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March 28, 2010 - 7:03 am

I'm sure auctions have their place, and although never bid at one, I've been to a few just to get a feel of what it's like. The thing that gets me completely disillusioned with auctions are when a house with a reserve price of $1 mil sells for $1.8 mil, or an auction quoted at $550-600K is only 'on the market' at $700K.

In essence all this 'underquoting' is a pain to deal with. Imagine getting all the inspections done and then having a house sell for $100K above its reserve, which is itself already $100K above the top end of the quoted range. In some cases now I might even look at a house's quoted price and just add $100K on top of it if it's nice and in a fairly desirable suburb. If I can't even afford that then it isn't in my price range.

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March 23, 2010 - 11:57 am

Yeah, I don't think they would touch anything sensitive with a 10-foot pole, especially if they wanted the polls to work for them.

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March 23, 2010 - 9:57 am

1. Stamp duty is doubled for purchases of non-PPOR properties.
2. The concept of negative gearing has been abolished.

Muahahah!

Hope that's not the case.

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March 19, 2010 - 3:53 am

wealth4life.com wrote:

If the average house price went up in Australia to ONE million dollars and wages stayed the same as it does who will the buyers be and who would be able to afford the rents

ROI = 0

That's where government subsidised housing comes in. In Singapore, the average house IS over a million dollars. Government subsidised housing is in little flats all over the island, where frequently two individuals on salary of $30K a year each might live. These little flats of course, still cost $200K as a conservative estimate, and get higher towards even $500K for the more luxurious ones.

And these, for what they are, are still like apartments. Plus the title is on lease from the government. Usually, in 99 years, it reverts back to belonging to the government at no compensation to the owner. How's that for harsh!

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March 18, 2010 - 10:52 am

DWolfe wrote:

LOL get the tents FWord haha!

D

Haha! I'd rather live in my tiny little shoebox, thanks very much!

The phrase 'not sustainable' gets thrown around quite a lot. Certainly, prices are not likely to rise at this rate forever. But I think prices would continue to rise at a slower rate because of the high demand, which is likely to be sustainable.

People out there still want a roof over their head, and not only that, to actually own that roof under which they live. Some folk want permanence, something they could hang on to and not get booted out of, so long as they meet mortgage repayments. Prices could conceivably rise till an outer suburban house price rises to a million dollars, and then perhaps the government better have some form of subsidised housing available, because by then, people are still drawing an annual wage anything around the national average $60K mark can forget about owning any property.

When that happens though, be prepared to have people living in an apartment building in slum conditions in an outer suburb.

I'd bet that regardless of what happens in the next couple of years, newcomers in 10 years time will look at a million dollar average outer suburban house, wondering why people are complaining about high property prices today. As my Dad sometimes remarks: if we bought anything in Australia 10 years ago, we'd be swimming in money by now.

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March 18, 2010 - 4:01 am

In a way I'm hoping for the bubble to deflate/ burst. When that happens I'll be swooping down to grab my dream property, or to scoop up cheapies by the handful. Overseas investors will no doubt suck up cheaper properties by the bucketload, where land here is still seen as being cheap compared to where they live. An average 3 bed/ 1 bath house on 700-800sqm of land here could be bought for certainly less than 500K, whereas the equivalent in Singapore would be worth millions.

In my opinion the raising of interest rates by the Reserve Bank to combat house prices is not justified. Do this and potential first home buyers will put off their purchases for a number of years more, while those already in could be forced to sell out. Then it hurts the banks because people no longer think about buying houses and don't take any loans. Overseas investors however, are coming here either with cheap credit or able to pay in cash, gladly taking up prime property in blue-ribbon suburbs.

In short, put up interest rates to control house prices, and all they're hurting is the working class people of Australia. Higher interest rates here will not stop overseas investors and neither are they likely to stop local investors. They'll just put the rent up. Will we have people living in tents eventually? Will we have high class people owning bucketloads of property, the middle class renting, and the lower class completely homeless?

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March 18, 2010 - 2:22 am

Well, there goes my plans for an investment property…

My suspicion however is that the median prices in Melbourne have jumped because more expensive properties went under the hammer in the final quarter of 2009 while the number of first home buyers (and the kinds of under $500K houses they're after) actually dropped in that same time. Thus we have a skewed median price that appears to indicate massive price jumps when in reality, the under $500K market has softened and gone quieter.

