Sydney too expensive? Try Melbourne.

Discussion in 'Property Market Economics' started by KateAshmor, 24th Jan, 2017.

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  1. KateAshmor

    KateAshmor Victorian Conveyancing Lawyer Business Member

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    Sydney's median house price is now $1,123,991 according to this Domain article.

    That's $300,000 more than Melbourne's median price, which is $795,447.

    Yikes!

    No wonder I'm seeing so many Sydney-based buyers looking to enter the Melbourne market.
     
  2. Biz

    Biz Well-Known Member

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    "For many investors, Brisbane could be more attractive and there could be more space for prices to grow as incomes are at similar levels to Sydney.

    In Brisbane, the average income is $82,980, compared to $88,692 in Sydney. The median Brisbane house price is $540,758."

    Marinade in that for a while...
     
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  3. MTR

    MTR Well-Known Member

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    Melb median has increased significantly, I expect it will continue to do so in 2017
     
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  4. Otie

    Otie Well-Known Member

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    Go Melbourne...
     
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  5. MTR

    MTR Well-Known Member

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    you beautiful thing:p
     
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  6. standtall

    standtall Well-Known Member

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    All property markets (Sydney, Melbourne, Brisbane, Adelaide) will continue to grow until stock market recovers, interest rates start going up or unemployment starts going up.

    Average real estate returns are 8-9% per annum and with optimal leverage (80% LVR), even an average investor is looking at 30-40% equity growth on their deposit investments which is more than Warren Buffet made in his heydays of investing.

    I don't think Melbourne is an alternative to Sydney or some other city. It's about finding a good property with great fundamentals and you will find them everywhere if you look hard enough.
     
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  7. JohnPropChat

    JohnPropChat Well-Known Member

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    That pretty much is the main reason why I love property investment. Leverage and if required, the ability to carry paper losses (can't do that with margin calls) until market turns and last but not least - everyone wants to buy a house (irrespective of their ability to make money out of it)
     
  8. MTR

    MTR Well-Known Member

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    everyone keeps stating ...interest rates need to go up before markets correct.......interest rates are already rising
     
  9. MTR

    MTR Well-Known Member

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    ouch paper losses, no thanks.
     
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  10. JL1

    JL1 Well-Known Member

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    ^^ This. BUT if we are speaking broadly about cities, then...

    Brisbane also has less than half the population growth it had 8 years ago, a 1.25% loss in number of jobs over the year, and approving/building 1 dwelling for each 1.2 or so new people.

    NSW and Melbourne have heaved on record population and jobs growth while other states have gone backwards (some more than others...). There is a total supply/demand imbalance that has caused the boom, and my fear for Brisbane is that its potential is artificial. The figures do not stack up anything like Sydney or Melbourne, and too often in peoples' reason for its potential there is a comparison to Sydney or Melbourne and no actual analysis of the state.

    As for the Sydney Melbourne debate.. employment in VIC has grown by 4% over the last 12 months, NSW has grown by 0.05% (with a 2.42% fall in full time positions). NSW's prime was 2015, 2016 to me was fuelled by slow completions and population growth. By jobs data, it is well past its peak though population growth is still strong. VIC is still growing its population and jobs at record levels, and it is also building/approving less dwellings per new resident than any other of the big 5 states.

    We know rates are going up at some point, jobs will slow as cost of debt/construction goes up, and overall there will be a slowdown. Migration will slow when jobs cannot support it, and the housing market will slow. Based on jobs/population growth, dwelling approvals/completions, Melbourne is best prepared to weather the downturn.

    Depending on how the next 6 months go, Perth is actually not in too bad a position but thats another story.
     
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  11. bumskins

    bumskins Well-Known Member

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    I'd agree you can't put Brisbane in the same category as Sydney/Melbourne on a Macro level. As mentioned population/job growth are nothing like Syd/Melb.

    Melbourne / Sydney are an interesting one in my opinion. Melbourne has the security of a far lower median as well as a higher population growth rate.
    But it's also more leveraged to its high population growth rate. Any falls in population growth / dwelling construction will hurt.
    Not to mention some large industries going through a difficult transition.
    Car Manafacturer's and associated Industries going, very large Brown Coal Mines & Generator shutting down. Aluminium Smelter may have had a stay of execution for now after large Government subsidies.

    Like after a bull run in the share market, you just want to hope what you are left holding is quality. Another issue is Yields are almost at rock bottom with
     
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  12. JohnPropChat

    JohnPropChat Well-Known Member

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    Haha. Yes no one wants them but sometimes if one of your IPs goes underwater - no point in crystallizing your loss. Don't you have one in Mandurah that is a paper loss?
     
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  13. zed_kid

    zed_kid Well-Known Member

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    They’re rising, but rising by ‘stealth’. As soon as RBA officially lift rates it’ll be an ‘in your face’ scenario
     
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  14. melbournian

    melbournian Well-Known Member

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    Interesting. I saw this in the papers today on the median. Really there is still many suburbs not in the million dollar (if you see, South East, North East, North and West). If you look at the graphs in the age - how the growth of the million dollar suburbs ( it spread out slowly form the expensive areas and mostly correlated to distance to the CBD)

    I was looking at cottages in Sydney same distance to CBD and some were like 3-4mil where else Melbourne is only 1-3 million. IF you compare point cook, you still can get a house below 500K easily when really couple years ago it was 300kish. 26Km odd to CBD. If you go to northern suburbs many are still below the median of that 795K. even some parts of preston and glenroy etc you still can get below this price median.


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  15. 380

    380 Well-Known Member

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    I posted extensively on Vic market last year and bought and sold few development sites!

    We were aware of fundamental of Melbourne market growth!

    Market is still pretty hot for right product!

    Townhouses and houses are still good buy!

    I would stay clear of apartments - too much stock
    Is being built and plenty in pipeline!
     
  16. standtall

    standtall Well-Known Member

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  17. Omnidragon

    Omnidragon Well-Known Member

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    Going from second most expensive city in the world, to sixth most expensive.

    Or you can try New York, LA, Chicago, Tokyo, Singapore, Paris which are all cheaper.
     
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  18. Otie

    Otie Well-Known Member

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    What are the suburbs in the middle of the red patches really close the the city that aren't in the $1mil club yet? I have no map to compare..Interested to know which suburbs they are
     
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  19. JL1

    JL1 Well-Known Member

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    95% sure its CBD, Collingwood, Abbotsford, Richmond, Burnley, Southbank, North Melbourne, West Melbourne.

    I would say that the study included apartments. Houses in those suburbs are mighty expensive but with a high house/unit ratio, the average would likely be less than $1m.
     
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  20. Ekin200

    Ekin200 Well-Known Member

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    Well said. Probably the best post in this thread. Capital growth in Brisbane is going to correlate heavily with jobs growth, income levels, quantity of well paying jobs and net increase in migration.
     
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