Newsletter - Inner Circle June 2018

Inner Circle

What’s making headlines?

Another month has gone by and we now find ourselves with a new Melbourne Lord Mayor – Sally Capp, who was head of the Property Council’s Victorian arm. The impact she will has on our city will be seen in time to come, but in the meantime, what else is happening in the market?

The headlines of late have been dominated by the banking royal commission, and the outlook for lending isn’t getting any better, with credit still likely to be tight. Those with the capacity for further purchases will still be able to access credit, but you’ll have to prove you can do so comfortably. The good news is that those who perhaps can’t borrow comfortably will not be able to do so, which will help prevent borrowers from getting into trouble.

This tightening of credit will see prices continue to moderate, which will provide buyers with some breathing room to consider their next purchase carefully before signing on the dotted line. Having said that, Melbourne is still the second strongest performing city for growth, with values having risen by 3.7% over the past year, and the most in demand areas will always grow in value.

If you’re thinking about entering the market and you want advice about what and where you should buy for the best results, contact us for some advice today. 

Are apartments a good investment?

Last month we mentioned that units were outperforming houses in Melbourne in terms of price growth, and the latest CoreLogic data shows this is still the case, with houses rising by 3.1% over the past year compared to 5.7% for units.

So far this trend is unique to Sydney and Melbourne, which is evidence it’s driven largely by housing affordability – that is, the affordability of units as compared to houses. More people are buying units because that’s all they can afford, and higher demand is pushing up prices. But it’s also being driven by location of the housing, with many unit developments being in the inner city, or at least in the inner or middle ring closer to amenity. For the price of these units, buyers looking for a house at the same level would have to look to far-flung suburbs of Melbourne.

Location is intrinsically linked with liveability, as being closer to the CBD usually means being closer to employment and amenity, including entertainment options and public transport. While there have been concerns of an oversupply of apartments in many cities, including Melbourne, the likelihood is that units will become more popular, particularly with first home buyers and downsizers looking for affordability and liveability. In Europe living in apartments is often the norm, and it certainly may become more mainstream here in Australia.

Let me first say that at Property Mavens we generally don’t buy apartments for clients. We specialise in buying high-performing investment-grade property, as either homes or investment properties, and as a general rule of thumb we often buy for high land value, not land size. The fact remains that apartments by nature of design have less land size -and therefore value - than a villa unit, townhouse or house in the same suburb, which is why we focus on the latter.

While I don’t advocate buying apartments, I have noticed that in some suburbs, such as Moonee Ponds and Camberwell, units are in high demand with downsizers in particular. Middle-ring suburbs do have strong demand for well-built, well-located, low-rise, small boutique apartment buildings as they provide good options for first homebuyers, downsizers and investors. These are the areas I would be looking if I was to buy an apartment. Features such as security, lifts, concierge and parking are popular with older downsizers, while proximity to public transport, lifestyle amenities, cafes and employment are popular with all buyers. Remember, these amenities come at a cost and owners corporation fees can be very high.

I would advise anyone looking at buying a unit to avoid anywhere where there is an oversupply of high-rise and/or low-rise apartments in relation to the demographic. An oversupply will affect vacancy and rental rates for investors, and it will also negatively impact capital growth prospects. As an example, Southbank has had annual growth of 0.9% and Hawthorn has had annual growth of 1.7% - neither of which is impressive – due to an oversupply of apartments.

If you’re looking for a property with strong growth potential, Property Mavens can help you make the right decision. Contact us today for an obligation-free discussion.

In 2013, one of our clients, Narelle, came to us wanting to purchase a 2-bedroom apartment in St Kilda, but after engaging our services we convinced her to buy an investment-grade house instead of an apartment, and the results speak for themselves.

We worked with her to refine her homebuyer brief, which allowed her to get clear on her needs, financial goals and how much she actually needed to spend to secure her dream home.

Rather than buying an apartment, Narelle instead purchased a single-fronted 2-bedroom renovated period home in the tightly held suburb of Ripponlea, in Melbourne’s inner southeast. This property represented excellent value for money and was a fantastic asset from which Narelle could leverage in the future to buy her dream home. She understood after working with us that it was imperative for her own home to have strong underlying growth drivers, so that equity gains could be used to purchase more property in the future.

We purchased the investment-grade Ripponlea property in 2013 for $715,000 at auction and it’s now worth more than $1.2 million - that’s a huge gain of half a million dollars! The home has grown in value by a whopping 68%, equating to an average 13.5% growth per year. Narelle is now able to fulfill her goal of being able to purchase an investment property and grow her portfolio due to the impressive equity gain.

Without our advice, Narelle likely would have purchased an apartment, which would never have resulted in the staggering growth she’s seen in her Ripponlea property. As buyers’ agents, we have the expertise to guide home buyers and investors in the right direction – we follow the Melbourne market closely every day, and we are confident in determining where the growth will be, for which type of properties.

If you would like help with purchasing an investment-grade home like this one, click here to book a time with us to discuss your requirements. It’s 100% obligation free.

East Bentleigh

We help any and all types of buyers make smart buying decisions when it comes to property, with the goal of helping them have a brighter financial future.

Recently we purchased a home for a single mum, helping her to secure a future for herself and her two young children. After unwittingly disclosing her budget to the agent, Holly was getting the run around by him in relation to a property she had her eye on, and needed our expertise to assess the value of the property, provide her with anonymity and bid for her at auction. And our carefully considered strategy worked!

We ended up purchasing the property for less than Holly’s budget, despite bidding against six others on the day. We also ensured there were no existing problems she was inheriting with the property, by identifying assorted building issues so she could factor them into the purchase price.

If you want similar results, click here to book a time with us to discuss your requirements. It’s 100% obligation free.

If you want to invest or buy the right home for your budget, click here to book a time, or call us for a chat about securing your financial independence.

Sign Up to our Inner Circle Newsletter here. 

Property Mavens - Smart Property Buying