First Steps for First-Time Homebuyers to Get Easier from 1 July
Victoria’s Labour Premier Daniel Andrews has recently announced 7 new policies in a little under a week to attempt to address the issue of housing affordability (or rather lack thereof).
This included announcing that from 1 July 2017, Stamp Duty will be abolished for first-time homebuyers in Victoria for any property that costs less than $600,000.
This policy is expected to help up to 25,000 first-time homebuyers save an average of around $8,000 a year.
Additionally, properties worth between $600,000 and $750,000 will also be eligible for a concession, applied on a sliding scale, regardless of whether they are new or existing.
So what can you buy for under $600k or $750k in Melbourne’s competitive property markets?
Firstly, according to leading demographic website www.microburbs.com.au, the median prices you will need to pay as a function of distance from the CBD are shown in these graphs:
As a consequence, if you’re looking at houses for around $600,000, you will generally be looking outside of the 20km ring of the CBD; but otherwise you’ll be able to afford a unit pretty much anywhere in Melbourne for less than $600,000.
What Exactly Does $600k Buy You in Melbourne in 2017?
If you have been following us for any length of time, you will know that we are not big on the overuse of any statistic utilising median methodologies.
So to get more specific, we did a basic search on www.realestate.com.au and found the following listings available now online:
1 BR UNIT: $599,000
Want a ten-year old, 1 bedroom apartment in the iconic Eureka Tower building?
Well, you can have it for $599,000 according to this ad.
This was the tallest building in Melbourne when it was built, at 297.3 m (975 ft).
Construction began in August 2002 and was officially opened on 11 October 2006.
According to Wikipedia, it has:
- 556 apartments
- 13 lifts travelling up to 9 m/s
- 52,000 m2 of windows
- Lap pool
- Private cinema
A quick word of caution though: while many of these features may seem desirable, the cost of just getting the 52,000 m2 of glass on the outside of the building cleaned regularly and the age of this building now means that things like the lifts are due for replacement (at a cost of millions of dollars). I have heard that the Body Corporate Fees on this building are now as dizzyingly high as the building itself!
2 BR UNIT: $599,000
Head around 5km north from the CBD and you could pick up this 2 bed, 1 bath unit of approximately 65m2 (including balcony) in Brunswick East.
The inner north has been seeing a significant amount of gentrification over recent years, as some of the old industrial heart of Melbourne is being replaced with large, multi-story apartment living.
According to www.microburbs.com.au, Brunswick East now has a Hip Score of 9/10.
The Hip Score may be thought of as a measure of desirability, influenced by the influx of the type of amenities that “hipsters” like to access. Think coffee shops, beard groomers, personal trainers, etc.
As you will see from the online brochure below, this 2BR unit is a fairly typical unit layout.
When purchasing units, especially off the plan, there are a couple of basic things to watch out for. As leading interior designer Andrew Zunica explains:
“Looking at this floor plan above, the balcony appears to be of a decent size, which is a valuable addition to any apartment. However, if you have the choice, a north-facing balcony is preferable. In the case of this unit, the balcony faces south, which means that it will get less direct sun and will tend to feel colder in winter than a north-facing balcony.
Similarly, east-facing balconies pick up the morning sun, whereas west-facing balconies will usually pick up the afternoon sun, so it is important that you consider orientation when purchasing.
Apartment design can be tricky to get right, and one of the big trends in recent years has been the use of non-direct or borrowed light. You will notice in the plan above that the second bedroom has to “borrow” light through a small window off the balcony. And finally, whilst the galley-style kitchen is an effective use of space, the pantry is some distance away from the work areas.
With all unit designs, it is often a case of what feature or benefit you are willing to compromise on. Probably the biggest issues you will want to get right for maximum livability and rentability are maximising the storage, getting plenty of natural light and ventilation into the unit, and car parking. Whilst car stackers are becoming ever more commonplace, standalone car spaces are a sought-after feature by many tenants and owner occupiers alike.”
And whilst unit living may not be everyone’s cup of tea, there are often some significant advantages in regards to depreciation benefits as Mike Mortlock, from M.C.G Quantity Surveyors, explains:
“When it comes to total depreciation, a unit will typically provide a higher depreciation claim than a house will. Units generally have a lower proportion of land value, which is a non-depreciable component of the purchase price. Additionally, units will often have common areas that you have an entitlement to claim over, as well as being more expensive to build than a house on a square metre basis.
Therefore, a typical $600,000, newly constructed unit within a small development would usually have somewhere between $11,000 to $15,000 worth of deductions in the first year, whereas a newly constructed house would more likely only provide between $9,000 and $12,000 in the first year. And obviously, the older the properties are when you buy them, the less depreciation that can be generally claimed.“
And if you are looking for a more affordable, more boutique style unit option, in close to proximity to schools, shops and public transport, then The Property Mentors have hand-picked prime investments in suburbs around Melbourne for as little as $350,000. Call us on (03) 8842 9399 to discuss to discuss your investment needs and learn how you could gain access to these exclusive, off-market opportunities.
2 BR TownHouse/Villa
Travelling approximately 30km north-east of Melbourne’s CBD we recently bought a development site with an existing, older 3BR home on 1469 m² of land for $1.25 million.
The site has plans and permits for 5 new dwellings that will sell in the range of around $600,000 (2 BR) to $720,000 (3BR) when complete.
So for around the $600,000 mark, you could pick up a brand-new single storey 2 BR brick home of 16.51 squares with 70m2 of Private Open Space (P.O.S.), and as a new home buyer pay no stamp-duty.
Or for a larger, 3 bedroom double storey townhouse, which will be priced closer to the $720,000 mark, discounted stamp duty calculations will apply from 1 July 2017.
4 BR House: $599,000
Heading approximately 50km south-east of the Melbourne CBD, you can get a typical suburban 4 bedroom, 2 bath, 2 car house in one of the growth zones of Melbourne.
Obviously, you get more house for your buck the further you head out of the CBD of Melbourne, with this property measuring around 21.4 squares and sitting on 419m2 of land.
Again, members of The Property Mentors have been able to access 3BR townhouses we’ve developed in the suburb of Officer for as little as $379,990.
In close proximity to the shopping centre and train station, these more affordable properties could be a great way into the property market for any homebuyer — and with yields of around 4.5%, a good addition to the portfolio of any investor.