Report on potential growth of older Melbourne Apartments

Hi Luca here are a couple I can think of off the top of my head

https://www.domain.com.au/property-profile/4-2-denmark-hill-road-hawthorn-east-vic-3123

This just sold not sure exact price but somewhere between 750-800 so pretty flat since last sale in 2015. Whereas previously sold in 2006 for 380 then 2015 for 701 so averaged around 7%

This is another I like
https://www.domain.com.au/property-profile/6-754-high-street-armadale-vic-3143
Approx 2-3% growth per year for last 10 years but sold in 2006 for 385k then in 2011 for 735 so a massive amount of growth.

This is the style I am talking about, older with a lot of character very well built, if inside it feels like a house rather than apartment.

For me I would much rather live in something like that closer in than a much bigger block further out. But not everyone is the same.

p.s your example is possibly a good example of looking at things from a very long term view as it was held for 28 years the growth looks linear, whereas transactions between those may have given more data about booms and flat periods.

 

You can buy similar older apartments in much more blue chip locations for the same price, much closer to the city. While in Heidelberg, a smidgen more coin gets you into a villa unit. This isn’t even a premium older unit, it’s just not very nice at all. It’s small and grotesque. Those walls!

Happy to disagree, but I stand by “astonishingly terrible purchase”

 

Yes, that was a bad buy. But not terrible, the location is top notch. Will always be easy to rent out to hospital nurses.
https://www.realestate.com.au/sold/property-apartment-vic-heidelberg-137333926
Heidelberg is seeing lots of apartments these days.
Believe it or not, one sold for 1.4m before the market really started to heat up

702/68 Cape Street, Heidelberg, Vic 3084 https://www.realestate.com.au/sold/property-apartment-vic-heidelberg-134905022

 

Take this for what you will; Stuart Wemyss also asked the same thing on his Investopoly podcast in Feb 2018 and again in mid 2020.

They could still rise in value but IMO if your property does not have a small courtyard or bigger I think growth will be fairly limited until COVID 19 is long forgotten.

 

Yes I seen that thank you, he does address this and is up front about it. He still believes there is growth coming. But what you say is relevant hence my apprehension. Would need to be a decision I was happy with for the very long term.

 

Just recently moved to Melbourne and taking a look at the apartment market here, theres plenty of beautiful 2 bedroom places, with great city views for like 4-600k, comparing the apartment market to sydney market theres a HUGE difference in prices, surely melbourne apartment market is set too boom in the next 5 years? Covids going now too so melbourne is getting back to normal

 

Agree. The price gap between flats and homes will close.

Just look at these cracking places

https://www.realestate.com.au/sold/property-apartment-vic-elwood-134881926

https://www.realestate.com.au/sold/property-apartment-vic-elwood-135608826

 

Deffinitly on the cards for my next purchase, could be seeing huge gains in the future

 

Awesome places

 

Hope so! I've been waiting for the past 5 years.. but unlikely until houses further out reach the same prices as Sydney. Wfh has really hit units that don't appeal to families/working couples. Not that they have dropped but more plateaued.

But might make sense for those who have long timeframes & want to have a finger in every bucket like myself - i.e. one beachside rural, one premium suburbia, one gentrification suburbia, one inner brick walk up unit

 

Once covid goes melbourne being the biggest city in Australia & the most affected by covid could be a great place to be finding good deals at the moment, sydneys inner apartments are worth a average of like 1.3 million from what i been seeing

 

Hey so since this is my thread and it’s popped up again I will give an update…

We bought a big 2 bed apartment just across from the beach in Elwood. Art Deco, some amazing features inside and our own private garden as well as private parking and a store room. I hope it goes up in value but really we chose somewhere where we want to live for the next 30 years, we don’t need a house and this ticked all our boxes. It means we can live in what we believe is one of the nicest parts of Melbourne and still have a mortgage that allows us to keep investing plus enjoy our life.
Easier decision for us as we don’t want kids so we don’t need to worry about upgrading for more space down the track.

 

What a awesome place to live looking at city apartments myself at the moment, well hopefully they see some good returns in the near future

 

Hi Ian

I’m in a similar position and wondering if you already own any other property or plan to in the future?

Im thinking of buying an Art Deco apartment in south Yarra/prahran as a first house because it’s what I want to live in. No plans to have kids or move to the suburbs and lifestyle/location/cash flows is much more important to me.

If it’s a PPOR I know capital growth should not be so important, but I still feel like I’m missing out on growth and am considering to rentvest or buy a villa unit or townhouse a bit further out.

How did you know the apartment was the right decision for you?

 

Hey, yeah we already owned 2 investment properties on decent land but in suburbs we wouldn’t want to live. Nice suburbs but a bit further out and less of the things we like close by.
We knew the apartment was right for us as it had everything we needed, we are across the road from the beach, we have our own garden, private parking, separate lock up store room. The actual apartment is just under 100square meters which is more than enough room for us and it has a private entry with a double wide entrance so really feels more like coming into a home than an apartment.
It was easier for us to make that decision as we are very aligned on remaining without children so we don’t need to worry about needing more space down the track.
We could have sold the two properties and probably purchased a house here or close to here but we just didn’t need to, we are happy in an apartment. Or we could have bought a decent house a bit further out but again we don’t need a 600 square meter block with 3-4 bedrooms.

You could rentvest and we did do that previously but ultimately we prefer owning our own place and I think most people would prefer that. What seems to be missing from the rentvesting idea is that eventually you need to either sell which is costly due to entry and exit costs or increase your income by a large amount so you have the serviceability to buy the home you actually want.

Happy to answer any more questions but we absolutely made the right decision for us and love living where we do.

 

Thanks Ian, that’s really helpful. I know the apartment would be the right decision from an emotional perspective and share your same views on why I love apartment living. I’m a bit different in that I don’t already own property - so I’m not sure if it’s right from an investment perspective. I’m guessing rentvesting and buying house/land is the better investment decision, and then could buy the apartment too later, but I suspect that’s going to end up very expensive holding costs and not sure that fits my lifestyle/risk profile. It’s very overwhelming and confusing!!