What will stop the BOOM in Sydney and Melbourne

My partner's studio in Sydney doubled in value in 4 years. She sold it recently and cashed out. Do you think apartments in Melbourne, close to the city could ever present such good value? I mean with Melbourne population forecasted to keep growing, wouldn't people prefer to live in apartments close to the city than houses far away? Is there a price at which an apartment is say Carlton would be a good buy?

 

There was an Artdeco home converted to apartments in Pigdon St Carlton North that sold for 690k a neighbour was telling me (can't confirm) could be leased for ~550 a week, walking distance to the cbd and busses/trams under 100m away.
I personally couldnt see that doubling in 4 years but just an isolated example in an area you mentioned.

 

Part of the cycle

Time to sit and watch

 

Yep......just like 1929 to 1946

 

Nice...is that in Potts Point, Eliz Bay, Surry Hills, Darlo, Newtown .....this product in these areas is gold.

As for Melbourne...the value in apartments is incredible...you can get 1 brms for under 400k....within 6 klms of the city....there is a oversupply now...but in the future there is real market for these....

 

I would buy in 283 Spring st Melbourne - opposite carlton gardens, easy access to underground. and trams in the free tram zone. it is a big bonus - though I would only buy the larger sized apartments

I mean ppl can say what they want - it all depends on how they see it. Even now there are opportunities through refurbishment. I used to do this a while back - and some made 6 figure gains in 3 months (through sale not valuations) etc.

But if it was to buy now I would stick to proposed underground stations. The tram system is a major bottleneck if you live on the fringes of the CBD - this will present. Parkville Arden all close to Vic Mkt and the hospital district. If you know someone who works on-call in a hospital - they will tell you why it is convenient to stay/work close to hospital. Anyway that is just my personal view.

 

Yeah, I guess I'm an alarmist because of what I experienced in perth. I gotta remind myself that the Perth market got hit from two angles: Over-supply and mass exodus.

Melbourne apartments are oversupplied but there's plenty of people immigrating to absorb that given enough time. Rent still seems strong which will help fight of investor panic.

 

You know my theory is that big things like Sydney's capital gain usually happens by surprise. When people try to immitate that elsewhere it doesn't work out. For example, Melbourne started to experience a market upswing in 2011 and everyone predicted we'd end up like Sydney selling old apartments in Footscray for 650k each. So all the developers tried to cash in an built thousands of dog boxes everywhere and the area peaked at 350k with a real risk of correction coming because there's too many apartments in the area.

 

Ok i

I am located in Perth most of the time.

Yes massive exodus due to the end of mining boom, those high paying jobs no chopped.

 

Speaking of Perth, I reckon that'll be a great place to buy in (perhaps) around 12-24 months.

 

I will let you know in 12 months time? I am certainly not buying at the moment.

Developments in Perth make no sense, in other words, profits are too skinny, high risk.

Buying property where rents have fallen back 30% and no signs of growth makes little sense to me.

I would prefer to buy when I see some signs that the market is starting to recover and stock is starting to shrink, I see neither at the moment.

Some investors prefer to buy in this type of market as they have no competition. I would prefer the competition and see the prices rising.

MTR

 

Unliveable studio scores $550k

Thar ya go.....550k for an absolute wreck..it would seem....some people will pay for things in a certain location.....

Some one I know could not even achieve 600k for studio in Potts Point.

 

We sold the studio for 620k in June 17. It was located in Surry Hills, close to the new light rail that's coming up. Good location but I think we got out at the right time.

 

That is great price..what did you buy that for?

Some 1brms in Surry Hills have hit $1m.......it is one of those areas the pink dollar is willing to pay $700-100pw for a 1 brm! It is a lifestyle with a lot going for it.

 

You and me both - me with Gladstone. Values dropped 30% and rents by 66%.

 

I think in general this is a very wise move, although in the North Melbourne area I sold as it's becoming dominated with unit towers. I hope they don't turn it in to a 'Southbank'.

 

This thread is starting to get quite interesting as it evolves we can now see that the markets are now forming some cracks.

What will stop the boom? NO FINANCE for one, no money no buying.
Investors are out of the market from what I am hearing, FHB market still going in some markets.

 

The cracks are definitely forming...finance is only one reason...the other is that wages are just not increasing at the same rate and job loses in better paid jobs is still high.

The jobs replacing these jobs are not paying as highly.

The other thing is the migration away from Sydney is now pronounced...this time we need to also add baby boomers to the equation even if only 5-10% move away from expensive Sydney to a seachange that will have a huge impact.

The same thing is happening in inner Melbourne.

The other trend is migrants are now choosing Melbourne and Brisbane over Sydney due to cost of living. This trend will be pronounced till the equilibrium is established. Melbourne will go the same way on about another 18 months or so.

 

Agree with you on this.
Hopefully investors have already accessed their equity or sold out.

 

Yes...but then you are an investor who has seen many cycles...

I worry about some of the newbies......they have no room to move.

If people have not got out by next June...they will need to ride it out till next cycle or take less.

I am not trying to frighten anyone but just communicating what I see as an investor.

I am seeing the same thing in Melbourne. Even Outer Melbourne is starting to hit its straps. For example blocks of land being sold for 380k in Cranebourne/Officer is ridiculous...the end cost will be north of 650k after stamps....and other costs! You kidding me

For example ...I wanted to sell my house in Officer....the agent quotes 550k plus...my final product only cost 320k...for both house and land.