When buying my first home I was despairing that I didn't have $600-700K, because if I did, that segment of the market offered much better value and I wouldn't need to compete with FHB who were willing to pay just about any price for a weatherboard shack!

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March 17, 2010 - 10:41 pm

Thanks for the link. The information within is expected. There have been numerous articles elsewhere citing the reasons for the price rise, and the potential bubble building up because of unaffordability.

Unaffordability is a relative thing. Back in Singapore where I was born, buying a house anywhere on the island is akin to looking at a blue ribbon inner suburb or a choice coastal area. A very unexciting, old side terrace house- double storey, 4 bed/ 3 bath (ie. one with ensuite), 1 living area, on 350+ sqm of land- will set you back $1.4 million dollars. Or how about a 3 storey house, 5 bed/ 4 bath (ie. 3 with ensuite), 1.5 living areas, on approx. 400 sqm of land? That's $3 million dollars.

Even the shabbiest Housing Development Board (HDB- or government subsidised housing) flat in what could be considered a 'suburb' in Singapore would still be around $200K. Or you could buy supposed 'houses in the sky', or large flats in 25 storey buildings that have 3 beds/ 3 baths (ie. two with ensuite), 1 living area, 1 dining area, one example slated for enblock previously and worth over $1 million close to a prime location…

Furthermore, a lot of the land in Singapore is on a 99 year lease, or more rarely, 999 year lease. So once that time period is up the land reverts back to belonging to the government and you don't own or expect compensation for that land or the property sitting on it.

In essence, the $4 million that would buy a mansion here on a substantial quarter acre block in a blue-ribbon suburb, with a pool, games room, 4-5 beds/ 3 bath, maybe a tennis court, would buy you only a Mc Mansion in Singapore…a large house on a shabby little block of land. The neighbours are so near you could hear them praying by the altar, see, smell and hear them cooking (and flushing the toilet)! A house in the median price range in Melbourne at around $450K could be a 3 bed/ 1 bath brick veneer on 750sqm of land, whereas the same house in Singapore would be worth many millions of dollars.

The other key difference between Singapore and say Melbourne, however, is the difference in their size, and the quality of the infrastructure. If they actually improved public transport here significantly and made it more comfortable, quicker, more efficient and timely, people would be more willing to live further from the city. Simply subdividing land on urban fringes ain't gonna solve the problem. We need to make people want to live out there, not put up houses in some hole that's two hours drive from the city, with cars plodding along bumper to bumper to get into the CBD. The joy in Singapore is that you could walk to shopping districts and eating places in most parts of the island, or do away with the car as well in most cases.

The reason why Singapore's roads are still clogged with cars despite the superb public transport, is because some people at least, view cars as status symbols, buy them, and then drive badly on the road.

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March 11, 2010 - 8:46 am

I wouldn't know of a way to make money quickly in RE without having money in the first place. Either that, or you gotta be lucky and quick in a rising market to be able to flip for profit. In this case then a better way of rephrasing things is 'There's everything to lose but a heck of a lot to gain also if you're patient enough.'

It's the same as going up to an experienced doctor and asking him 'What's the quickest way to gain experience?'

His answer?

'Slowly.'

Good things take time. And while I don't agree that 'good things only come to those who wait', I'm a firm believer in doing the hard yards, getting smart and having adequate knowledge before getting started in anything. When money is involved, be careful. Where greed is involved, be very, very, bloody careful.

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March 9, 2010 - 6:06 am

DWolfe wrote:

Old chestnut, growth or cash flow. I do like Croydon but the FHB have ravaged the prices. And yes like many places it used to be full of druggies and obnoxious high school students. Bring on Geelong (not sure yet which surrounding suburbs) You can still get houses for under $250k with an hr commute to Melb which isn't far off the commute from Croydon.

Bayswater would have been good along with Boronia but like a lot of areas they have gone up a lot in the last year. But saying that each time I think we have topped out, the price goes up again so you tell me.

If you can get into any prestige suburb now without losing a bundle in holding costs then go for it because the prices will just keep going up steadily.

D

Just went on RE.com and did a search on Geelong. There's some nice houses there for under 400K, generally the two-bedroom variety it seems. It'd be nice to live close to the water. Geez, I remember the days when Geelong was a sleepy little town. Like someone once said, 'If you bought anywhere in Melbourne 5 years ago, you'd made big bucks by now.'

