They are about 100 sqm in area – some one, some 2 cars. I think the agent said Katsilidis (who ever he is) designed them. There are lots of new otp apartments in the docklands & southbank but none around prahran & armadale where i am looking – is it not supply & demand for capital growth ? None at docklands but plenty of scope in these areas. I am debating whetehr to buy or not.
The balconies are in addition to the 100 sqm floor area. The name of the development is Stratford
Melbourne apartments.
Enough said.
Initially I had just written the first two lines but thought I should expand. The latest statistics are showing a decline in apartment prices in Melbourne and this has been happening for a short time now.
For a property in the high 300’s you are going to be struggling to get a positively geared property. The tip for today is soo appropriate “your deal’s in trouble if the difference between making and losing money is claiming a tax deduction for depreciation”.
I think now is the time to be sitting it out and waiting for property to decline even further. Every talks about the property decline and then say “gee in 2 weeks I’ll make a killing”. Well look at the ABS statistics. Over the last 20 years we have two period of negative returns (someone correct me if there are more I am working from memory). Anyway these downturns lasted for 2 years before an upturn. However this market is a lot different in that we have had 5-7 years of positive growth. So my thoughts are that based on historical cycles property will either correct itself by 20-30% or it will decrease by a lesser amount but stay flat for 5-7 years.
There are much better yields to be made from other investments. Remember there is a time for sowing and a time for reaping. This is the time for sowing. So plants those seeds (cash) and wait for when it time to sow (invest in property). Hmmm i like that….i’m claiming intellectual property rights on that in case I decide to write a book [biggrin]
Markgil,
Haven’t seen the specific apartments your mentioning, however, am quite close to prices as an owner of some new & close to new apartments in inner Melb.
High 300’s is what a lot of new 2 + 2 apt’s are selling for now. No big discount there. How big (in sq mt) is the apartment? Car parks? Who designed them? You would find rent ~$350 per week for these.
James
“your deal’s in trouble if the difference between making and losing money is claiming a tax deduction for depreciation”.
Yes but this is confusing cashflow with profit – two different concepts. A CF- person is relying on capital growth to collect the profit. There are many suburbs that have generated an average 10%+ cap growth over a 30 year period, so if you forget about trying to time the market (which invariably you can’t) the returns are solid. If you belive cash is king and are a CF+ person, the cap growth is just a bonus – luckily as it may well be negative. But if CF+ investing remains flavour of the month, then it will continue to generate growth for these properties and revalue them on a new basis. Problem will be if it ever falls out of favour – will be like a pyrmid scheme unravelling. should be ok though… if you pick your towns and locations right. The thing that always bothers me is – if the rents are so high compared to owning, why aren’t the locals buying themselves. Either it’s very transient or they don’t have the confidence to purchase themselves.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
They are about 100 sqm in area – some one, some 2 cars. I think the agent said Katsilidis (who ever he is) designed them. There are lots of new otp apartments in the docklands & southbank but none around prahran & armadale where i am looking – is it not supply & demand for capital growth ? None at docklands but plenty of scope in these areas. I am debating whetehr to buy or not.
markgil,
Mike and georgis already made some of the salient points. Mike said you would be lucky to make it pozz geared- I’ll go further. As georgis said- the apartments would get $350 a week rent- that’s 4%. If your apartment value goes down- as have many in oversupplied areas of docklands, southbank, st kilda, et etc… you might be looking at losing 80k-100k off your purchase. 20% reduction on a 350k apartment is 70k- eek- would be hell to lose that kind of money!
Also, sometimes it is better to buy an apartment that is a few years old. An off the plan apartment has no tested value- only a presumed value. Once resales start occurring, you’ll find out how much you can hock it off for.
As you’d know- deposit bond strategies which use flipping to make CG on OTP’s- forget it- that strategy is, I reckon, about 5 years ago now.
kay henry
Katsilidis (Nonder or Fender) are known designers who have undertaken many big residential apartment blocks (Docklands, CBD, Port Melbourne & St Kilda) The agents will probably use that to market these apartments, as you have already referred to. You will notice marketing of recent say 0-4yr old apartments, where they specifically mention these ‘brand’ designers. Not sure what credence that has today in the changed property market. (Maybe more, who knows??)
I am assuming there is a balcony/courtyard depending on level, so this would be approx 10-15sqm of the 100 as external. For example, $380k for 85sqm is $4470/ sqm. Anything above $5000 per sqm is very risky today, given the way prices are going.
I agree that the area of Prahran but to a much lesser extent Armandale, is very transient, which will ensure a high rental demand in the longer term.
I would look at 2 car spots, although that would depend on premium you are paying for that. Storage facilities on the car spots?? You would only be looking at maybe another $10-$20 per week rent(max) for the additional car spot. If you are looking at another $20k-30k for a car spot, that is a judgement call you will have to make between return v future capital growth.
Again look at comparable sales in the area for near new or renovated older apartments and see what they are attaining. Sometimes, the older style apartments (which are renovated) do achieve a better price than the new!! How many in the complex? Ask how many the developer or related parties are keeping for themselves??
Of course finance may be another issue/difficulty You should find out what LVR prospective financiers are willing to go to before thinking seriously about committing.
What is the development called?
James
The balconies are in addition to the 100 sqm floor area. The name of the development is Stratford
is this off the plan stuff or perhaps something a developer is selling? if so make sure you look at a large amount of aftermarket sales before commiting yourself, often off the plan stuff is badly overpriced.
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