Looking Further Afield

It’s getting tough to find properties that meet our investment criteria in the current market. They are still there; they just need a little more leg work to hunt out. Interestingly, however, we are seeing properties that tick all the right boxes located in suburbs that have previously sold in excess of our valuations, often to people who have increased their offer prices based on emotive or prestige factors.

These “premier” locations are now offering some reasonable value, although the purchase prices can still be substantially higher than (even double) other suburbs.

A recent example involved a property in the Melbourne suburb of Footscray offering a yield of 2.8 per cent, compared with a similar sized property in the upmarket bayside suburb of Albert Park on a 3 per cent yield. Add in to the equation that the average capital gain for both suburbs has been similar during the past five years and it makes for an interesting opportunity.

Overall, however, it is typically slim pickings in most markets during July and August, although this year real estate agents are already bemoaning the shortage of stock. This might indicate that this year’s winter slow down might be a little more severe than previously.

Rents, too, are fairly soft, or at least not increasing, as people are also reluctant to relocate at this time of year.

Until next week,

Jock Bing