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The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.


Category Archives For: Random Thoughts

Hotwater for REIV

A huge story broke late last week in relation to the sale of a block of land in Camberwell.

The property was reported to be under quoted having been marketed supposedly at $3 Million plus and passing in at auction for $3.5 Million. Later selling for $3.75 Million.

While some people might say that’s normal, the problem here was that the vendor was the REIV (Real Estate Institute of Victoria)

The beat up has been savage. Radio broadcasters, newspapers and the public have been quick to suggest the REIV deliberately deceived the public.

In response, the REIV have stated they were unaware of the advertised price.  It’s understood they gave different instructions to the selling agent who was representing the REIV in the auction sale. 

As a member of the REIV, it’s disappointing to see the above happen. I feel the REIV is truthful in its response. A body such as the REIV would never risk what has happened on itself when it’s so often taking its members to task for underquoting.

To not check the advertised price throughout the entire campaign is unwise. The REIV is looked at in everything it does and some responsibility must come down to not checking the ads themselves as to the guide price. If what is reported is the case.

If the selling agent did go against the REIV advice, then I think some trouble will loom for the selling agent in the near future.

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Adelaide continued

Adelaide’s east offers some very good and upper end suburbs.

Trendy suburbs such as Norwood offer some of Adelaide’s best real estate. Suburbs on the door front such as Hackney etc have blossomed in recent years but still provide good value for money.

As a rule of thumb you can expect to add about $100,000 to a single fronted property in the East compared to the inner West.
The South has some great suburbs such as Unley, which is a very expensive inner city suburb as well as others. Unley saturated with beautiful double fronted period homes.Moving deeper South are some good buying options.

The coast: Glenelg is Adelaide’s premier beachfront suburb. This part of Adelaide offers great lifestyle close to the beach. Apartments are the favoured investment here and you can buy a 2-bedroom apartment for mid to high 200’s or a great 2 bedroom with water views starting at mid $300’s.

The resource boom, which has begun, is attracting many miners to the beach suburbs. Why? Imagine spending week’s underground dealing in a dark dirty environment. The 1st thing these people want is to be close to water when they arrive in Adelaide.

This brings us to another water front hotspot. Port Adelaide is the last undeveloped city port in Australia. This is really starting to take off and with the transport linking the city with this part Adelaide. Except some big things to happen.

CBD: The one thing about Adelaide’s CBD is the general lack of apartments compared to other capital cities. This is just changing with some pretty major projects starting to take off. In fact Macquarie bank and others have spotted this opportunity and are starting to acquire sites.

Some reports suggest rents could skyrocket by 60% in Adelaide over the next 6 years. These are big numbers and the city will definitely be a great buying plan for those who are return hungry.

Good 2 bedrooms can be purchased for in the low $200’s. One type of property that is quite common is the 1 bedrooms single fronted terrace. The land size in Adelaide’s CBD is much smaller than in the inner suburbs. Expect 100 – 150sm2 and you can pick up one of these terraces starting at mid $300’s.  Melbourne’s grid doesn’t really have any single fronted residential homes. Imagine a single front in a street such as Collins Street for Mid 300’s!

Adelaide also has many other parts such as the Adelaide Hills, other coastal areas (Such as Port Willunga), regional hubs such as Port Augusta (a mining city Mecca) as well as smaller towns that are experiencing unbelievable growth due to the mining industry such as Roxby Downs.

In a little over a month, we’ll be in Adelaide for the purpose of acquiring property. This time will coincide with higher stock levels and more choice.
If you have any interest in buying in Adelaide, feel free drop me an email. [email protected]

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Adelaide’s pricing

MileendfinalAdelaide is still the cheapest Australian mainland capital city with a median price of $362,000. Adelaide also has the cheapest rents in the country.

Adelaide’s period housing is very distinctive. Most are period homes constructed out of stone due to the shortage of timber in the mid 1800’s to early 1900’s.

As mentioned yesterday, Adelaide has an easy to navigate grid layout with the water/ airport to the city centre’s West. Adelaide Hills to its East. Most of the cities sprawl runs South/ North.

For anyone who has followed this blog for some time, you might realize we stick to a few golden rules when buying real estate:

Buy close to city centres, lifestyle focused, amenity rich and property that have a ‘scarcity’ factor. A Victorian period home is a great example, these cannot be rebuilt. Another example would be an inner city apartment in a boutique block with never to be built out views.

The opportunity: Go West

The western suburbs of Adelaide are comparable to Melbourne’s inner Western suburbs such as Yarraville, Seddon etc. One difference is the proximity to the city, Adelaide’s West sits right on the edge of the CBD and has much easier access.
The state government is putting an enormous amount of money into this part of Adelaide. The recent budget caused a sensation in Adelaide with the massive allocation of funds to two very important projects.

