VIC The Market has certainly changed direction - Melbourne

That's all good, but still not sure why you call ppl who loaded up on properties pre boom "reckless and stupid".

 

I agree with you but it goes back to what some individuals were saying earlier - there are diff markets (some bad, some worst). i personally don't think it is just lock and load - wait for CG.

since you're from melbourne, i am sure you can admit that southbank apartment market is one the flatest or if not the flatest markets in melbourne. This was a market i was operating in at a point in time - sometimes making gains of 6 figures within 6 months many many times. There was no Boom or Bull market and no such thing as regular super growth like compared to other suburbs.

AS for shares, stocks or trading - you can make money too in the bear market - there is CFD (contract for differences) which you can leverage on short term punts betting the market will go down 10K could give you 100K exposure on a variety of items shares, stocks, forex etc. You also could organize complex deriative trading based on certain positions in the market with call or put options. As you see it is much easier to get this organized 100-500K position using these methods. I recall trading in the GFC when the ASX200 indexes were going up and down based on certain news items - you oculd make 20K a day on a good run.

why i say there are diff markets, I think the best way to put it is to cite examples where a lot of my relatives live in doncaster, balwyn, canterbury, box hill, kew. For them they all think the markets are here in the east and some have never been to the west (like the likes of pt cook, tarneit, werribee) or would not go north say the likes of epping or thomastown. and would never consider buying or investing outside of their preferred suburbs. A relo of mine purchase a doncaster place 1.3 mil about 2-3 years ago. everyone knows that was when the market was at its peak. Now u go to auctions a double block can't even get 1.5mil on average per block. Contrast with someone who bought 3 blocks in the west H&L @sash - say 1.2 mil around the same period and you have made 400k.

 

My thinking about a year ago was when the crash comes in it would be the more expensive suburbs that would have tanked or were over inflated by Chinese investors in the first place. I was pretty surprised when I recently started to look on realestate.com.au again in suburbs like Heidelberg West/Heights selling for high 600ks or at best low 700ks. This is a dramatic decrease from 2017 when I saw ex gov houses on 600m2 blocks going well over 800k.

 

Good observations - you are correct they have come off a peak - even early 2018 some were hitting nearly 900K. NOw i see them in the 700kish like this one. THis property would have been a 900Kish last year as it is a corner.


the problem is Heidelberg Heights/West is not that close to the shopping and transport and the zoning is GRZ with high concentrations of housing comissions. Banyule is also one of the hardest councils with lots of vegetation overlays. If you see the suburb next door like Reservoir (the growth zone sites have all now entered into the 800Kish and 900Kish when it was originally lacking behind Heidelberg Heights/West). Diff movements diff times.

 

I'm just curious of how all of this will pan out to be honest. I had a friend dumping $1.25mil into Box Hill North early this year. 600m2 and weatherboard but an easy fix ($30K and I think it will be quite comfortable to live in). But gee, I'd hate to see how much he will be losing now when I think lately I've seen an arguably better property in his street sold for 1mil whilst being slightly bigger - 650m2.

Secondly the real question I'm dying to find out is when it's a crash what would it really mean? Do prices of suburbs like St Albans fall back to something like 500K or will it be more of the expensive suburbs going backwards to something still not reasonable but not as outlandish. Say Glen Waverley falling back to 1 mil averages?

 

Hi

Caught up with a friend last night who is an estate agent in south east Melbourne and I asked him how the market is going. His reply was out of the two offices that his boss owns, 3 sales staff have quit over the last month and out of the past 11 auctions 9 of them have passed in.

He tells me the buyers are attending the auctions but aren't bidding in fear of paying to much and hoping to pay less in the very near future.

Regards,

alicudi

 

Ouch, if you mate borrowed $1M, he just wiped out his equity/capital. Based on that very small sample, it says Box Hill North has already crashed 20%.

 

Opps typo! I meant 1.1mil!

 

i think 1.25 mil is ok for 600sqm in BoX hill North. i have seen stuff going for 1.4-1.6mil so your friend bought well. Glen waverley is also quite huge - for the ones in the school zone - will stand up but they are still a lot of ppl looking to live in that area. TBH the last few weeks there hasn't been that much of worthwhile auctions since then. St albans still holding atm 600Kish for standard blocks probably high 500Kish for smaller ones. Well mostly viets - who are cashed up.
Will have to see over the weeks what are selling. Like high end places like essendon and aberfeldie are still holding up and selling. Doncaster i have seen been hit hard.

 

We can talk about markets within markets till the cows come home, but at the end of the day when the market sentiment goes from positive to negative, the end values impact on all markets. This is exactly what buyers do..... they get nervous and sit on their hands..... why??? fear sets in......prices will/may fall further back.

Then what???? More supply comes to market and that is exactly what happens, prices do fall market and the market becomes price sensitive.

