated from the watering to feeding the chickens. For the maintenance not too hard for us as we love chooks and any leave falling would go into the coop.

Next step would be to automate the lawnmower but that would be too much stress on the insurance company

 

I

I move from a 700m2 block to an older suburb with even bigger block 1000m2
I can't live in small block, nothing beat having a large garden watching all the birds and wildlife come to it every day while you enjoy a nice cup of coffee.

I got chooks, vegie garden, fruit tree, lawn etc...

My house is wired to the internet 24/7, Things I do regularly are internet based, control everything with iPhone and iPad, can see who come and go to my property from any where etc...

I can sit out there for 5-6 hours listen to music watching the wildlife in the garden if I want to

I enjoy gardening so it doesn't bother me, I now want even a bigger block maybe 1500-2000m2 next.

with that sort of block I can deck out a nice creek and ponds and having my own little backyard Forrest.

 

I'd be renting if is only going to be for this long. Buying/selling costs could very well eat up any CG you make, and if the expected CG doesn't come through you're on a loss maker.

 

No way you can buy any block at UCV price period
at least 100K more or double UCV price

My block UCV is 410K but if I was to buy an empty block of that size in the same area probably 650K-700K

 

No way you can buy any block at UCV price period
at least 100K to double UCV price depend where it is located

My block UCV is 410K but if I was to buy an empty block of that size in the same area probably 650K-700K

 

Sorry still new at this, thanks for clarifying. I actually wanted to ask this question so it's good you actually helped me

 

We would try to buy low and sell high to offset the losses. Possibly a house that needs cosmetic upgrade and a new kitchen at the right price. We are quite good at renovating and designing and our old places always sold 20-30k over similar houses. If the market really crashes then we might look into renting the place while things picks up.