Hi everyone,
I'm doing my research on an IP (unit)
in inner Melbourne. I'm concentrating on East Melbourne, Richmond,
Collingwood, Carlton and Fitzroy. The reason for this is that I have
2 kids who will possibly end up at uni in Melbourne and it would be
nice to have an apartment for them to stay in while they study. Long
term I would also like to have a pad to use when I retire and want to
stay in the city.I'm using the statistics provided at
the back of API magazine to help me decide where to buy. I've been
quite surprised by some of the growth numbers in the tables. These
suburbs are what I would consider to be high demand areas but the 10
year average growth figures for some suburbs are quite low. Here
are the P.A. growth figures averaged over the last 10 years:Collingwood 7.7%
Carlton 3.2%
east Melbourne 5.2%
Melbourne 4.8%
Richmond 6.7%
Fitzroy 7.7%
north Melbourne 8.5%How can Carlton have an average annual
growth rate of 3.2%? What's going on there? The median unit price
in Carlton is much lower than the rest at $235,000. Is the low
growth because the quality of the units is lower?Why is East Melbourne 5.2% when
Richmond is 6.7%? East Melbourne is closer to the city and is
bounded by Fitzroy Gardens and Yarra Park. Again, is it something
to do with the quality of housing stock?I'd be keen to hear from any investors
who know the inner Melbourne area who might be able to shed some
light on these apparent discrepancies.Regards,
Jack
P.S. sorry about the dodgy formatting. I typed this in a word processor and then pasted it into the thread. It got all messed up and i can't fix it.
Hi Jack,
API databank is a great guide, but always use this as an indication of the areas and don't use it as gospel. Some areas can be skewed based on new developments and particular dwellings.
To use Carlton as an example, it is a fantastic area and provides some real growth opportunities (simply look at the housing growth for Carlton and you'll see it's well above the unit growth). Carlton does however have a lot of new student accommodation in it, and the median price is fairly low. This in turns drags down the suburb average and makes the growth look poorer than it actually could be.
All of the areas you have mentioned, in my opinion all (with exception of Melbourne CBD) are great locations to look at for investment potential with strong capital growth.
More importantly (and to further solidify the strength of a suburb), you can go into individual blocks (as Carlton does have some beautiful art deco and older blocks that have great growth potential) and do a comparative market analysis on individual blocks and units to see the price movements over the last 10 years. This should provide you with further evidence of the strength of the individual asset or block.
While overall suburb analysis is a great start, you'll find that drilling down into the neighbourhoods, streets, blocks and then individual units/houses will get you the real outperforming result. So to answer your questions, yes the suburbs mentioned are in high demand and some of the figures may be skewed but you can be sure that your search in these areas will find some great opportunities. You'll see in a recent API article the inner city of Melbourne was pinned as a hot spot for investors in the immediate future.
Best of luck and if you do need some help with the process, we run workshops specifically tailored to this exact process.
Hi Lincoln,
thanks for the feedback. I can see how new, relatively low cost developments like student accommodation would drive down the median price and therefore stunt the growth figures.I'll take your advice and visit the suburbs I'm interested in to get a feel for the more desirable bits, then start looking for units in those places. I've made up a large colour map of the area from photocopies of the Melways. I'll make notes on the map identifying the good, the bad and the ugly and use it when I'm doing my online property searches.
Regards,
ChrisGood luck with your search!
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