VIC Melbourne Property Market 2024

Considering the price of building/renovating, I’d say a while.

 

40 Storey Rd had a similar size block, no heritage overlay and that sold for under 1.3. Keen to hear your thoughts on the 1.8-2m valuation.

 

Thanks Whitecat (and HonestShiba). From your point of view, getting a CF positive IP is quite challenging then? Or is your view just generally reflecting todays high interest environment + rent levels still yet to grow?

I'm just thinking, if we think MEL is the next growth market then expanding the porfolio with multiple houses at negative CF will be challenging. Am I missing something?

 

Also, can anyone recommend good Building and Pest companies in MEL?

 

Getting a bit of analysis paralysis at the moment. We're pre-approved up to $900k, and easily servicing this as my partner will receive a gift from her family for the offset and we earn 20-30% extra in overtime/bonuses annually. My plan was initially to buy something around $700k in Frankston and surrounds; however, now I have been looking at the $850k range as this opens up much more desirable locations and sometimes granny flats. This will be a PPOR that will turn into an IP in 3-6 months. Any thoughts or advice? If you're paying market value, is the aim to get a place with the highest value you can comfortably service? Maybe get something $700k and renovate it might be best? Should we really be considering other areas outside of Frankston?

To provide an example this would be a cheaper property: https://www.realestate.com.au/property-house-vic-seaford-144732024
And this the more expensive:
https://www.realestate.com.au/property-house-vic-frankston-144627860

 

Very interested in your thinking around this, particularly Rezza (Oakhill/Regent) being number 1. Any chance you could elaborate?

IMO there are some good deals around Reservoir that will do well with more gentrification, but generally it's almost looking a bit overpriced when you look at the gap between Reservoir/Preston and more gentrified and central suburbs (Northcote, Thornbury, Fairfield, Alphington), or suburbs with similar distance and amenity/community, albeit with psychological main road barrier (Thomstown, Lalor, Epping).

I think the whole North/North East including Reservoir will do well comparative to whole of Melbourne. But I think Northcote and Clifton Hill (in particular), Fairfield, Alphington, Thornbury will do as well or better % comparatively than Rezza/Preston, even with gentrification factor.

The amenity and centrality of those suburbs will give some serious scarcity and tightly held nature that I think will see them become inner-eastish 2-3mil+ prices vs Rezza/Preston which I think will be standard mid 1 million+. But probably can't go wrong with any of the above suburbs, including Fitzroy North, Carlton North etc.

P.S. I am not super familiar with Reservoir and would love some insight into what the allure/high prices in Oakhill are about vs more central Northern suburbs.

 

@Whitecat please sell me Broadmeadows. More potential than Epping?

 

Value.
Sydney should not be 60% more than Melbourne but it will probably get to like 70% more before Melbourne starts its catch up.

Talks about the lag in the immigration effect and believes that Melbourne will be the best performer over the next three to five years. I personally think it would be the best performer over the next six or seven years at least.
Why is Melbourne's property market in the slow lane and will it accelerate in 2024? - latest residential news - API Magazine

 

I have some numbers on the gap between Sydney and Melbourne house price over the year. It's ranging from 11% to 77% with the average around 33%. Historically speaking, I would say Melbourne right now is in undervalued territory as compare to Sydney.

 

Getting a positive cash flow IP is challenging anywhere in Australia even in like mining towns you don't necessarily get cash flow positive.
Melbourne yields aren't too bad really depending on where you buy. Yes negative cash flow is challenging and so is holding while you are waiting for capital growth. I actually wished I had bought another in Perth for more instant gains. Having said that I also like diversifying given that I didn't own in Melbourne. And it's so much nicer to buy in a flat market.

For my purchase in Melbourne after all costs all complete property management and ownership costs I am 170 dollars a week out of pocket not including negative gearing. Given the interest in the property for rent I possibly could have got another 20 bucks but I'll pick that up again in 12 months plus more likely. Now if I was on an interest rate that was more normal as in like mid Sixes then after negative gearing subsidy I would basically be neutral.

I would buy again in Melbourne, if thinking of a ten year timeframe its the place to go for me.

 

Exactly and there's also charts showing more recent data than this where you can visually see that there are periods where Melbourne and Sydney drift relatively further apart (and we are now in one of those examples) but they actually track each other very closely over the long run. Actually Sydney and Melbourne over the long run track each other more closely than other state capitals do to Sydney however over the long run no state capital underperformed Sydney just some are more jumpy compared to Sydney.

 

Lots of retain and subdivide blocks in broady.
Is yours one of these ? If so do you think you will develop subdivide and build down the track when numbers stack up (and they will eventually once the land goes up)?

 

Hello Khang, thanks for sharing, do you have data up to 2024 ?
The chart appears to end in 2016 which is like 8years ago ?

 

It would be interesting to benchmark particular suburbs to see where the undervaluation is most prevalent.
Eg high middle or low end.

 

Hey VanillaSlice, the data was from this article Successful Ways | Australia’s median house price data and it's only up to 2016.

You can get the latest data from REIA/Corelogic/Domain and do the same comparison.
For example in this latest domain report, the gap between Melbourne and Sydney is around 58%.

 

No due I needed something cheaper and good condition to get a good yield.
But yes definitely those are the ones to go for are the subdividable ones. Perhaps with hindsight I might have tried harder for that.
I have checked in with council and it's fairly likely I will be able to do a granny flat even in the front yard so once I get some money together that's something I might look at. That's not quite as good as putting in townhouses or an extra house but these days with all the hacks you can do to maximize the size of a legal granny flat you kind of end up with a second dwelling (can essentially get a 3 bed 2 bath) so that's a kind of like a development that is a pretty good use of space given outlay versus yield that you get.

I am happy with the yield getting 4.9% (and turns out with the level of interest I possibly could have got more) and I don't have any concerns about long run capital growth potential but certainly you can do even better if you get something with a development option if that's in your budget or your negative gearing tolerance.

 

Victoria coastal regional looking pretty good although it's still may have more to fall. Some very good yields on offer. 6.6% etc. Just a bit uncertain about timing though because some of those areas have doubled since 2019 and even though they are at a discount now it might take a while for them to come around but still I'm surprised at the good yields on offer and coastal property has good long run capital growth they are always discovering the next 'hot' previously overlooked coastal suburb