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Dundas

Discussion in 'Real Estate' started by Tanya, 1st Sep, 2008.

  1. Tanya

    Tanya New Member

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    Hi,

    Im new to this forum, but have been reading for a few months now. I am thinking to purchase a fairly new 2 bedroom apartment in Dundas.

    I was wondering what the area is like now and whether this is a good area to invest? I found the price very resonable and It will be my PPOR, but hoping to turn it into an investment later.

    Im worried that it isnt such a good area, compared to Parramatta or Eastwood.

    Any insights would be really appreciated!
     
  2. 02bsure

    02bsure Well-Known Member

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    Tanya, do you always ask a hairdresser if you need a haircut?


    _____

    In any case, stand back and prepare for answers long the lines of -

    Dundas would not be my preference... XXX would be better

    and

    Yes, now would be a good time to buy ...because interest rates are coming down.
     
  3. Billv

    Billv Getting there

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    Tanya

    I did look at Dundas a couple of times but it was a few years back.
    The long term trend for units is 9.5% so it's ok.

    All 3 suburbs are good IMO but it depends on what you are after, where you work, where your friends live etc.

    What's the price of the unit?
    Parramatta is probably better value for money but it depends on where you buy.

    Cheers
     
    Last edited by a moderator: 2nd Sep, 2008
  4. Billv

    Billv Getting there

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    Tanya

    btw, don't listen to O2Bsure, he/she thinks this is the US with the dodgy/speculative loans and that our property prices will collapse.

    Our property market is nothing like the US, our lending is largely regulated
    and our banks despite some write downs due to their US exposure they are enjoying record profits.

    At the same time, home loan interest rates have peaked and tomorrow they are coming down so I think the worst is over and we should have price stabilisation and some small price increases.:)

    Cheers
     
  5. Tanya

    Tanya New Member

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    Thank you for your reply BV, the price is $329,000 and has 2 security car spaces. Another one sold for $319,000 that had 1 space.

    After looking for months, its one of the nicer 2 bedders I have seen at that price, which is I guess why I was wondering whether the area was ok. I also wanted a place I didnt have to spend money on renovating.

    I was happy to hear today that the interests rates are most likely to be coming down too!
     
  6. Billv

    Billv Getting there

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    Tanya

    It sounds like a good unit.

    Please note that the median price for units is $291K and I don't know the building and the exact location to know if the price you are paying is justified.

    I suggest you go to this website and look at the sales for your street
    You should get an idea of prices.
    Street sales report - search now for free - onthehouse.com.au

    btw, Jacque knows the area better than I do so if she doesn't see this thread send her a PM and she will give you her opinion.

    Cheers
     
    Last edited by a moderator: 3rd Sep, 2008
  7. Jacque

    Jacque Team InvestEd

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    Hi Tanya

    I do know Dundas especially well, not only having searched for clients in the area but also growing up and living in the suburb next door.
    My impressions (and please note these are just that):

    The "Valley" has always had a certain stigma attached to it, due to the previously high population of Housing Commission stock housing in the vicinity. As a result, even though the vast majority of these have now passed into the hands of private owners, locals still paint it with the same tainted brush of history and nothing much will change this, except time. Nearby Telopea is also the same, though again it's only particular streets.

    I like certain sections of Dundas only myself, and would try to avoid the area around the Evans Rd shops as well as the awful old high rises in Marshall St (I think they're in this street), behind Telopea station. Not really attractive parts, but then again I'm sure other ppl will disagree.

    The suburb is made up mainly of older 1960's typical HC stock- fibro or brick 3bed 1bath basic cottages, most initially built without parking. Units came later, and obviously around the stations you have more of them, due to the allowable zonings. Compared to the surrounding suburbs of Carlingford, Oatlands and Epping, prices are cheaper but then again you're not comparing apples with apples as most houses in these other suburbs are larger.
    As far as value goes, it's pretty good at the moment and presents well for FHB's with house prices starting from mid $400K's- most decent examples selling in the low to mid $500K's. The big advantage of this suburb is it's location, and it may well transform from an ugly duckling into something more beautiful over time- already you can see a lot of knockdown rebuild projects as owners afford to start again.

    Hope this helps- best of luck with your unit purchase :)
     
  8. Tanya

    Tanya New Member

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    Thanks so much for all the information BV and Jacque, its been very helpful. :)
     
  9. 02bsure

    02bsure Well-Known Member

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    As far as value goes, it's pretty good at the moment and presents well for FHB's with house prices starting from mid $400K's- most decent examples selling in the low to mid $500K's.

    _____________

    Say what? The items 'FHB' and '400-500K' do not belong in the same sentence or even the same paragraph. What are you people thinking?

    As for trend analysis - by what % has Sydney real estate increased since the beginning of this year? I would suggest you start with that as the basis of your trend because it is at least the most recent trend. For a larger view I would suggest you analyse the trend in the 1st half of last century rather than the 2nd to better understand the current situation.