Speaking of prices…a number of years ago a friend was lamenting spending 560K+ on a house in Templestowe (east Melb), saying she overpaid. Well, a few days ago a house just a few doors away sold for 1.2 mil. Goes to show that even if she did some basic renovations, her house would probably go for over 800K. Time does heal most wounds it seems, unless the choice of area is drastically wrong. Another example is a house we used to rent in Balwyn North (also east Melb). It sold for 550K maybe 7 years ago. It was opposite the park, and although an ugly house, I begged my parents to buy it. We didn't of course, because not only was it ugly. It was riddled with damp in the rumpus downstairs.

Still, the land would be worth a pretty penny now. Knock down that house (still perfectly livable), put up a modern 4 bedroom 2 bathroom, DLUG and it'd be worth at least 1.5 mil.

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March 9, 2010 - 5:52 am

maree_bradross wrote:

There was a fantastic lift out magazine in the Sunday Age the other week that comprehensively reviewed all Melbourne suburbs. If you like I could photocopy it for you and post to you?
BTW Melbourne's predicted population growth is huge.
Regards, Maree

Would this happen to be the Domain Property Review? It's a very interesting read with star ratings for quite a few suburbs. It's also interesting to see how the star ratings have changed since the last similar publication. Not sure if the increase in rating in some suburbs is anything to go by, but it could indicate increased confidence in the property market.

Not surprisingly though, the suburbs that you know and love have the highest star ratings but are also the most unaffordable. Some of the cheaper suburbs that buck this trend are arguably the ones you wouldn't want to be caught dead walking the streets in. Either that, or walk the streets and you'll be dead anyway. As an example, one of those suburbs I was considering was supposed to be so full of ferals that it wasn't going to be a nice place to live in.

OK, just kidding yeah…but read carefully and form your own opinion. Don't just look at 'star ratings'.

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March 8, 2010 - 11:56 pm

On the General Property forum there was recently a thread on which areas people speculated would record good gains in the not-so-distant future.

The response (or rather the relative lack of it) is disappointing. My guess is that human nature takes precedence. If people think a particular area is going to boom, they're not going to let fellow investors get wind of it. In other words, you got to do the research yourself.

I'm a newcomer to the world of property and essentially still a first home buyer. But here's my two cents worth: when searching for a home to buy in Melbourne's outer east (proximity to my parents' home and workplace taking precedence), I chose Croydon over Ringwood, Bayswater, Boronia and Ferntree Gully.

Ringwood is pretty pricey these days for an average first home buyer, and perhaps a little 'busy' and congested for me. One of my workmates in particular told me not to buy in Ringwood. But Ringwood north is very nice, if you can still find a detached house on substantial block of land that's not under transmission lines, within your price range, consider that. Boronia seemed nice and even Bayswater was decent but was told by numerous people to avoid buying in these areas. To be honest though, any of the areas you could buy into at under 500K would have a stigma of some sort. That's the impression I'm getting. Even Croydon used to have a bad rap, from what I've heard and read.

Ferntree Gully…some told me it's a nice place and I saw a few houses there myself while shopping for a first home, but it's bordering on becoming a little too far from the CBD. If I wanted to live as far as FTG, I'd rather be looking even further out at say, Sassafras, which although is out in the sticks, is a beautiful tree-lined area, winding roads and general seclusion. In essence, it's actually special and has something going for it.

The options under 500K in the outer east expand considerably if you're looking for something like a unit/ townhouse. But for a detached house with land in that budget, it gets a little harder.

In the days when I was looking, Heathmont was my top choice, and it's had good apparent growth since then, pricing out the sub 500K buyers. Of course, I wanted to get something in Mitcham, Nunawading and even Vermont South, but I'd be hard-pressed to find something livable (and with land) in those areas under 500K.

Croydon is quiet and livable, is serviced by rail and buses, easy access to shopping, lots of schools including some prestigious ones. I like the area north of Maroondah highway, near Croydon Hills and Warranwood. In essence it is like being in the country and being able to drive to something more city-like (ie. Ringwood, Boronia) in minutes.