1.    The extension of the cities tram network. The tram which did not go through the West will now be extended from the city centre all the way through to Port Adelaide. This for those who are unfamiliar passes all the way through Adelaide’s western suburbs.
2.    The massive overhaul of the Adelaide convention centre. The West is poised to become the businessperson’s companion with this massive overhaul.

Further to the Beach also sits the cities airport. It’s important not to be right next-door however its proximity is a massive benefit. For example some of the big mining companies are planning on housing their workers in Adelaide and flying them out to their locations rather than simply staying in remote communities.

Proximity to the airport will be key for these workers and for instance people who are in business and travel a fair amount.

The property pictured above is in a suburb called Mile End. It’s a semi detached period stone home. A real charmer. This sold for an undisclosed sum in the low 400’k. It was on 420 sm2 of land, which is very large for a single fronted property. The deception is that the block is almost 50 Metres deep. Tree lined street and beautifully close to the CBD. To view the map of the location, click here .
The closest main road is Henley Beach Road. This is a strip starting to emerge.

The other beauty of this property was the car access at the rear. At an estimate the width was about 7 Metres and had subdivision potential. The subdivision of blocks is only really a recent event in Adelaide. A property that presents options, presents good capital growth!

Entry point property is very affordable. For Mid $300k you can purchase a double fronted property in Croydon on good land, which is up, and coming. Little funky trendy coffee shops are just starting to pop up and the new tramline will service this suburb.

Single fronted property is still obtainable in the high 200’s – 300k mark, these however will often not be updated or on the smaller side.

North Adelaide:The crème of the crème. (The suburb itself) sits elevated above the city itself. The unique thing about the spot is the fact that it is placed within the parkland district the surrounds the CBD, see map.
This is where the Adelaide oval is situated. From a pricing end, expect plenty. This position uses the full ‘scarcity’ effect at its best. The suburb is as close as you can get yet isolated at the same time in a good way. Buying real estate here you could not expect to go wrong; the area is however very established unlike the West.

Good townhouses can be obtained in the high 400’s in North Adelaide.

Prospect, which is an inner Northern suburb (Note: North Adelaide is a suburb itself which is very small on the CBD. Think Albert Park of Adelaide) A period house can be purchased for $400,000 and then moving up. Prospect still has good growth possibilities moving forward.

The inner suburbs of Adelaide are great options; you just have to be careful about moving too far north.
Tomorrow I’ll cover the city centre, the inner East, Coastal and South.

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Adelaide

I’ve just returned back from Adelaide after a short stint, some very exciting opportunities are emerging in their market place.

More on this next week.

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Wages rocketing in property and construction

Salaries in property and construction have risen by 10-15% over the past year and are expected to increase by a similar amount for the upcoming year. This is due to a shortage of skilled workers in the industry.

In the past 5 years building costs have doubled and more.

For those who are looking to renovate or build a new home……

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Closing portal

For all those that use myhome.com.au it looks like you will have to switch to another Real Estate portal as this is due to close down as it is ‘commercially unviable’ according to reports.

The power of the web has changed the way property buyers look for property drastically over the past years but the key operators such as Realestate.com.au, RealestateView.com.au and Domain.com are hard to beat for a new internet portal competitor.

Many of the sites at the moment are not that brilliant and are quite ‘clunky’ to use. The new portal launched by realestate.com.au (property.com.au) is heading in the right direction.

New portals over the coming years will be more ‘mapping focused’ as the position of the property becomes number one priority to the consumer.

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Take note

The most popular story on the age newspaper online is how hard it is to get rental property in the CBD; clearly many people are feeling this issue at the moment.

Investors should take note.

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Petrol hits record high

News yesterday the petrol prices hit a record high in Melbourne ($1.62 Litre) has continued the long term trend of rising petrol costs throughout the country.

This as most would agree, is only the tip of the ice berg on were fuel prices might go to, it’s been reported that petrol could soar to $3.50 per litre over the next decade making a car impossible to run for many ordinary people.

Properties with a selection of good transport options close by are increasing in demand; however I still feel the full value is yet to come with this being a more and more important feature in the years to come.

In countries such as London, the price for a property skyrockets (providing the area is also of good standard) when close to a tube station as do other cities such as New York, Tokyo etc.

A gentleman asked for my help yesterday who wanted to move closer into the city from were he currently owned a home in Gladstone Park. He figured out its costing him $300 per week just to travel to work via car as he had large petrol costs, city link costs, parking plus cleaning. This did not take into account his car repayments insurance or mechanical repairs.

He is now expressing interest in an inner city property which he always thought was not obtainable, however realising what it now costs him to work he realizes he can put that money to buying a property in the inner city and using transport to get him to work.

This looks like a strong trend.

How much are you spending on you car travels?

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Holiday Blues

When market conditions change, naturally many areas that have a high proportion of holiday homes such as coastal areas feel the pinch.

Victoria's coastal locations have at this stage still been largely unaffected however one surprise is Noosa which has lost some ground in recent months with a large decrease in values that are lower to middle tier property.

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