Southeast Melbourne- feels like FONGO again

Discussion in 'Property Market Economics' started by Younginvestor2, 14th Jul, 2019.

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  1. Younginvestor2

    Younginvestor2 Well-Known Member

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    Yes, strange phenomenon. After the federal election, there's a sudden surge in confidence and many properties sold like hot cakes.
    In recent weeks, it feels like it turned bad again. My interest is only in 2 areas- Burwood East and Glen Waverley. It feels like those investors who bought at the peak, couldn't wait to get out , fearing stock will flood the market in spring and bring down the prices. But still unwilling to take a loss.

    Look at these examples:
    1. 62 Davis St, Burwood East
    62 Davis Street, Burwood East VIC 3151 - House For Sale | Domain
    Passed in yesterday for $1.14m. Last sold $1.224m in 2016.

    2. 24 Florence St, Glen Waverley
    24 Florence Street, Glen Waverley VIC 3150 - House For Sale | Domain
    Passed in yesterday for $1.85m Vendor bid. My friend was there, apparently there was no bidder.
    Last sold $1.86m in 2017.

    3. 9 Whites Lane, Glen Waverley
    9 Whites Lane, Glen Waverley VIC 3150 - House For Sale | Domain
    Passed in yesterday for $800k. Last sold $850k in 2016.

    More coming up for sale to get out of the market
    1. 9 Oakham Street, Burwood East
    9 Oakham Avenue, Burwood East VIC 3151 - House For Sale | Domain
    Quoting : $900-990k. Last sold $1.07m in 2018.
    2. 7 Montclair ave, Glen Waverley
    7 Montclair Avenue, Glen Waverley VIC 3150 - House For Sale | Domain
    Quoting:$1.85-$2.035m. Last sold $2.2m in 2015.
     
  2. hieund85

    hieund85 Well-Known Member

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    All properties you posted are typically for investors (big land, existing building is small and old). I do not think investors are back yet. Most of the surge after the fed election comes from OO buyers. I have also been monitoring those areas. In the last 3 months, OO stock (good school zones, decent condition) were sold for top price within 30-45 days. The part of Burwood east within Forest Hill school zone is not very desirable to OO.
     
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  3. Triton

    Triton Well-Known Member

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    Spot on. The data clearly shows that investor loan commitments are well down. Of course the prices are going to be below peak. Glen Waverley and Burwood, due to Chinese money, had bigger speculative growth than most of Melbourne, so those knock down and rebuild type properties won't get back to peak prices for a while
     
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  4. Silverson

    Silverson Well-Known Member

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    I was following a property in melbournes north, quote 1.1-1.2, a week before auction price revised to 1m, passed in yesterday with bid at 850k now for private sale at 1mil, in my opinion worth 850k
     
  5. highlighter

    highlighter Well-Known Member

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    It's not strange. The same factors that drove the market down are still there. Credit access wasn't what started the slide, it was oversupply, and when the number of willing buyers drops in a market where prices are also dropping, certain suburbs become less desirable.

    We've seen a marked improvement since Feb because supply (other than apartments) has thinned out through winter. If we see a big supply surge in Spring, we're likely to return to the same malaise in many parts of Melbourne.

    Properties that do well are likely to be quality family homes in popular areas. These are what's been selling recently, and these are the type of property that's thin on the ground in winter.

    Personally I think a lot's going to depend on external factors, like jobs. If unemployment starts rising, all the APRA tweaks in the world aren't going to resurrect some of these new-development heavy areas, especially those in the outer outer suburbs. Apartments are the same story (these arguably haven't seen the improvement other properties have, but the most often reported index excludes off the plans, so it's hard to see what's really going on there).
     
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  6. Younginvestor2

    Younginvestor2 Well-Known Member

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    I spoke to some of the selling agents of the listed properties above. Many of them are eager sellers, happy for break even price to exit.
    I’m left scratching my head, so if as many bulls in this forum suggest the only way for the price is up because of APRA relaxation, interest rate cuts, improving clearance rate, why are they desperately want to sell now?
     
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  7. Tattler

    Tattler Well-Known Member

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    That's because the holding costs are still very high for those properties. Old house means low rent, then you pay land taxes plus bank interest plus properties manager fees and it means 5 digit negative cash flow every year.
     
  8. willister

    willister Well-Known Member

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    I've always questioned this myself all the way back even in 2015 even when I was looking semi seriously the numbers did not stack up and I've always feeling foolishly stupid myself why people are still so bullish on the future market.
     
  9. pvfv

    pvfv Active Member

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    This isn’t fongo. This is unsuitable lending done by our banks to buyers with fomo virus.
     
  10. Jeffb

    Jeffb Well-Known Member

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  11. Younginvestor2

    Younginvestor2 Well-Known Member

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  12. gman65

    gman65 Well-Known Member

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    Stop looking at 赌场 areas? ;)
     
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  13. Younginvestor2

    Younginvestor2 Well-Known Member

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    What does that mean?

    Anyway more and more similar ones marking exodus of investors:

    1. 29 Regent St, Mount Waverley
    29. Regent Street, Mount Waverley VIC 3149 - House For Sale | Domain
    Quoting $2.7-2.95m. Last sold $3.3m in 2015

    2. 1 Blair Road, Glen Waverley
    1 Blair Road, Glen Waverley VIC 3150 - House For Sale | Domain
    Quoting $2-2.2m. Last sold $2.45m in 2015

    3. 1-2 Turner ct, Glen Waverley
    1-2 Turner Court, Glen Waverley VIC 3150 - House For Sale | Domain
    Quoting $1.65-1.8m. Last sold $2.65m in 2016

    Scary times ahead as investors exit
     
  14. The Y-man

    The Y-man Moderator Staff Member

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    Why so? I thought it would be a potentially exciting time for those wanting to buy in? Esp PPOR buyers.

    The Y-man
     
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  15. Younginvestor2

    Younginvestor2 Well-Known Member

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    There is a transaction when 2 sides disagree.
    Buyers think there’s potential upsideto the price, sellers think there’re potential downside. Most ppor buyers are unsophisticated mums and dads. When the investors run and willing to sell at a loss, should mums and dads rush in?
     
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  16. The Y-man

    The Y-man Moderator Staff Member

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    IMHO
    1. Investors are not always right - they are often unsophisticated "mum and dads" (and singles and childless couples) or just plain over ambitious.

    2. My general philosophy on PPOR is buy it if you can afford it - it's a lifestyle choice. I do however agree that the "unsophisticated" can land themselves in trouble becasue they don't know what they can realistically afford. However, if the prices are down on before, there is less chance for them to stuff up (or at leas stuff up by a smaller margin) which I think is better. The "unsophisticated" do not look at the house pirces when they buy a PPOR, so if the price goes down after they have bought, they would probably be unaware/uninterested. As long as they keep paying their bank repayments, the banks will be largely uninterested too.

    The Y-man
     
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  17. gman65

    gman65 Well-Known Member

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    Chinese "casino" suburbs.. Glen Waverley, Box Hill, Burwood, Doncaster, etc. Chinese are gamblers, not investors. Look into other areas and you'll get a quiet different picture. Don't be blinded by tunnel vision.
     
  18. mickyyyy

    mickyyyy Well-Known Member

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    Does anyone know who are selling these things? i.e young professionals, downsizes/retirees
     
  19. Oliver Shane

    Oliver Shane Well-Known Member

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    People who NEED to get out!!
     
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  20. mickyyyy

    mickyyyy Well-Known Member

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    Oh yeh, cool story bro LOL