VIC Regional Victoria or Melbourne CBD

I have been interviewing BA's with the aim at purchasing 2-3 properties in Victoria with a total purchase price of $1-1.2 million.

Was leaning towards purchasing established properties with one 20-30km from Melbourne CBD and one or two in a strong regional centre.

What is interesting is that all three BA's have advised to look at buying one single property no more than 5km from Melbourne CBD and all seem to be pushing units/townhouses. Their reasoning is also similar. 2.5-3.5% rental yield and 6-7% expected growth. Apparently these figures do not occur anywhere else in Victoria which I find unusual.

Would love to hear from anyone who has recently purchased in Victoria or has any knowledge of properties down there as it seems my research is way off.

Note that all 3 companies are well established, well known and do not have their own properties to sell.

 

2.5% yield
6% gtowth

Vs
6% yield
4‰ growth
As an example.

No right or wrong!

 

Hi @Chilliblue

Alrighty, to address what you have been told :

Flicking to page 121 of the Feb 2017 edition of "Your Investment Property" magazine, and just taking a look at the published statistics on two of the suburbs that appear at the beginning of the "houses" listings:

Airport West (houses)
12 month growth % = 11.11%
Annual Avg Growth % = 8.40%
3 Year Growth % = 30.77%
5 Year Growth % = 18.16%
Gross Rental Yield % =2.87%

Altona North (houses)
12 month growth % = 13.07%
Annual Avg Growth % = 9.39%
3 Year Growth % = 41.00%
5 Year Growth % = 33.02%
Gross Rental Yield % =2.93%

Flicking to page 138 of the same magazine and taking a look at the following suburb under the "units" section:

Box Hill South (units)
12 month growth % = 14.32%
Annual Avg Growth % = 9.41%
3 Year Growth % = 50.96%
5 Year Growth % = 52.43%
Gross Rental Yield % =2.62%

I've been observing suburbs storm ahead at rates of above 10% growth in 6 months, and delivering above 4% rental yield while they're at it... and they are not units and they are not within 5km of Melbourne CBD.

 

Many (but not all) buyers advocates will generally be biased towards expensive suburbs because that way their fee looks less extravagant relative to the purchase price of the property. Or, more charitably, it takes the same amount of work to research a property in a $1m suburb as one where houses go for $300k.

They may also be disciples of this mob who have a nice little echo-chamber going between themselves, The Age, The ABC and other media outlets favoured by the affluent. Some relevant Somersoft threads:

Wakelin Property Advisory - opinions please

Also klearpicture.com.au & other buyers advocates?

Not saying they're always wrong, it's just that some BAs advocate their pet approach too widely to too many people, including those for whom it could be risky.

 

Sounds like @JacM should be on your BA list to interview.

 

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Ditto.

Also, you don't know what you don't know, nothing wrong with BA but they are going to give you their spin on particular suburbs and it will always be about stats.
From my experience its the gems that you want to be chasing. As you know Melb has been a booming market since 2013, I would not be buying at peak, suburbs that have already seen significant growth.

I personally would look at areas/suburbs that have some catch up, also look at suburbs where surrounds are significantly higher.

MTR

 

Thanks everyone.

 

To be honest, not sure where they are recommending - but units and townhouses unless they are in a premium suburb with limited land (and within the Neighbourhood Growth Zones - as they will not be able to build townhouses, villas anymore if there is a cap to the land size for dwelling. ) are the ones that has potential to grow. for e.g places like kew, camberwell, balwyn, Canterbury.

if I was focused on heavily on yield I would just get an apartment. If you have the budget and funds to go 1 million mark, I would go to this area (in my opinion - a gold mine)

Chadstone, ashwood etc (and buy a ex-housing commission) - get some permits and sell it. or build or sell it. You could buy a block 600sqm and sell it like this block below bought 1.06 mil subdivide sell each 1.18 mil.







Demographics - Lots of Asians (high income demographics), close to Monash University (mid way btw 2 campuses Caulfield and Clayton - most international Students in australia), TAFE college just around the corner, next to the biggest shopping centre ever (Chadstone) - freeway check M1, transportation check, lots of restaurant and hipster places coming around warrigal road. it takes only 15-20 minutes to CBD on the freeway as well.

if you are playing in 1 million mark - forget the H&L, Melton and outer CBD areas.