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Melbourne South-East Suburbs property market

Written on the 14 July 2017 by James Cagney

(A four minute worthwhile read for investors)

Following the release of Census data at December 2016 the total population was 24,381,000. The biggest average annual growth over the 5 years was for Victoria (+147,600), followed by New South W ales (+116,400), Queensland (+70,500), Western Australia (+16,800); South Australia (+10,300); ACT (both +6,000); Tasmania (+3,000);  and Northern Territory (+600). So Victoria was the big winner as migrants and locals flocked to Melbourne's outer suburbs.

Most land being released by developer's s being snapped up by owner occupiers at prices above market value. Investors are struggling to buy land at favorable holding deposits so they can obtain finance approval before signing contracts. You have to pay the developer a holding deposit between 5% to 10% on the value of the land or goodbye there is someone else waiting. Many of these land releases are only registering in the second half of 2018. That does not help an investor who wants to get into the market now to get the benefits of the tax rebates and a structure which reduces the interest they pay the banks over the lifetime of the loan. If you would like more details of how this is done click >>> BENEFITS .

Then you need to get a builder who will return your calls before you pay the deposit. How bad will the service be after you have paid the deposit.  That is the real estate market in the hot market builders are too busy to offer good service. This can be very frustrating for people building a home. 

Businesses in Melbourne is buoyant and the job data released by the Australian Bureau of Statistics back up by the major banks data shows that full time jobs across the nation rose by 62,000 and the unemployment rate is at a eight-month low of 5.6%. The cities of Melbourne, Sydney and Brisbane are the major beneficiaries. This will add to the pressure for housing in the outer suburbs of Melbourne. 

The  research I have quoted below was released in the beginning of July 2017 and prices quoted for a four bedroom house may already be out of date. 

 The inner south eastern region has also enjoyed excellent growth over the last few years. Any suburb close to Port Phillip Bay within 45 minutes is in great demand and house prices are $1.5 million plus. Older houses along and around the Napean Highway are being knocked down, blocks are being consolidated and one to three bedroom apartments are springing up. A two bedroom apartments around the Chelsea area are $650,000. This is a one hour drive off peak into the city and a 50 minutes by train ride in to the city. The East Link  has made travel much easier for suburbs 15 to 20 minutes from the Bay. The East Link is a toll road and working in and around the city is expensive to travel by car.

Herron Todd White (HTW)in their July 2017 Review said "The outer south eastern region is referred to as a growth corridor and property prices have seen steady growth. With new subdivisions constantly popping up in the area, there is no shortage of land available for development and whilst those looking to invest in the area will need to sacrifice their proximity to the city, $500,000 will still take you quite far. "

Moving south east suburbs the Dandenong area have enjoyed huge growth due to the East Link and public transport to Melbourne CBD. The residents have two motorways to chose from to get into the city. The M1 takes 40 to 45 minutes and the East Link takes an additional 12 minutes. Great advantage when there is a hold up on the M1. The train take 55 minutes and you are in the CBD of Melbourne.  This is why Amazon have chose to locate their Melbourne warehouse in Dandenong South. They have leased a 25,000 sq.m facility with expansion potential to 50,000 sq.m. They are recruiting heavily from laborers, technology and management positions adding to the wealth in the area.

RP Data has this to say about Dandenong:

"The median sales price for 4 bedroom houses in Dandenong, VIC in the last year was $650,000 based on 23 home sales. Compared to the same period five years ago, the median house sales price for 4 bedroom houses increased 54.8% which equates to a compound annual growth rate of 9.1%." That is phenomenal growth and due mostly to it's proximity to Melbourne industrial areas and the CBD.

Further south of Melbourne this is what HTW has had to say: 

"Suburbs such as Cranbourne, Cranbourne East, Cranbourne West and Clyde North all have affordable housing options and a $500,000 budget in these suburbs can easily get a recently constructed 4-bedroom, 2-bathroom dwelling with a double lock up garage on an allotment of approximately 500 square metres. This option is seen to be most appealing to first home buyers and young families who are searching for more space at an affordable price point. Whilst a large portion of the region is still developing, government investment in the area is certainly evident with planning for new schools, major roads and public transport all in the pipeline."

Frankston was heralded a few years ago as outer Melbourne's hot-spot by all the pundits. Previously the Frankston area did not have a good reputation.  However over the last 10 years property developers flocked to the area and affordable houses sprung up. The East Link and Frankston Mornington Freeway was extended to the area and  commuters are less than an hour away to Melbourne. Numerous new schools, a TAFE college and university campus  have been built in Frankston and the area has certainly come a long way over the period. A four bedroom home is still achievable around $450,000 on a reasonable sized block.

The freeways have opened up the suburb of Mornington on the Peninsula to people who want to enjoy a beach lifestyle and do not mind an hour's drive to Melbourne. Be prepared to pay for the privilege as the median price of a 4 bedroom home is $890,000.

Investing in Melbourne is not for beginners. There are so many factors that determine the potential growth of the area. For example to name only a few:

  • Location of public school because education is expensive in Melbourne.
  • Public transport
  • Motorways
  • Tertiary education
  • Shopping centres
  • Sporting facilities

Make sure you get professional advice before you purchase in Melbourne. James Cagney has contacts with reliable and trust worthy builders in the Melbourne. He also has contacts  with accountants and other professionals through the Australian Investment Property Network that will help you invest for your future. Contact James on +416 137 645 or click >>> HERE.

DISCLAIMER

This is not financial advice. You should not act solely on the basis of the material contained in this article for your investment strategies. Changes in government and legislation occur frequently and without prior notice and financial markets are unpredictable.
Please note that the information herein is of a general nature only and is not intended as specific advice for any particular person or entity.

This information was written and compiled by James Cagney.  The opinions expressed herein do not necessarily represent the views and opinions of his associates including
Asset Finance Pty Ltd.

ACKNOWLEDGMENTS:

Thank you to the resources of Terry Ryder, Property Observer, The ABS, BIS Shrapnel, Michael Matusik, Property Monitors, Colliers, On the House, Corelogic, RP Data, Residex, SQM, Herron Todd White, NAB Residential Property Survey, Australian Bureau of Statistics, Peter Wargent, Port Phillip Publishing, Economy & Markets, Harry S. Dent and the many others for the material discussed above.


Author: James Cagney
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