ksd_2010

I have a 3 bed room house in Melbourne, Australia and currently it's been rented out. I have been spending 200-300 AUD per month extra (for maintenace and mortgage). I live in the UK. Is it a good idea to maintain the property or sell it?

asprilla

maintain it.

Australia_bound?

Do you intend on staying in England? If so, I'd say sell as the exchange rate is excellent if you're converting $ to pounds.

furkew

I would definitely agree with that.

Take advantage of the good exchange rate, and sell it off. The market is pretty flat at the moment and could "possibly" even drop a bit.

ozzieeagle

They are tipping a drop in prices over the next year, not sure how great that will be and if any. I guess it depends where you are. Could be a good time to sell.

gumtree

If you can estimate the net sale proceeds of your house and compare the current net rental income (deducting outgoings and mortgage interest) with the savings interest (6.51% to 6.75%) you will earn on the net sale proceeds, this will help you in making the decision, assuming there is no big house price increase in the near future.

mpgrewal

If it is in Western or Southern suburbs then maintain it. My guess is prices will rise 20% there in the coming year.

ozzieeagle

Really whys that ? Most people are tipping the opposite. Just curious ?

Are those the areas where most Indian Migrants are headed ?

mpgrewal

Partly. Everywhere else like beach area, inner city and hills have been gentrified and prices have reached saturation threshold. Prices will increase where a house can be bought below 300,000.

ozzieeagle

Thats exactly how our Indian Chappy that we work with made his money in the very down at heel suburb of Dallas.... he owns 4 houses there now. Rents them out, and the possibility of any house price crash doesnt faze him one bit. He laughs at it, and says it wont affect him. I bet it wont either.

He is actually Fijian Indian, and has two Fijian "Boys" to help him with rent collection that he manages himself. Dallas would possibly be the roughest suburb in Melbourne. He is a really amusing character, because he doesnt turn up for work for days at a time... waiting for Aus post to sack him, which they probably wont. As he is getting by just on his rental Income money now. His Wife has turned their garage into a workshop where they make those fridge magnets for advertising.

mpgrewal

More risk, more reward :-) May be he entered the market at the right time, its difficult now. My theory is always buy in a cheap and upcoming area, if you want capital growth.. today such areas are melton, wyndham, tarneit, werribee, north of craigieburn, pakenham.. whatever outermost suburb you can think of from where it is feasible to commute to the CBD daily.

littda01

Your theory is good, but your timing could be wrong :-)

Whether you personally agree or not, there are a lot of commentators on both sides of the debate agreeing that Melbourne has a coming significant oversupply, particularly of inner-city apartments and entry-level housing in the outer suburbs.

The period 2008-2010 saw three major trends - record low interest rates, a rapidly rising housing market, and very strong immigration growth. All of these trends have now stalled or reversed. In those two years, a development boom has happened and people are now starting to realise that these original trends may not continue indefinitely.

If I was in the OPs situation, with the current exchange rate, I'd be selling. The potential upside from now is quite marginal, but the potential downside is absolutely huge (the OECD just reported that the AUD is 35% overvalued, for example).

Petals

Established older areas continue to improve as land is short and services are usually established. New areas houses do not catch up for a long time as house and land packages continue to be more attractive than buying established. There was an article in Saturday's Herald Sun about the subject.

We went to a Real Estate Seminar many years ago and the same scenario was discussed.

Staying put gathers moss. There are plenty of forums around about property investment which can be invaluable to anyone looking at property investment.

We prefer the share market, no tenants to deal with lol