Hi all, just wondering whether any of you guys have had experience with buying proprties in areas you suspect will be gentrified. I only have to ask a few older people about their original roots in Melbourne and they'll tell me stories about houses in Port Melbourne and Yarraville selling very very cheap yet today they are considered to be some of the cities most exclusive or up and coming areas.
I've noticed that a lot of the industrial areas in Melbourne's inner west are being rezoned as residential areas as massive factories close down. Dilapidated and derelict buildings are constantly being knocked down to make way for high density housing. Although I don't believe high density housing is all that great I think it definitely adds much better value than having unsightly factories nearby.
In my mind I think buying in areas like these is good in the long term and could possibly yield higher capital growth than the entire city average as a whole. For example, Flemington was at roughly 70% of Melbournes median house price but today it is at about 150% of the median price. Ofcourse this is talking about having the investment for over a 30 year period.
So, I guess I'd like opinions on whether urban gentrification can add yet another dimension to capital growth and whether I should be wary of anything before investing in areas where some of the population is a bit "unsavoury" (to put it mildly). I'm looking mainly at areas within 10kms of the CBD where gentrification has visibly been going on for years but still has a long way to go in my opinion.
Skuz
I think you may be a Melbourne person and one who can see the value of researching growth areas. Not just using the old mentality of worst house in the best area. Well done. I think you are on the money, with this concept just by definition alone.
Gentrification: the buying and renovation of houses and stores in deteriorated urban neighborhoods by upper- or middle-income families or individuals, thus improving property values but often displacing low-income families and small businesses.
Ive live in the inner West and spend a bit of time there, even now. Have a look at Footscray. I went to an auction 2 month ago near Barkly St. Old W. Board 550 2m block, just livable. on a corner. Now we all know what Footscray was like 7 years ago and to a lesser degree now. I thought it may go for 350,000 it went for 550,000. The old people next door lived there all there life some 50 years, nearly had a heart attack. They paid some thing like 28,000. Now tell me why would I pay 550k just to pull it down, or what rent would the new owner want min $550 pw.At rent like this it wont stay a "unsavoury" for to long. The "unsavoury" move out further west. I wont go into the history of the Melb. West suburbs & its demographics. I think you know what I mean. Yarraville is also a good example. My concerns are investing in these areas if it does not take of as planed you have an old house in a bad area. Now if it was your PPOR you have to live with it. Yarraville was a good one now its trendy and livable. Be careful of like minded investors and the high density housing. I nearly got done. Found a nice block in one of the west areas, good price. Then a few doors down some smart ass decided to buy up big time and do a high density development. I did not want to live next to that.
Don't go too far out. Or you will be in Lego Land, FHB, all the same type homes, and too far to slip into the city for a latte. And future out you go the C.G. will be less, more land to develop in the future.
All the best with it, what area are you looking at, if I can ask.
Cheers
T………………
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