Forums / Property Investing / Help Needed! / Buying in Gellong Vs buying in St Kilda

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  • Profile photo of 2morroW2morroW
    Participant
    @2morrow
    Join Date: 2011
    Post Count: 5

    I have been doing some research into the property market and have the income and deposit to take this step.  It seems the more I investigate the more confused I get!  I have been attending lots of auctions in St kilda the suburb I live and work in now (renting) and notice that nearly every auction is passing in.  I am assuming it might be a good time to buy.  The again the original plan was to buy in Geelong as an investment.

    Would it be wiser to stick to the original plan of Geelong or buy an apartment in St Kilda where prices seem to be dropping?

    Any thoughts would be welcome as I am very undecided. 

    Profile photo of bjsaustbjsaust
    Participant
    @bjsaust
    Join Date: 2009
    Post Count: 141

    Somebody may have a better answer for you, but when I read this post, the question that comes to mind is "whats your plan?".

    Why are you investing in property? Why did you choose Geelong in the first place? What attracted you to buying there? Is there any reason you believe St Kilda now suits your plan better?

    I think part of the reason you're having trouble deciding, is you haven't really nailed down what you want. Even the fact that you "assume" St Kilda is a good buy now, based just on the fact that auctions are passing in. Do you know what you can actually buy there for? What they'd rent for? Are they bargains now, or were they overpriced before? Have the prices actually dropped, or just less selling? Are there any motivated sellers?

    Think about what you want from an investment property. Think about your budget (both purchase price and any ongoing funding required), and then work out which area you can afford to buy in that meets your wants.

    Profile photo of xdrewxdrew
    Participant
    @xdrew
    Join Date: 2010
    Post Count: 479

    The correct answer is to assess your reasons and your expected motivations for any driving force in price.

    St Kilda is now a very established suburb .. with strong prices .. strong facilities … great demand and prices to reflect that. As I keep saying .. the majority of property price movements and increases are SOCIAL movements too. So the question comes back .. what is keeping people excited about being in and/or around the St Kilda area? That is your most important gage for trying to work out whether St Kilda is a good investment. As it is .. your chances of receiving a good percentile rate on your investment there are slim. Its a high demand area, hence the return you will recieve CANNOT compete with the continual property price changes.

    It doesnt mean that St Kilda WONT move ahead. With continued demand .. expect it to move ahead.

    Geelong has a lot of factors going for it .. and a significant number of factors working against it. Its major industries up until recently were the car industries and the university. However .. just due to its cheap pricing and its access to the Avalon Airport put it in a prime position to do better and more interesting things now. Geelong bayside prices have moved up significantly .. but in the backblocks and the old housing commission areas .. there are still bargains to be had. And the most comforting thing is .. you can still get a decent return closer to 5% across most property categories. Thats attractive to someone who wants to invest .. since the margin between borrowed money and gross returns looks more reasonable. All that being said .. geelong's major problem at the moment is what most areas of melbourne are really suffering from at the moment. A re-assignement of industry. That is a problem that unless its dealt with properly …. geelong could suffer major setbacks as the students stay away .. the car industry keeps tumbling .. and its popularity wanes.

    Summary : its got potential … and real drawbacks. Invest wisely .. invest close to transportation and pay proper prices. you'll do ok. On the other side, you can still pick up a decent full-size block with 3br BV for well under 300k. Thats got to be attractive.

    Do your homework on the area you choose, choose your reasons with the pocketbook and NOT emotion. If you are investing you use your head and not your 'dreams'. And you'll do well.

    Profile photo of fWordfWord
    Participant
    @fword
    Join Date: 2009
    Post Count: 471

    xdrew makes very good points about both localities. Personally I like both areas but feel somewhat partial towards Geelong. It needs to get over the 're-assignment of industry', which could be a significant speed hump. There was an article in The Age not too long ago that talks about a proposed industrial park north of Corio, which I presume is an attempt to compensate for the dwindling car industry.

    Geelong is starting to resemble Melbourne itself, IMHO, albeit much smaller and several years behind, but arguably better planned and no trams. I don't have a crystal ball (much as I wish I did) but it's not hard to see Geelong becoming really 'hip' within the next decade. When I first visited Geelong a number of years back, it was a sleepy town. In reality it was a real 'sleeper', and anybody who bought back then, especially close to the water's edge, would have made an absolute fortune. There's simply more happening on the streets and waterfront in Geelong these days. Affordability is a big plus as is proximity to the bay.

    Considering also the infrastructure and proximity to employment and Melbourne CBD (via train), many of the houses are bargains (3BR house on 600-800sqm block for less than $250K…anyone?).

    I received a newsletter from Buxton in Geelong and here's a snippet of information that you'll need to research further to either prove or disprove (especially because it's from a real estate agency):

    "…the vacancy rates of rental properties across the region continue to be below 2%, and most rental properties are achieving a very solid return of around 6-7%."

    Be sure to research each of the suburbs individually. To buy 'in Geelong' is a bit of a generalisation because Greater Geelong covers a sizable area.

