Somerset is probably close to what we'd call 'inner-city' in Singapore. Nevertheless, for $1.2mil, I'd rather be buying a nice house on a block of land over here. That's not to say I can afford a $1.2mil house of course…I'm a very small player here.

Well, they could have done a lot worse. Buying at $800K hoists them well out of the first home buyer territory, the sub-$500K houses that many first home buyers are either desperately trying to buy, or hoping to afford. I don't know Thornbury well, but it is near other 'trendy' suburbs and Thornbury will hence become trendy also in no time. Close to parks, public transport (train stations) and expensive suburbs. What's not to like?

Geez, $800K for an 'ok' house in an 'ok' area? Where did they buy? I'd be very thrilled if I could afford to live in (ie. not buy and rent out as an IP) an $800K house.

For capital growth, perhaps buy the house on the bigger block.

For better income and yield, take the renovated house on a smaller block.

Of course, you could also buy the semi-reno'd house on the larger block and extend, build a granny flat to get dual occupancy or even subdivide to increase yield directly or indirectly. All this would be STCA obviously.

These 'inaccurate' statistics could be a self-fulfilling prophecy however. With luxury housing in the area and cashed-up owner-occupiers or investors buying in, the overall image of the location could change and housing in the surrounding area could experience jumps in price.

In addition to Jamie's websites and what's been mentioned above, you could look at sqmresearch.com.au to look for vacancy rates and myrp.com.au for other details.

Now the rest of this might be akin to teaching you to how to suck eggs, however I find Google (in particular, GoogleMaps) and the Melways to be extremely useful. It allows me to see exactly where my potential purchase is with respect to everything else (ie. transport, schools, shops, industrial zones, proximity to parks and the water). GoogleMaps is not entirely up to date however so this is where the most recent copy of the Melways comes in. And you could even compare the most recent Melways with the Melways of old to see where things appear to be going, or whether anything has even changed in the area within the last 2-3 years.

If you ask questions here about where the next hotspot is, you're not going to get any answers because nobody is going to want added competition. I think at least in this regard, the Melways and GoogleMaps MAY have helped me shortlist a few potential 'hotspots' (some of which have even been mentioned in the papers of late, and prices shot even before I managed to save to buy something there) which I can specifically target and investigate.

Realestate.com.au also has a little section where local residents rate their own suburb. It might be full of rubbish sometimes, but if you take care to read it carefully, there are sometimes detailed opinions about specific streets that are good or bad, or what amenities are in the area.

A visit to the local council to look at zoning, ask questions about the property itself (eg. any proposed developments in the area, building permits etc as Jenny mentioned) and collect a copy of the local newspaper. What sort of articles do you see in the paper? Does it reflect an area that has a degree of crime which the council is trying to stamp out? What about sports, culture and festivities?

Use the information at forums like this. What's the general sentiment of the market at the moment? Is it a frenzied market (in which case you might decide not to buy at all since things are 'overvalued') or is it a flat, cooling or even a buyer's market (where you could probably look to secure good deals and buy before things get hot again)?

Of course, ultimately you need to do the good 'ol legwork. Drive or walk around the area where your potential purchase is. Is the area full of well-maintained, quaint period housing or is there evidence of brand spanking-new luxury housing being built? Is the area about to welcome a luxury village-style or golf-links residential area, or low-rise luxury apartments (which could cause a rise in property values nearby)? Or perhaps all you're seeing are ill-maintained, disintegrating weatherboard houses, one overgrown lawn after another, and old rusting cars (or a tarted up wannabe sports car) parked on the lawns? Can you hear your neighbours in a fight or having a domestic dispute next door?

One of the common things I've read about investing in property is not to get emotional about your purchases but instead let the numbers do the talking. Is the property positively geared? Is it going to give you passive positive cashflow from the rent even after all the expenses have been paid?

I have wavered significantly from this 'rule' by getting very emotionally attached to what I buy. That's because I'm not looking to own over a dozen properties and be super rich. I'd be happy with just one family house in the suburbs and a beach-side shack for retirement (and with both the loans paid off). However I believe in buying a house that I would personally like to live in. If you buy something like that, you will attract tenants and potential buyers who are like-minded, people who are just like you. Look at it another way: would you prefer to deal with people who are just like you, or people who are radically different?

Because I have done this, the properties are negatively geared. This is NOT what I set out to do, and I did NOT buy these properties just to reduce tax…this is a VERY bad idea. To me, the negative gearing is just icing on the cake. My intention was merely to set foot in the property market and make sure I have a house ready once I move away from my parents' place and ready to start a family.

Everybody's intentions with property investment is different and that determines in some way the kinds of property they buy. What are your intentions?

While I can't say much about the accuracy of these price estimates, it is possible that the difference in price between that in the report and the advertised price indicates the current state of the market. In a cooling market, it is more likely for the advertised price (and even the final sale price) to fall within the range stated in the report. In a heated market, the advertised and final sale price could exceed the report's price guide. Hence, the property may appear well-priced based on information you're getting in these reports, but don't forget to consider the condition of the market also.

