Units in Dandenong v Blacktown - help me understand

A simple question: why units in outer Melbourne haven't moved at all in the last Melbourne boom? I thought that the unit oversupply is in/close to Melbourne CBD? Why places such as Dandenong for example haven't moved at all in terms of unit prices?

I have never been in that part of Melbourne, so I don't know if my thinking is logical, but let's compare Dandenong with Blacktown in Sydney simply because they are approx. the same distance from their CBDs.
Google maps say that Blacktown is about 36km (takes 42 min) from Sydney CBD by car, Dandenong is 35.6km (33min) from Melbourne CBD. By train, similar travel time for both. Yet, as per SQM website, Dandenong 2 bed units fell by over 7% over the last 3 years with an average price of 292.6k. At the same time, Blacktown 2 bedders are up 48.7% with average price of 477.8k. That's over 63% difference in median prices. Looking at realestate.com.au, median prices for Blacktown (425k, which is more realistic than SQM) compared to Dandenong (290k) paint similar picture.

Melbourne population is not that much smaller than that of Sydney. The population forecast is for Melbourne to overtake Sydney in the next 15-20 years or something like that. Google earth does not show heaps of green around Dandenong, it is nicely filled already.

So, what is going on, why there was absolutely no price increase for Dandenong units in this growth cycle?

What is going to happen with Dandenong unit prices in the next 5 or 10 years in your opinion?

 

@Redwood Ivan, your opinion would be very valuable here

 

Dandenong has its good parts and bad parts. There are large enclaves of sri lankan and indian communities which are in demand and a lot of ethnic communites as well african etc. A lot of centrelink people choose to live there. it is 35km away from CBD which is not that far but not that close either. Not sure abt blacktown is like but there are a reaonable amount of foreclosures in dandenong. Suburbs like doveton (which is right next door) was known as foreclosure capital of victoria for a few years. Dandenong also has a stigma of being a rough crime suburb similar to footscray many many years ago but foortscray is like next to the CBD. It is meant to be one of the growth areas for victoria and lots of development. I think it will do well for houses but not units (why would someone want to buy a unit 35kms away) there is still a fair bit land etc around those areas and one could get a house on ur own plot in the western suburbs 29-25kms away for similar prices. i think clayton which is 10km away from dandenong would be a better bet.

i've been watching units as well but not not in dandenong rather in the suburbs of glen waverley, doncaster, doncaster east, balwyn, camberwell, mont albert etc. i dare say some when renovated have moved 30-50% though a unit in glen in the GWSZ was passed in a million this week. The reason is strongly related to the schools and the median houses in the area. if someone can't afford purchase a 1.2 mil house, they settle for 700-900K instead with a landed villa.

 

With prices the way they are in Sydney, most newcomers (immigrants) can only buy units in Sydney's west. Can't afford anything else. This is partly why prices went up as much as they have. Sounds like Dandenong demographics are similar. So why wouldn't you buy a unit in Dandenong then, looks like getting to Melbourne's CBD from there is not too slow. Really puzzled with this difference between Melbourne and Sydney unit price growth. Good potential there I think for someone limited to 300k investment wanting to invest in Melbourne. Or am I completely misreading this?

 

I think there's relatively too many land buying options in Melbourne whereas land buying options in Sydney is extremely limited. Melbourne can expand West, North, East, South East and all points inbetween but Sydney can only go in a West, South West and North West direction. So if none of these appeals and you cant afford a house and you dont want to commute from the Illawarra or Central Coast then people live in a unit. Historically, Sydney has been releasing not enough land for the amount of demand.

Even units were in short supply from developers till recently.
So all these factors simply drives up Sydney's property prices...

 

Compare a Melbourne suburb which is about 1/2-2/3 that distance from the CBD. Blacktown is a city, Dandenong has a long way to go by comparison. Alternatively look at somewhere past Penrth eg Kingswood or lower Blue Mountains.

 

spot on @Gockie - land plots are still in limited in demand 30kms out in sydney but there is still a lot of blocks for sale in the west

 

I own a unit in Dandenong. My aunty and uncle live in Blacktown. I grew up next to Dandenong and owned my first home in Keysborough (just next door to Dandenong). You're right: Dandenong hasn't moved much at all. If it wasn't for newly arrived migrants--India, Bangladesh, Islander, Iraq, Middle East--it's units would be mostly empty. Whereas all my cousins and relatives who live in the western suburbs have properties that have sky-rocketed. Is it because property prices generally in Sydney are much higher--I don't know.

If you look at that corridor, you will see that there has been a creep effect. Many years ago the cheaper places on the periphery of the city (on the south eastern side) started just outside Caulfield. It started to creep down, from Carnegie to Oakleigh. Years ago Oakleigh's prices were the same as Dandenong's. Now they're much higher. I think Carnegie has grown about 30 per cent in the last year (don't quote me).

I don't know what Westall and Springvale are doing. Hopefully they're next.

I tend to think that there were other suburbs much closer to Melbourne (in other directions) than Dandenong, and that's why people have avoided Dandenong. Also, it doesn't have a good reputation. It was a big farming community in the 1950s. I think that during the Melbourne Olympics it was decided to put all the public housing in Doveton. It was then a combination of solid working class and farming. The suburbs encroached and the farming disappeared.

