VIC Why Pascoe Vale is relatively Cheap

Hi Guys,
Completely new to property. I am looking to buy a 3 bedroom townhouse in Melbourne and going through prices of suburbs and notices that Pascoe Vale, considering the distance from the city is relatively cheaper.
Eg 1/160 Derby Street, Pascoe Vale, Vic 3044 - Property Details

If I look at similar distance suburbs in the east its much more expensive

Why are the factors affecting this price? Appreciate your thoughts.
Cheers.

 

Hi,

Location, location, location

Check this one, same distance from CBD but on the west side of CBD (Braybrook), brand new townhouse and 42k cheaper than the one you mentioned from Pascoe Vale:
13/40 Errol Street, Braybrook, Vic 3019 - Property Details

I think distance is only one factor, demographics and infrastructure of the area has a big impact on the price.

 

Thanks for the reply. I can understand that other factors matter, but when we compare the value for money its hard to resist. I mean how much does an infrastructe differ between different parts of melbourne middel/outer suburbs. On a day to day basis, you need place to shop to which u can drive to. About demographics, unless I get stabbed or robbed, I am fine.

Obviously I cannot get anything in the east for 700K unless I go further out.

So I wonder what do I get if I put another 200K and buy in Nunawarding or ringwood which is about 30K from the city.

 

No trams. Most parts are beyond walking distance to the station. Need to drive more. Not as much tertiary education nearby as the likes of Caulfield or Box Hill. Doesn't have the urban 'identity' of a Brunswick, Northcote or Moonee Ponds and you may need to go out of the suburb more even for regular shopping. But it's hilly with some good views and is relatively close to Essendon (which has lots of schools) so would be an excellent family area. Not so exciting for singles.

 

Transport is not the best in Pascoe vale and surrounds but there are buses and they are fairly reliable and also you have train lines on both sides (Craigieburn and Upfield line).
A few good primary and secondary schools, lots of green parks and as for amenities i know that bunnings,Whoolworth, Coles, Aldi,kmart are all less than a 10 minute drive.

 

Affordable yes, cheap no. In 2007 a whole house on a full size block was a little over $300k. Also look at rental yields, they are typically a good starting point of gauging fair value.

151 Derby Street, Pascoe Vale, Vic 3044 - View Sold History & Research Property Values - realestate.com.au

IMO there is no activity in the area. Coburg is the closest activity hub, and that is in a bit of a gentrifying transition right now, so you're more likely going to Essendon or Brunswick for a beer or meal out.

Personally i'd trade that off for a back yard and enough space to have a dog and rebuild a car, but for a 3x1 townhouse with not even a private courtyard... nah.

 

So in your opinion is it better to buy a house somewhere like craigieburn, point cook etc for the same price?
I was thinking along these lines, but one of my investor friend is against the idea. He says that in these outer suburbs there is supply and the capital growth will not be as much as you would get if you buy a townhouse in the inner middle suburb.

 

I really can't say i see either as a good opportunity. A year ago there was a significant price differentiation between inner-middle and outer-middle suburbs. the step between places like Reservoir to Lalor was near 50%. Likewise for coburg north to Broadmeadows.. two suburbs away, 50% price split. that has now closed, and i think that melbourne overall is largely evenly valued for the demographics that will buy/live in each area. Rental yields are also starting to reflect this - a year ago it wasnt hard to find clear of 5% gross in some of the less desirable suburbs of melbourne. That is fast fading.

I am a Melbourne skeptic though. Looking at development approvals, they have in recent months shifted from high rise to townhouse/new build detached. the high-rise stock has yet to hit peak completions, something we will start to see in a year. likewise, the shift to houses will really start to hit in a year because they complete faster than highrise. I think there will be a double-whammy of completions late next year that will start to push stock levels up in a very similar way to what Sydney is seeing now. This will be exacerbated by a slight slow-down in population growth in Victoria as i don't believe jobs growth will continue at anything like the rate is has done in recent years, and the underdog states of Qld and WA will continue to recover and lure more of the job seeking overseas migrants. Throw in a rate rise or two and Melbourne is toast.