Not expecting a crash in Melb, as lots of good stuff happening, however, just part of the property cycles, up/down/sideways..... just make sure we are buying on the way up......otherwise its like catching a falling knife as they say

 

I have a work colleague who in his mid 20s is well on his way to financial freedom. Just purchased his fourth IP and has been told by the bank he is in a position to buy a fifth. He is also one of the most financially illiterate people i know. Has zero knowledge of finance, economics and is completely ignorant of market fundamentals, cycles, intrest rates, etc.

He has built considerable wealth armed with only the cliche of "property always goes up". Has also generated alot of equity as was unaware he was paying well above the minimum repayments on his all P&I loans. Also contributing to this and i **** you not, did not realise he had the option to structure the loans IO!

Having achieved this without any fundamental knowledge, would he be considered reckless? Stupid? Lucky? Or Maybe ignorance really is bliss!

 

There's evidence that mortgage stress is higher in the blue chip suburbs, so my guess is that it could get messy in the Kews and Tooraks, and perhaps less so in the likes of St Albans.

That said, my history of prediction isn't great, so you'd be better off ignoring my investment advice!

 

lol that's one **** I like, regardless if He's reckless, stupid, lucky and ignorant.

 

Interesting. How hard has Doncaster been hit by?

Interested which areas have been hit hardest in Melbourne to date.

 

I am really surprised. Isn't Doncaster supposed to be one of those nice family suburbs with good schools and shopping center, lotsa Asian buyers, etc etc that would hold it's value in a downturn? How hard has it been hit % wise? 10%?

 

I once drove to a friends place in Doncaster East. It was actually 10k.m drive (15 minutes no traffic) from Park n ride in Doncaster Eastern Fwy entrance. So clearly suburbs within suburb/s may apply.

In regards to Box Hill North it seems good value now and one of the suburbs that clearly has dropped over 10% (probably closer to 20%) from peak

Sold 16 Cherry Orchard Rise, Box Hill North VIC 3129 on 20 Jun 2018 - 2014346097 | Domain

As a long term local around the area it is not want most buyers are after as
1. No train within walking distance for most locations
2 Many locations not in a "good high school zone" public e.g. EDSC, Box Hill High, Balwyn High, Canterbury Girls SC
3. Not close or easy access to top private schools (need to be closer to train or the whitehorse rd tram 109?)
4. Freeway noise which everyone will get used to after 6 months
5. It is not a coincidence that the North suburbs (Balwyn North, Mont Albert North, Box Hill North, Blackburn North etc.) have always been cheaper

 

I had a cursory look at the stats, Doncaster still seems to be achieving good prices but the data is flat lining.

 

Went to a few diff markets, i went to doncaster - corner block. pretty heated auction sold 1.5+ mil near to the westfield. would say the market is patchy in this sense. Would have thought the tram rd sites would be better.



Also went to albert park auction (now we are in the 3 mil range)- there are bidders up to 3.175 mil and sold at 3.32 mil - for a single fronted cottage - lots of ikea and kmart furnture (that looks good though) - you don't need an exp reno or stage to make things work.








Went to the 70 plus sqm apartment in SOuth melbourne - heated auction with 6 bidders and sold 665K at auction. Big Crowds - old carpet unrenovated apartment still sells - which is why i said the apartment market is a super big market (student acc, high end to medium to low end), size vs new, OTP)



Werribbee - i belive was a perfect 8 out 8 auctions (sold) - coz price bracket
And Melton (also broke the 500K mark for sub 600sqm block ) this week
Pt cook - sizes for my block - now broke 600K mark as well

however you contrast with the super high end. LIke said the higher end market are the ones who are hid hardest. Balwyn 4 out of 6 Passed in. Bentleight East 5 out of 10 passed in. similarly for Canterbury, Mount Waverley, Ashburton, Ashwood, Port Melbourne and Sandringham which are million plus suburbs.

My relatives is now regretting buying 1 mil plus in doncaster - and that is what happens when your world is always only in the canterbury, doncaster, balwyn, box hill and you disregard other suburb markets.

 

Thanks for the review, great and entertaining as much as it informative as usual! You should set up a blog!

Hmm so I am partially correct so far in my guess - market really has swung downwards in a lot of the expensive suburbs.

Surprised in what way? You expected it to decrease more?

Really? My friend purchased about 1.5kms inwards towards Box Hill central for significantly more (1.25mil) = $217,500 but it was also renovated and on a sloping lot. The one on 16 Cherry Orchard Rise would have been a better bet as it has a much better layout.

I actually find Box Hill North fairly quaint. Funny, I looked at Box Hill with my elder sister years ago - back in 2001 when I was still at uni earning peanuts on a part time job. I think she was on $40K back then and I was probably on $15K - but I was on the cusp of finishing uni and had already secured a graduate placement but didn't start yet. Anyway, back in the day, properties were going for $290K to about $350K and these were a heck of a lot closer to the station and better stock.