For example, I know of a house that Residex estimated would be worth $405K. The advertised price was $380-420K. It received an unconditional offer at $436K, another at $450K and the highest offer was $489K. The house ended up selling for $450K because the highest offer failed to obtain finance. Even so, the final sale price was almost 10% greater than Residex's price. This was under the rather frenzied market conditions in 2009.

Compare this to another house that I looked at in December 2010 in a cooling market (and arguably during the pre-Christmas weekend, which is even quieter): Residex estimated the price at $507-557K. It sold at auction at $537K. I don't believe the price guides are a substitute for true valuation by a qualified person, but they are a quick and easy way to get more information about your intended purchase and the records of past sales are also worth studying.

Based on the other articles on the same site predicting price falls in property over the same period, it's a wash between the conflicting arguments. Perhaps this is not unexpected in a flat market. Price pressures in either direction balance out, leaving you with a flat period with slow or no growth.

Nicely said. Gen Y's sometimes get a bad rap not saving enough, not working hard enough and then spending too much. There are some however who will do whatever it takes to ensure a comfortable future. They may look at the struggling pensioners of today and decide it's time to put their foot to the pedal and accelerate their way towards financial independence.

'Lahdink' is a fantastic term, although I feel more like a 'lahsink' at the moment. After all, I don't need a $20K wedding celebration to set me back. On that note, it appears that in delaying their moving out, Gen Ys also delay getting married and starting a family.

Just my two cents, although I'm no expert and hence may stand corrected in the presence of more well-informed advise, however this would be my personal opinion:

A property is only worth as much as someone is willing to pay for it. Therefore, it would be crucial for you to consider how good the property is in terms of location, whether there are any issues ongoing in the body corporate, any forseeable large expenses that you'll need to fork out for the building etc and then decide how much you think its worth.

Putting in an offer on a property is not about offering within the quoted range. It's about offering how much you think the property should sell for (even minus say 10% if you're hoping to buy under market value), and giving your best offer the first time around. Do NOT offer $480K straight up just because that's your max. The property may NOT be worth $480K in the real world. Do check out the other deals out there to see if better ones exist.

If you offer the maximum of their quoted range and it is not accepted, it matters not whether they are underquoting. It is of no value to you to know this. What purpose would that knowledge serve? Furthermore, when it comes to properties on auction, it is sometimes routine to see properties sell for higher than the maximum figure in the quoted range, but it is not always the case. As my Dad frequently warned me, it is unsafe to simply assume a property should sell for between 0-20% more than the higher end of the quoted range, even if historically this has happened in more popular areas.

Key thing is always to do your own study and analysis and weigh up the pros and cons of this property versus others in approximately the same price range (ie. +/- $50K or so). Of course the other factor depends on how badly you want the property. This emotional reason does not justify overspending on an investment property, however sometimes you simply have no choice. A real life example if when my parents bought the house we currently live in. Our lease was coming to an end in the house which we were renting. The landlord sold the house with vacant possession and badly wanted us out. So my parents decided to quickly buy the nicest house in the best area they could afford, and to do anything in their power to win at auction, WHILE STILL SPENDING WITHIN THEIR MEANS. The result is that they overpaid slightly in a face-off against a similarly persistent bidder, however it got a roof over our heads and saved us a lot of stress, of moving to another rental property and potentially dealing with the same issue again.

Sounds like ribbish <moderator: delete language> to me. If you're making an offer prior to auction, then you should be able to put clauses such as 'subject to finance' or 'subject to building and pest inspection revealing no major faults'. Even if you're going to auction, there is some room for negotiation (some days or weeks before the auction begins), except the introduction of a cooling-off period (as mentioned before). Personally I've been to an auction where I was allowed a 90 day settlement (if I was successful at auction) instead of the usual 30/60, which was what the vendor originally stipulated.

This varies on a case-by-case basis however. If you're dealing with a particularly cold and non-motivated vendor, then he/ she may have already stipulated to the agent that all offers before auction must be unconditional, otherwise they are not acceptable. And again, some vendors would even completely refuse offers before auction, even without knowing what the figure is.

This is madness, in my opinion. If the property is hotly contested at auction between two bidders, the highest bidder may get your apartment at say, $535K when he/ she was originally prepared to offer up to $550K. In this instance the vendor has 'lost' the potential to make another $15K. Having said that, some vendors refuse such offers on the advice of their agent and hence are guided into doing something that is not necessarily right for them.

Couldn't advise on this unfortunately. Very basic knowledge tells me that your budget would of course depend on the loan amount which the bank would conditionally approve. However, if the bank approves a loan amount of say $480K and you go overboard and splurge all of that on a property that should only be worth $300K, then the bank valuation may be reason for the bank to refuse to loan you that money, even though it was conditionally approved based on your income and ability to service the loan etc.

This is where your research comes in handy again…knowing how much you should be paying for the property is crucial and you'll need to compare this current property with similar past sales in the last few months. I've developed a bad hoarder's habit of keeping the property sales results from each week's newspaper in a folder and have done so for over a year. However if you go on a website like realestate.com.au there should be limited past sale prices available under the 'Sold Prices' section, or if you just type in your suburb of interest in Google, do a search and manually sift out the websites that have free suburb information.