There's a book I've been reading that talks about buying average 3 bedroom houses on a 'family-sized block' in a 'working class area'. I think Croydon would qualify as 'working class', and you can probably still find such houses on blocks of land 800sqm or above, and for under 500K. To me that sounds like a decent buy. Maybe it's something that my Dad drilled into me, but as you can see I'm a big fan of actually owning land. If you wanted to buy into a unit, townhouse, apartment etc I'd be searching hard in the middle and inner suburbs. But good luck finding even a unit under 600K in Doncaster, Balwyn or Templestowe!!

Also, I'd rather be living in an older house in Croydon than a brand new house in say, Cranbourne, Berwick or Lyndhurst, or Hampton Park, even though you would certainly be able to afford land in both instances.

But remember again, I'm just a first home buyer looking to turn into an investor. Just thought I'd give you one opinion since you're getting none otherwise!

Note that the West is something I haven't researched into, but there is apparently good potential there also, so have a look into it…areas such as Werribee or Hoppers Crossing…Tarneit…

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March 5, 2010 - 10:22 am

DWolfe wrote:

4ish years…. It was on it's way when we were living over there for work. We did buy and double our money, but double is not triple lol!

D

That's amazing. Although you would also have to take some credit for doubling your money in that 4 short years. I don't know WA at all. Was Belmont considered a 'crappy' suburb 4 years ago? Was it characterised by good infrastructure such as the presence of schools, train station and shopping center back then? Or did the arrival of such amenities bring up the price?

These days I wouldn't bet on a 300K suburb in Victoria doubling (or even tripling) in value over 4-5 years. At a glance, the infrastructure in these areas just doesn't cut it. And I wouldn't want to buy in a hole and at the same time bet (probably against all hope) that the necessary infrastructure will come in!

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March 5, 2010 - 10:05 am

sonyasal wrote:

Am i missing something or is a lower return on investment the norm in Victoria?

Maybe higher capital gain is the norm in Victoria…

That statement should provoke some responses!

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March 5, 2010 - 9:42 am

DWolfe wrote:

Sad story fword. I could have bought an older house oposite really nice park, walking distance to Belmont shopping center (WA), 1000sqm block for 240k. Now they want $640k for the same thing. Crying buckets.

D

Far out! How long ago was it that it was just 240K? In this instance you would have some experience of what suburb boomed after you started checking it out, and there might be some factors responsible for its movement.

Geelong was a place I considered somewhat vaguely, due mostly to the travel distance if I had to commute back and forth just to find the right place to buy. After that it could be simpler however if I could have a trusted agent to manage it for me. My first visit to Geelong was 7-8 years ago when we were passing through. It was real sleepy at that time. Last year I visited again and it was well and truly on its way, lots of activity. Hindsight is a wonderful thing.

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March 5, 2010 - 5:46 am

DWolfe wrote:

$450? Yeah Mitcham is in the 600's even Croydon is on at mid 500's. Montrose has an ok road out but no rail. Kilsyth was on my list but there just isn't that much around there to draw in huge amounts of renters or buyers. And once again no rail. It will always be ok as an area but not special. (I may eat my hat later) Ringwood East is good with the hospital redevelopment and the hop skip and a jump to Eastlink and Eastland SC. Still shopping.

Wantirna South is the sleeper. I think it will be the slow and steady growth. Not huge jumps but a nice even percentage each year.

Just my opinion.

D

Oh, I was quite the idiot when starting out in property. The first house my Dad and I went to look at was in Mitcham. That was back in March/ April last year I suppose. Average house, 'quite crappy' (my Dad's words), perfectly liveable. $438K it sold for. Another of the houses not long after that was one in Vermont South, similarly average, good deal of cracks in the wall and we were worried about the grouting. Sold for $451K. Needless to say I then unhappily watched as prices in these suburbs soared into the 500's and 600's.

Even in Croydon there was a house I liked and offered on. Quoted at 385-420K and sold at 488K. Geez…thank goodness the search is over, at least for now.

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March 4, 2010 - 9:14 pm

DWolfe wrote:

Well FWord, now I know who I am fighting it out with in Croydon, Mooroolbark and Lilydale. (As well as all the FHB who will pay ANY price)

I also like Mitcham an Nunawading. I like Carrum and Wantirna South as well.

I like Geelong too but I haven't started looking properly yet.

Sorry I forgot the WA ones East Vic Park and Belmont. They had a huge price rise years ago and are gearing up for another one.