    Profile photo of 2morroW2morroW
    Participant
    @2morrow
    Join Date: 2011
    Post Count: 5

    Thanks for the comments- I really wish I knew more people like you guys to bounce these ideas off.   I am very wary of not making emotional choices when it comes to property but must admit it gets hard when you start to look around. 
    Bjsaust-to answer your question about my motivation.  I think the goal is to get to retirement age (i am 30 now) with a couple of properties bringing in a passive income that I can rely on.  In other words I am happy to negatively gear something and let it pay for itself and then a few years later get a second property.  I suppose I would love to invest in an area that has growth but also happy just to have something that is easily rentable.

    It does get tricky once you start to look around the area you love and see great property but I am really trying to stay focussed and starting to look in the western corridor and Geelong (West Geelong, Highton, Belmont, East Geelong).  Also looking closer to home in West Footscray which still seems to have some decent prices.   

    I do have a friend who has three properties in East Geelong and they are never vacant and he has had them for a long time- so I guess that s a good sign.

    Anyway I am going to continue to go to auctions in my neighbourhood but also look further afield.

    The longer I wait the more deposit I save so I guess thats a good thing.  But then I tend to think the longer I wait the more property goes up…AAArrgh

    Anyway, I will continue my hunt and keep you posted!

    Profile photo of bythebaybythebay
    Participant
    @bythebay
    Join Date: 2010
    Post Count: 14

    hello, just wondering if you have any more information on the proposed industrial park north of corio?
    “There was an article in The Age not too long ago that talks about a proposed industrial park north of Corio, which I presume is an attempt to compensate for the dwindling car industry.” is there a link to this particular article? .

    Profile photo of fWordfWord
    Participant
    @fword
    Join Date: 2009
    Post Count: 471
    bythebay wrote:
    hello, just wondering if you have any more information on the proposed industrial park north of corio? "There was an article in The Age not too long ago that talks about a proposed industrial park north of Corio, which I presume is an attempt to compensate for the dwindling car industry." is there a link to this particular article? .

    Good thing I kept the articles. It helped me track it down online. Here it is:

    http://www.businessday.com.au/business/property/a-ring-of-confidence-20110405-1d2v7.html

    Also have a read of this earlier article about Geelong becoming a popular alternative to those wanting to live on the Mornington Peninsula:

    http://theage.domain.com.au/real-estate-news/the-other-peninsula-20110321-1c3bw.html

    Hope it helps.

    Profile photo of Jacqui MiddletonJacqui Middleton
    Participant
    @jacm
    Join Date: 2009
    Post Count: 2,539

    Have you tried talking to a few managing agents about the vacancy rates in the area?  Remember that different property types will have different vacancy rates.  For eg in one area, two bedders might be in massive demand while four bedders lie vacant for a while.

    Keep an eye on the rent section of realestate.com.au and see how long particular properties remain "on the rental market" before they are tenanted. 

    Try turning up to some open for inspections as though you are a prospective tenant and get an understanding of the demand.  In some townships an open for inspection for a rental property can attract quite a crowd.

    For what it's worth, my own opinion is that smaller dwellings (ie one or two bedders) that are within walking distance or a short busride from a major hospital, will always have a tenant (ie medical staff).  It's up to yourself to check on such a theory, and any other theories you hear of, until you have your own understanding of a market niche and are rock solid in your decision to buy in.

    If you would like to chitchat about Geelong, drop me a PM.  I've done my homework on the area.

    Jacqui Middleton | Middleton Buyers Advocates
    http://www.middletonbuyersadvocates.com.au
    Email Me | Phone Me

    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of henry13aucklandhenry13auckland
    Member
    @henry13auckland
    Join Date: 2007
    Post Count: 40

    Hi, everyone:

    I also experience the same dilemma with suburbs to invest as I only have a few years in melbourne. I read a few books like steven, lomas,and Michael Yardney.

    Every book get merit. However, I agreed with most of Michael Yardney’s ideas: invest in inner suburbs of capital cities.Invest property to get capital gain , not cashflow.

    Then I look at good inner recommended suburbs like elwood,elsternwick. A spacious 2 bed apartment easily sell for $550K and the rent could be $400/w. Based on 7.16% borrowing interest, one apartment can cost you around $20K each year to hold. This could be very stressful for most ordinary people who can not hold it a long term.

    On the other hand, I look at 10 year growth rate and found low price suburbs like sushine/broadmedows have good rental returns while still having around 12% annual capital gain same as good inner south-eastern suburbs. The good rental returns shall help ordinary investors avoid cashflow problems and hold property long term.

    Is michael yardney’s stragety only suitable for high income earners? Or cheap suburbs like sunshine/broadmedows only enjoy good capital gain in the last 10 years while in long term(say 30 years from 1980-2010) they have poorer capital gains comparing with inner south-eastern suburbs. I do not have resource or knowledge about capital gain in these long periods.

    I really appreciate the experienced investors going through a few property cycles in melbourne can give insight opinion. thanks.

    Profile photo of BaysideBayside
    Participant
    @mornington
    Join Date: 2018
    Post Count: 64

    The Mornington Peninsula is definitely where all the growth has been at as of late.

    Bayside

    Coastal markets 2019

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