    The definition of a 'long term investment' is a short term investment gone bad. I have no doubt the 'long term investment' phrase will start to be trotted out more and more as time rolls on and the promised capital gains fail to materialise yoy. For most here a long term investment is 2 to 5 yrs. I strongly suspect that will become 20+yrs with regards to real estate.

    Bloomberg.com: Worldwide

    Lateline Business - 21/07/2008: Marc Faber joins Lateline Business
     
    Last edited by a moderator: 6th Sep, 2008
  10. 02bsure

    02bsure Well-Known Member

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    U.S. House Price Decline Could Be Worse than Great Depression: Tech Ticker, Yahoo! Finance
     
  11. Billv

    Billv Getting there

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    O2bsure

    I have watched the video.

    We should not forget that Robert Shiller is in the job of selling books.
    He writes and talks about subjects which are popular and expected such as the crash of the US stockmarket & the US housing market.

    Without trying to degrade his work, it is clear to me that anyone could have predicted the share market crash.
    You could see from miles away that stocks were overvalued and the same with property prices at their peak.

    In this particular video he is sending mixed messages and shows that he doesn't know the product he is trying to analyse.

    For example, he is saying that properties won't go up because you can build more of them. While you can build more, these won't be in established city areas.
    Does he take into consideration supply and demand?
    In the US as you know they have built over 1 million speculative properties and they have them now sitting empty and vandalised.

    There is no excess supply in Australia; in fact we have the opposite.
    We are not building enough properties and this is not about to change anytime soon.
    He does not take into consideration the increasing construction costs.
    In some areas of Sydney property prices have fallen below replacement cost.
    He is not mentioning rents and interest rates which are the main factors determining the value of a property.

    He is also saying that properties don't usually have V shaped recoveries
    I don't know where he gets his information from but they do, they are just slower moving charts than the share market charts he is used to see.

    Finally, the Sydney property market has largely had its price correction.
    There could be some more adjustments at the higher end but overall, the drops of interest rates which have just started will help stabilise prices.

    Cheers
     
    Last edited by a moderator: 6th Sep, 2008
  12. 02bsure

    02bsure Well-Known Member

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    Hi Bill,

    Well 600K Pols moved to the UK in 2007 year on top of the 400K+ who moved there in the 2 yrs prior and thats ignoring the folks who moved there from everywhere else. The Uk is of course a rather small island with supposedly limited building potential. In any case, none of this has prevented the larget monthly house price drops in their history (in fact they've now had drops 11mths straight).

    Copenhagen sits on an island only arond 150km long (7000km2), population 4mill(the island not just Cph), limited land, expanding population and ...... collapsing house prices.
    Want to see what a stunning trend in growing inventory on a land locked, growing population example looks like, then check this graph ...

    Boliga.dk

    (also note the Top 10 price reduced properties for Sept 1 ...top being -47%)
    (also note the total amount of price falls for Sept 6 -437.000.000 kr compared to price rises 24.000.000 kr ...stunning stuff)

    There are so many failed examples of the 'lack of space / growing population' line that its amazing to think it can still be presented as reliable.

    Say what you will about Australias lack of supply, its false. We can argue that one all day long. The truth will only finally be revealed when credit is squeezed to the point where collecting houses like baseball cards becomes impossible. At that point and beyond, the supply/demand curve will change and surprise many. The collapsing AUD is going to cause significant problems for the ozzie credit lenders going forward. Easily obtained foreign funds are being withdrawn from Australia and the banks are going to have to find new sources.

    Robert Shiller is one of many but the Case/Shiller index is now an accepted cornerstone in correlating and measuring real estate in the US. Fact is , the future may involve mortgage holders having to buy a hedge against home depreciation by using an index such as this. I could certainly imagine future mortgage lenders demanding a premium be paid for this sort of new style mortgage insurance. ...you want a loan , then you must insure it.

    If only this concept had been made mandatory in real estate markets around the world, there would be none of these enormous problems today ...but probably also no enormous real estate speculation either.

    all the best
    02.
     
    Last edited by a moderator: 6th Sep, 2008
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    In Australia, the majority of loans are already insured for the mortgager - it's called Lenders Mortgage Insurance, and it protects the lender if they are required to sell the property at a loss when they foreclose.

    The mortgagee typically pays the LMI if the LVR is above 80% (with insurance premiums rising dramatically above 90% LVR), with the lenders covering the insurance premiums at or below this level (I'm not sure whether they do or don't insure lower LVRs).
     
  14. 02bsure

    02bsure Well-Known Member

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    Yes, I remember having to take that when I bought a place in oz in the 80's.
    But what I'm referring to is a step more draconian than that.

    The lender may say, to insure that there is no loss and there is no forced inconvenience/hassle to the mortgager or mortgagee a derivative taken against an index could prevent the mortgagee from having to leave his home at all. Unlike insurance where premiums are historically based via actuarial math, the derivative against the index would be very transparent and reflect the real market.

    gotta go.
     
  15. Billv

    Billv Getting there

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    Tanya,
    I hope you don't mind us highjacking your thread :)



    02bsure

    I find your posts very interesting.