 

Most people if given the choice would prefer a house over a unit. point cook a suburb 30kms away from CBD gives new houses with its own block of land 170-250sqm houses. the median price was in the mid 300Kish now has gone to 400Kish. If you have kids, medium to large dog and 2 cars - would you not want a house as oppose to a unit. Brand new with warranty. Hence melbourne although similar to sydney are different in that respect. Point cook was among the top suburbs for number of houses sold in australia last year.normally new land estates do not do too well but population growth and demand for houses in melbourne has prompted the number of sales

No Cookies | Herald Sun

 

Thanks Melbournian..... most of the credit should go to the very smart guy known as @euro73, I just added few extra thoughts of my own and expressed it in my own words.

 

@melbournian, sure, I would take a house even on a tiny block of land over an apartment, but when you just move to a new country, limited income, no massive savings, maybe relatives to support financially, then it would take you a while to save a deposit even for an unit in mid 200s.. So, for them, it is not what they prefer, it is whatever they can get. I know this, I had to start this way in Sydney.
So, for that reason, could this eventually drive unit prices up in places like Dandenong, Noble Park? My feeling is yes, but when?

 

Dandenong as a suburb is still heavily slanted towards houses with land. There are streets and streets of 60s weatherboard on 700-1000 m2. There are at least 4 current listings for unliveable (or close to it) houses on development sites
And it's still very much seen as the fringes and a rough area - if you're going to buy there to live it's probably because you want some land

 

Yes there a lot of migrants as posted by @BigKahuna from Bangladesh, African etc. these demographics have smaller median incomes compared to the other demographics of other migrants from korea, China, Indonesia, Taiwan etc. also nowadays I do believe there are more strict with the type of migrants that come in with really a focus on net assets to get permanent residency, what I think dictates the the capital growth in these circumstances is the increased level of incomes to purchase or demand from other groups to push the prices. Most people from Dandenong come from blue collar jobs with non-consistent income levels hence the growth is limited. And even ones who start out and subsequently get better paying jobs there will move away to other better parts. It needs like a university or something to attract demand to the area. Clayton I remember u get can a decent block of 900 sqm for 600k not too long ago now is 1 million due to increased demand for Asian migrants to the unis etc.

 

Pay is lower in Melbourne.
Edit : Unit blocks in Sydney are vertical. Everywhere ese, including Melbourne, they're horizontal. (A simplistic rendition of what has already been said.)

 

That is true similar jobs in Sydney pay more

 

Not by that much!

 

@melbournian I'm hoping that creep-effect will reach Dandenong. As you say, Clayton used to be cheap--years ago it was just as cheap as Dandenong, Noble Park, Keysborough. Now it's up around that million mark. I'm hoping Westall, Springvale, Noble Park and Dandenong are next--down that Princes Hwy stretch and along the Pakenham railway line.

 

Yes, many of the older weatherboard homes in the Dandenong area are from the era when Dandenong was a wealthy farming community. Those homes would have been absolutely beautiful in their time. They are now dilapidated and no one wants to restore them. The features on some are just gorgeous.

I've recently noticed that blocks in Dandenong in the residential growth zone (with plans) are selling for about $800K. One was in Hemmings Street. Block was about 900 sqm.

 

We are talking about completely different geography. Sydney's has a CBD that is heavily biased to the East, is split by water, and as a consequence has bottlenecks galore, and is 30-40 years and a dozen proper railway lines off the pace of where it should be , public transport wise

Melbourne is a planned city , approachable from all sides with plenty of room for orderly, sensible expansion. While it may have "traffic" , it doesnt have Sydney traffic...

Sydney's only room for expansion is the NW and SW, and time and again it is a cluster#*ck in so far as...lets release 10,000 lots of land, 15KM from the nearest railway station and see how that goes...

Net result? People who will or must ( because of budget) tolerate the horrific 3 hour daily commute in order to have a new Mcmansion will ( or must ) move there - and those who dont want to or dont have to (because of budget) will more often than not pay absolutely crazy money for what is generally inferior , older stock in the inner west, lower north shore and east - because it provides for superior lifestyle.

Im not talking about trophy homes. I'm talking about 2Mil plus for 70+ year old 3 bed cramped red brick federations or 100+ year old terraces, on 200M2 -300M2 .... with old plumbing, old electrical etc...

Viewed in isolation, the new Mcmansion is a vastly superior dwelling in every way, except it's stuck on the cruddy outer fringes of Sydney's geography - which is aesthetically Sydney's greatest asset but also Sydney's greatest achilles heel, planning and infrastructure wise.

let me put it this way - if Sydney had excellent rail to all parts - and I dont mean a new kinda sorta rail line like the NW Rail link - I mean multiple new , interconnecting heavy gauge rail lines to the NW and SW and linked at Parramatta, Penrith , LiverpooI, Epping etc... I can assure you it's real estate prices would be transformed.

I think many many many people would LOVE to have a new shiny home in the unwashed SW or NW for less than they pay for an old cramped box in the inner west - IF they could commute to work in the CBD within 20 minutes -30 minutes ...

Wont ever happen though... between local and state Govts ...pathetic.

And that my friends, is precisely why Sydney will always always always be the most expensive real estate in Australia... its geography, coupled with decade after decade of incompetence in providing substantial, transformational heavy rail infrastructure. And its also why those with old Sydney postcode prejudices who still think Parramatta is the sticks, are fools... because this metro area is like an ageing tree... with ever expanding rings ..except the tree trunk is a semi circle shape and the rings only ever expand OUT from Parramatta and the greater west... so places like Parramatta or Blacktown, which used to be "a long way out " arent within 15KM of the fringes now.

Anyhoo...

 

There are few high rise apartment in the making in Blacktown. These new proposed are much higher than the traditional 6-8 level. They are more liken 20+ level. Something to be watch out for.