D

Heheh, my fight was over months ago, so I won't be back for a while. I shouldn't buy another property in Croydon, based on the philosophy of 'spreading risk'. Montrose might be the other sleeper suburb (very liveable, safe and beautiful, by the sounds of it). I'm still new to this property thing, but when (and if) I get to buy my second property, I'd be considering if I would live there myself before actually buying.

Mitcham and Nunawading, even Vermont/ Vermont South and Forest Hill, Heathmont…these were amongst the surburbs I targeted to buy my first home. But as the story goes, I was rapidly priced out and couldn't get in before the market soared beyond my reach. I'm guessing it'd be hard to find a detached house in these areas now at the 450K mark, unless it's in a condition needing a fair bit of work, or a small house on a small block of land.

This is why I referred to Croydon: the next suburb out where a family-sized block is still within reach of someone willing to splash out up to 450K. I have a colleague living in Wantirna South. Nice over there, but again seems to be tough to catch at 450K.

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March 4, 2010 - 11:59 am

In Melbourne, at least in the cheaper outer East, one of them might be (or at least I hope) Croydon, particularly the area north of Maroondah Highway, bordering on Ringwood, Warranwood and Croydon Hills/ Croydon North. Short drive to the train stations, and with buses to commute to either Ringwood or Croydon station. Close to prestigious schools: Yarra Valley Grammer, Luther College, Rudolf Steiner…quiet and country-like compared to neighbouring Ringwood.

I'm putting money where my mouth is in this instance because I actually just bought my first property there and am betting for it to go up. It was also stated as being one of the suburbs to do well in 2010 in an article from Domain (a liftout from The Age). Not that I believe it has the best potential in Melbourne, but on a budget in the outer East, I reckon it's a good place to buy.

Values in next-door Ringwood have gone up a good deal of late, pushing us average folk further out. Other first-home buyers with my level of average salary have generally talked about buying in Bayswater, Boronia and Ferntree Gully. In that sense Croydon seems to have been forgotten. It's almost a crossover from city into country, yet it has ready access to Eastlink, shopping centers and also schools. The houses on some of the streets here are quaint, older, single-storey weatherboards often on big blocks of land 800sqm or larger. That's some serious family-sized backyard there.

The original houses have great charm, and rows of these look just beautiful from the street, particularly with the majority of them looking very well-maintained. But any willing person could knock it down and build a mansion or possibly subdivide. It will be a matter of time I think, before these bigger blocks start disappearing and give way to units.

Either that, or I bought wrong and I just have a vested interest in writing here… I'll be hanging onto this place for sometime, so hopefully at least time would fix my mistakes.

I'll be very interested to see what other areas are mentioned here…unless they're red herrings.

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March 4, 2010 - 11:28 am

DWolfe wrote:

Has Mt Eliza had its day? Or is it blue chip for that region? Will it always grow at a set percentage each year?  How is Frankston South for cash flow?

I think I need to buy a crystal ball, some residex reports and some henchmen for my evil property empire

You've picked 2 'nice suburbs'. Hows your numbers?

Probably should start a new thread……..speculation on areas.

D

'Mt Eliza…that's the Toorak of the Mornington Peninsula, isn't it?'

That's the remark my friend made in disbelief when I told him I was considering to buy there.

Residex reports, I could lay my hands on. Not sure about the crystal ball or the evil henchmen!

Anyway, I'm much too new in the world of property to be speculating. At this time I'm simple minded: wow, that's a nice-looking suburb with quaint houses…can I afford it? In a pinch, yes. Speculation is a funny thing too. When enough people jump on the bandwagon it's invariably self-fulfilling prophecy. I'll post a speculation thread on Mt Eliza after I secure my cheapie unit.

In favour of Frankston South, is that I might still be able to pick up mediocre landed property instead of getting a unit with basically no land in Mt Eliza. Either way, the property will be negatively-geared. I haven't gotten the knack of getting the cashflow +ve stuff yet.

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March 4, 2010 - 11:02 am

DWolfe wrote:

…Frankston

Okay, I know this has been discussed many times before so I beg your pardon. I'm desperately saving in the hope of getting another property before the end of this year. One of the places I was looking at was Frankston South (if I could still afford a detached house then). I was even considering a cheapie unit in Mt Eliza…but is there much potential growth for units in Mt Eliza?