    In relation to the UK and Danish price falls, I believe that these are largely due to increased cost of living, mainly the price of oil and food, fear of unemployment and due to the increased cost of credit.

    The trigger for the turn around was IMHO the central banks's increases of interest rates. Central banks in Europe and elsewhere were trying to control inflation at a time when the price of oil and food was going up. Inflation which was largely imported so they have put unnecessary burden on their economies and on mortgage holders.

    Also, something I find quite remarkable and which I think it hasn't quite been grasped yet is that money market rates have now decoupled from the official rate. In late 2007 I was amazed to see lenders raising rates independently of the reserve bank...:eek:
    Since then Australian lenders increased rates by an additional 1.5%
    It makes me sick even thinking about it...:eek:

    Now we have the unusual situation where the RBA is cutting rates as everyone expected but the lenders are reluctant to cut theirs.
    The RBA cut rates last week and lenders are taking their time to cut theirs with ST George being the worst 1 (they will cut them by 0.3% in the end of sept)

    Also, it is now highly possible that a number of other lenders will keep their rates at current levels. Please note that we are talking about a 0.25% drop.
    Are their margins really that small to worry about such a tiny cut?

    This is not all bad news though.
    The continued pressure on household budgets is definitely going to have an affect on people's spending and will force RBA to lower official rates even further.

    I can't wait...:D

    Cheers
     
    Last edited by a moderator: 7th Sep, 2008
  16. 02bsure

    02bsure Well-Known Member

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    Bill, interest rates in Europe are only slightly higher than their historical lows.

    My mortgage is 3.7% fixed (took it out in 2005) today the going rate is around 5.2%. Interest rates are absolutely not the reason housing is dropping in Europe. Roughly 10% of all of Denmark is currently for sale., people went crazy speculating based on the belief that property never goes down.

    Back to oz, don't expect too much kindness from the Banks now that the non-bank lenders are off the scene. The endless buckets of cheap credit are gone, those days are over.
     
    Last edited by a moderator: 8th Sep, 2008
  17. Billv

    Billv Getting there

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    O2

    That's a very low interest rate, nominal interest rates here are around 9%.
    If I was paying 3.7% all my properties would be +ve geared and I could retire tomorrow :)

    It's interesting to hear that the reason for the price falls is not high interest rates.
    I guess the EU with their open border policy made it easy for people who had access to equity and easy credit in the UK and elsewhere to buy properties in their surrounding countries and push prices up.
    Now they want to sell and get out but not many people are buying so prices are discounted heavily.

    The situation in Sydney is not the same but I can see some worrying similarities in other states. For example, many Sydney & Melbourne investors have been buying properties in QLD and in particular Brisbane and the Gold coast.

    Now that their IP holding costs have gone up some of those people will be looking to sell. We've already had reports of significant price corrections in some places so the recent interest rate cut could not have come at a better time. Hopefully there will be more cuts soon.

    In regards to Sydney though, I don't believe that we will see significant price corrections here because we've already had 4 years of no growth and/or falling prices.


    O2

    Thanks for the warning.
    I think driving their customers to the wall is not good for business and
    falling asset prices and defaulting customers won't help their credit rating either so I was actually expecting them to go easy on us. So far this hasn't been the case...:eek:

    Luckily, the increased price of petrol in combination with high interest rates and increased rents and food in particular brought consumer spending to a stand still.
    What a relied that was.

    The recent RBA cut is a good start and the way our economy is going we will have a few more cuts. In the short term interest rates will not come down by much but even 1% to me it's a lot of money.

    Cheers
     
  18. 02bsure

    02bsure Well-Known Member

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    Interestly enough, in the case of Denmark, only Danes or people who have lived in DK for more than 5yrs are allowed to buy real estate there.
     
    Last edited by a moderator: 8th Sep, 2008
  19. Billv

    Billv Getting there

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    02

    I don't know how to explain this.
    It could also be that interest rates were low, finance was easy to get and property prices were low so it made sense for Danes to buy their own place.
    Or did they have a rental shortage?

    I remember in the 90's when I worked in Stockholm it was very hard to find rental accommodation. We had to put our name on a rental list and wait for up to a year and sometimes longer for our turn.

    Cheers
     
  20. 02bsure

    02bsure Well-Known Member

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    Things changed quite dramatically from about 1996.

    I also worked in Stockholm (around 97) and rentals there like Copenhagen were difficult to get.

    But then the free flowing credit (new products and lenders) came along and flooded the market with new credit. The mantra became , how-much-per-month and no longer how-much-in-total?

    Then came a flood of building activity and speculation flipping. You have to remember also that taxes are very high in Scandinavia so when the ability to make sizeable TAX FREE gains from real estate speculation presented itself, it was an absolute gift. It presented the sort of profits that one would normally have to work a lifetime to achieve after paying Scandi taxes (think 68% in top level income tax in DK).

    So when the train started to leave the station, everyone jumped on and as is normal with this sort of speculation , the first in were well rewarded the late comers are now burning.