Hi,
I have recently migrated to Melbourne (actually it is my first week) and I am currently evaluating my property options in my new country and I need every helpful advise with the local experience that I can get on the following two issues:
a) Am I better off to rent than to purchase for own use or vice versa?
b) I need to send my kids to the bilingual school Bayswater South Primary School. What area is it recommendable to rent/purchase?
Your thoughts and knowledge of the local property market will be appreciated at this stage.
Joseph
Renting will certainly be cheaper than buying at the moment.
Vermont is a nice area; about 15 mins from Bayswater I guess.
Also look at Ringwood (some parts are nice).
If you go closer to the City, look at Blackburn and even Burwood and Vermont South (I used to live in all these places), or if you want to go closer to the hills, look at places like Boronia, The Basin, Croydon and Bayswater itself.
Welcome, Joseph, to Australia. I hope this is a joyful and successful move for your family.
I don't know areas of Melbourne very well, but regarding the "rent vs buy" decision, you're certainly better off from a purely financial perspective, week-by-week, to rent. Rents run at about 4% yields, ie a $520,000 property would rent for about $400 per week. But the cost of ownership of a property is mortgage interest (say 8%) plus another 2% for council rates, repairs, insurance, etc. So to own the same property would cost about $1,000 per week.
So the difference ($600 per week) comes out to a little over $30,000 per year. The issues are 1) can you afford to pay the $1,000 per week, and 2) will this additional expense be compensated by capital growth? Growth of 6% per year is lower than the long-term average for all areas over the last 100 years in Australia of 7.8%, therefore I'd be fairly confident that the risk isn't too great. And bear in mind that a good proportion of property investors believe that outer Melbourne is set for a boom in 2008: http://www.somersoft.com/forums/showthread.php?t=38746
So, if you're sure about where you want to live (both within Melbourne, and that you want to stay in Australia for at least a year or two), and can afford to do so, then I'd buy a home. It may also help you all feel more settled and established in your new home.
Sincerest best wishes,
Tracey in Brisbane
Thanks Marc,
From property ownership and investment perspectives, is Vermont the best/good location in the east? Does this suburb present growth potential? If not, what areas do you recommend in the outer/easter part of Melbourne?
Regards
JosephThanks Tracey for your insight into this topic of renting vs ownership. I will be renting. However, as a new comer to Australia without employment technically ,what are my options for property investment?
For example, yesterday while i was hunting for a rental property, I checked a house for sale:
Asking price : $300,000
Stamp duty : $11,800 (according to the agent)
Conveyor: $450
Rennovation and touching : $500
Are there any hidden costs? What about municipals fees? Are they paid by the owner or tenant?According to the agent, expected weekly rental is $250-260.
Is this a good investment? I can afford to make a large deposit if required. Once again, what are financing options?
Regards
Joseph
Council rates are paid by the owner, and vary but are usually billed quarterly (ie every 3 months), and a quarterly bill varies from about $400-800, depending on the property's value (amongst other things). You may have a few more fees, such as building and pest inspection, and loan establishment fees, but these only run to a few hundred dollars – you've got the main ones.
I have no idea whether it's a good investment, as it depends on where it is. Is it close to amenities – schools, public transport, shops, etc? Are there people living in the area and is it an area that is likely to continue to be in demand into the future? Is the particular type of property that you're considering desirable to tenants? etc.
As to whether you can get a loan or not, I'd talk to a mortgage broker.
Best wishes, Tracey in Brisbane
You must be logged in to reply to this topic. If you don't have an account, you can register here.
