Housing a good investment?
After one false start and 6 months on the market we have finally sold our house in Melbourne. Our 3 bedroom BV house in the middle suburbs of Melbourne (still Met Zone 1) sold for 10% less than we wanted, but we still sold it for 10% more than it was financed for 3½ years ago. In other words, over the last 3 years we have made a capital gain of about 3% per annum on our investment. Considering that we were paying interest of more than 6% per annum on the loan, that hardly made it a great investment.
At least we weren't caught out like the people who bought apartments "off the plan" during the boom times of '99 and now can't even get what they paid for it.
I guess there are lessons to be learned. You can lose money on property, and if you want to invest make sure you are in it for the real long haul, not just a year or three.
And to all those Perth people who think that "Perth is different" and the boom will go on forever: beware. It was said that "things are different now" in the dot.com era too and we though that Melbourne property prices would go up always then too.
posted by HDZ @ 10:37 PM
7 Comments:
What I'm interested to see is how (and if) petrol prices will further skew the pricing for houses that are close to trunk PT routes.
A very interesting question.
There is already quite a differential - and it applies to rental as well as purchase costs.
Looks like you got yourself a nice research project!
I'd also factor in rent saved (around 3-4% of property price each year), which would make it look a bit better. Though there's rates, maintenance, stamp duty, and agents fees on sale which would just about swallow all this up, so you're back to breaking even.
At least in Melbourne, I've come to the conclusion that despite it being a declining demographic, proximity to what are termed 'good schools' would occupy No 1 spot, followed by transport and then shops.
Due to our extensive rail network and shops near railway stations (unlike Perth) the former seems to have a higher scarcity value, especially amongst those who can afford to pay (which is the group that determines maximum property prices).
Speaking of research projects, how about 'service quality vs price as influences on property and rental values'?
Daniel, if this was the case, then zone 1 homes with good PT would be favoured and thus command high prices. They do in the S & E but not in the N or W.
Sunshine and West Heidelberg are both Zone 1 and have similar socio-economic bases. Sunshine (train and good buses) has better PT than West Heidelberg (OK buses in some directions) yet Sunshine remains a shade cheaper.
Another interesting pair is along the Clayton - Berwick corridor. The normal pattern is for land prices to steadily drop with distance from the CBD, but Dandenong is depressed in more ways than one. Prices along this corridor reach their nadir at Doveton, before rising at Berwick, Narre Warren and even Cranbourne.
If transport was decisive, then rail-based central Dandenong (and Noble Park) would appreciate vis a vis the outer areas (with less PT). And Rowville, etc would be less dear.
Neither of the extremes of Frankston (Frankston Nth and Frankston Sth) are easy walking distance to their nearest stations (Kananook & Frankston respectively), whereas central Frankston is, with prices nearer Frankston North's than Frankston South's.
Interestingly the areas with the very biggest social disadvantage are just beyond a convenient walking distance to the train. Eg Braybrook, West Heidelberg, Doveton Frankston Nth and much of Hallam, Werribee & Noble Park.
Thus there seems to be a slight ordering of prices in the 0.5-3km radius from stations, with locations next to the station not necessarily being the poshest, but certainly a rung up from the bottom.
In relation to the poshest suburbs, petrol prices shouldn't be an issue for those of sufficient means, so natural and human attractions will continue to be prime, even if no one has got around to putting in decent PT.
On the other hand, some of the well-off can be quite frugal so do consider their living costs.
Especially given that there is no land value capture system, so owners get the full advantages of being near transport infrastructure that they did not need to pay for.
Today's Age:
WITH a rate rise looming and petrol prices continuing their dramatic rise, agents have reported increased buying pressure within the zone 1 transport ring, an area that has cemented itself as the premier real estate zone with buyers desperate for a toehold.
In an arc from Brighton Beach through Bentleigh, Oakleigh, Malvern East, Mont Albert to Heidelberg, and to the other side of the bay at Williamstown and Altona, agents continue to report strong demand for properties close to amenities - and, increasingly, public transport.
...
Well, there you go!
It will still be interesting to look at individual sales and work out whether actual distance to PT has a strong correlation, and to what degree it is suburb "name" that does the trick.
Oh yeah, on the topic of schools, I was fascinated to read somewhere recently that McKinnon is "the place to be" at the moment, because McKinnon High is one of the top state schools...
As is Frankston High. Houses that are in the 'FHSZ' attract a premium of up to $50k compared to others outside it.
As for McKinnon (and Carneige) Telstra is one organisation that dislikes the area. At least three phone boxes on local PT routes (1x627 and 2x67) have yellow stickers proposing their removal.
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