Melbourne Suburbs/Property

For 250 you could buy in Dandenong,Noble Park,Cranbourne,Broadmeadows,Dallas,Fawkner,Preston……

Fawkner is less than 15 km from the cbd..

In my opinion, there are no suburbs in Melbourne worth investing in (for an IP).Prices way too high. Yields too low and prices I think are more likely to steady/fall rather than rise. My opinion only.

Every time this part of the property cycle comes around I hear teh same argument.

Don’t buy property!

Let’s have a look at a few of the excuses I could have used over the last 40 years or so:
 In the early to mid 60s we had just emerged from a major credit squeeze and finance had dried up.

 In the late 60s we had the nickel share boom and property was proclaimed an inferior investment.

 In the mid 70s, we had another recession.

 In the late 70s we had rising inflation and the OPEC Oil crisis.

 In 1983 there was a recession with high interest rates and peaking inflation.

 A few years later commentators said property prices were too high.

 In 1985, the government changed the tax laws pertaining to property with the quarantining of the tax benefits of negative gearing and the introduction of the Capital Gains Tax. Commentators explained how this was going to be the end of property investment as we knew it.

 In 1987, there was the fear of a ‘1930s-type depression’ after the stock market crash.

 By 1989–90, interest rates and inflation were again too high and led to the famous ‘recession we had to have’ – a heaven-sent excuse for procrastinators to stay out of a property market awash with bargains! I still remember in the late 80s the cry was ‘Our children will never be able to afford to enter the property market’ or ‘Prices will never go any higher, don’t invest in property’.

 In 1991 Australian unemployment was 11.3% and people were selling their houses at bargain basement prices, as most people felt property values would only fall further.

 The mounting foreign debt and current account deficit of 1993–94 was enough to scare people off buying property.

 The ‘world economic slow-down’ and the ‘Asian currency crisis’ were good excuses not to buy property in the mid 1990s.

 In the middle 90s we were told inflation was low so property prices would stop rising.

 Rising oil prices, September 11 and an oversupply of investment property in the inner city areas could have been great excuses not to invest in property over the last few years.

Through these times the value of well located residential properties has increased consistently, at about 10% per annum.

The first investment property I bought for $18,000 would now be worth over $600,000 if I wasn’t silly enough to have sold it.

Over the years the rent from my properties has helped pay their mortgages and the capital growth has allowed me to borrow against their increased value and pyramid myself into other property investments.

But at the time every one who talked dowm property seemed to have a good argument[blush2]

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au

And one other thing Michael. You say,…

“ By 1989–90, interest rates and inflation were again too high and led to the famous ‘recession we had to have’ – a heaven-sent excuse for procrastinators to stay out of a property market awash with bargains!”

Well as far as I know, 89/90 was the top of the previous cycle. Where were the bargains your talking about? Prices were lower, or at best flat for a good few years after 89/90.

Holding negative geared property when prices are flat for many years must be very painfull.

Good luck.

Why wait a little?

Property prices have been flat for almost 2 years, but I always find it easier to find good buys in a buyer’s market than in a seller’s market. It’s much easier to buy below market price when you have desperate sellers.

OK now we have to work out what a true market price is in a flat or falling market. That’s a whole different argument and one I have a research department helping me with.

Also the areas in which I am buying properties are moving up in value. I can show you the facts.

Am I a salesman? Yes. Do I sell property NO! (We have no properties for sale).

What I can honestly say is that I believe what I have written and in the last 15 months I have added $4million dollars worth of new properties to my personal property portfolio.

NO wraps no fancy stuff. Direct property purchases or new developments I have built for me to hold as long term investments.

And I have not regretted one purchase – all the properties are worth more than when I bought them.

One settled last Friday for $700,000 but is already worth $1million.

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au

Good point but I do know what I am saying.

I bought a large old house with a granny flat on a 1,700 sq mt block of land. During the 90 day settlement I have organised plans and am very close to havving development approval for 5 townhouses. 2 large double storey dwellings with double garages and 3 x single storey.

Development sites in Mt Waverley sell for about $230,000 per unit sites with permits (DA) this means the property is worth considerably more than $1million.

Sre I bought well, but I added value creating my own capital growth.

[/quote]
My point I was making is things are going to get worse before they get better, for the sake of 6-12 months I ‘think’ that property will be cheaper than now.
[/quote]

What are you basing this suggestion on?

I don’t disagree that some areas still have a way to fall, but I can show you suburbs where values have increased by 10% in the last 6 months. Not my thoughts. Property sales facts.

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au

Property development can be fun and very very lucrative, but most people involved in it go bankrupt at some time. Over the years I have seen many inexperienced property developers and quite a few that I thought were smarter than me go broke.

So take it slowly, start with small steps, Some of the significant risks I have come across include:-
• A downturn in the property market leading to lower property values or increased holding costs until the development properties are sold
• Increases in interest rates resulting in increased holding expenses;
• Increases in construction costs during the project. This was particularly obvious during the recent boom. Many inexperienced developers think they have entered into a fixed price contract yet are hit with cost variations;
• Changes in the supply and demand ratio for real estate market such as we are currently seeing in the inner city apartment market which depresses property values;
• Unexpected disputes with building or trade contractors or unions which can cause costly delays to a project;
• Changes to the laws relating to property development such as the laws relating to zoning and town planning restrictions on land use, environmental controls, landlord and tenancy controls, user restrictions, stamp duty, land tax, income taxation and capital gains tax. Changes to any of these could adversely affect the profitability and viability of your real estate development projet;
• Unexpected delays and increased holding costs may be encountered when town planning (DA) approval is required for a development. Councils are currently very slow in assessing development applications and they reject many development / town planning applications. Not obtaining an approval or obtaining one on unfavourable terms is a growing risk for developers. The cost of obtaining approval or fighting council’s rejection in a court of appeal is continually rising;
• Some inexperienced developers find that some of the improvements they have made to their properties do not result in an increase in value. They learn the hard way that increases in value do not necessarily occur in line with expenditure on improvements;

As you can see many of these risks are outside the control of the developer.

At Metropole we are aware of the risks involved in a development project and this helps us minimise them so that our clients do not get any unpleasant surprises. Most of our projects are very successful, but I have to be honest and admit that we also run into the same problems in some of our projects and they are not as successful as we initially hoped.

We must learn from all our developments. Learn what went wrong and minimise the risks of this occurring again and learn from what went right and repeat this if possible.

Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
Join over 10,000 readers each month.
FREE subscription http://www.metropole.com.au