CHEAPER TO PAY RENT THAN TO BUY APARTMENT

If you had purchased a detached house in Doncaster around December 2011 and sold it today the sale price could have doubled. In the same period apartment prices in the area have not increased which means many apartment owners wanting to sell this year would be lucky to redeem their initial outlay.

 Houses Shown in Blue  Units  in Red/Brown  Click to enlarge

House Rents Shown in BLUE
Units in RED/ORANGE
Click to enlarge

Apartment Sale Boards

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If a couple had taken out a high ratio loan to purchase an apartment, say a mortgage of $400,000, the weekly payments would have been approximately $500.00 plus outgoings, such as owners corporation and municipal rates, the weekly commitments could have been close to $600.00. Currently a detached house in Doncaster could be rented for approximately $500.00 weekly and a two bedroom apartment for less than $450.00. You would be far better off

renting according to Doncaster resident Christine Clark. “There is enough space in a detached house for couples to be sharing the rent to help save for a deposit on a proper home”. “You would still have more room than in an apartment, you don’t have to worry about noisy tenants adjoining or rubbing shoulders with people in the lifts from the 10th floor you really want to avoid and you have the added luxury of a backyard for the summer barbeque”

Doncaster  High Rise Click to enlarge

Doncaster High Rise
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The selling prospects for local apartment owners are further diminished if they are in a high rise tower where there are a large number of apartments for sale (agents report up to 15% at any one time). Chances of getting a fair price are not likely to improve with the current glut of apartments under construction. While the local market for existing apartments is stagnant, apartment sales through overseas agents is booming almost entirely due to Chinese developers who are outbidding the locals for the best building sites and Chinese purchasers who are taking advantage of government regulations (FIRB) which allows foreigners to purchase dwellings off the plan.

They see our real estate market as a safe haven to place their money. This is because there are limited opportunities for investment in China and many are concerned about its unpredictability and their government’s attitude towards private wealth. So they are not concerned about the poor resale performance of apartments on Doncaster Hill and some won’t even bother renting them out.

4 Responses to “CHEAPER TO PAY RENT THAN TO BUY APARTMENT”

  1. Talford says:

    Manningham Council are providing a lot of misleading material which is being used by a number of overseas intermediaries to promote off the plan apartment sales on Doncaster Hill. The deficiencies of infrastructure, employment and transport have all been swept under the carpet. Where are the 10,000 jobs they have promised? Five million visitors per year? Despite being told a train to west Doncaster Park and Ride could not be justified they continue to give the impression it will happen. The first stage of the rail study was only completed to honour a promise made by a politician during an election campaign so the chances of the government completing the second stage of the study would be zero. Doncaster Hill may not turn out to be the safe haven to place money they seek if the mismatch between the prices paid for apartments through overseas agents and the much lower resale prices they are fetching on the local market continues.

    • Patrick Nolan says:

      The Council website promoting Doncaster Hill, which shows Manningham as being only 12 km from the city, is deceptive and needs qualification. 12 km is the distance as the “crow flies” from the border of Greythorn and West Doncaster to the OUTER edge of the Melbourne Central Business District. Most distances are usually measured by road to or from the Melbourne GPO. The shortest distance by road from the Westfield bus terminal , the heart of Doncaster Hill, to the Melbourne GPO is slightly more than 18 km. Every man and his dog knows that there will be no railway to Doncaster/ Greythorn let alone Doncaster Hill. Recent comments on Manningham Leader conversation page indicate that the public no longer believe it. The last rail study was just a stunt by a politician who promised it in a lead up to a state election to give the impression it was happening. Manningham council jumped on board to promote it and perpetuate the untruth.
      Patrick

  2. Investor says:

    The rental yield from an apartment is higher than a detached house in Doncaster because they can be purchased for half the cost. However a house will see you in better stead in the long run because you can be assured of greater capital gain from a house that has a certificate of title to a piece of land which you might want to redevelop at a later stage. If you decide to buy an apartment for investment you need be careful where you purchase, firstly I would want to buy in a small block of apartments where there would be less vacancy rates and the owners corporation fees would be cheaper. Employment and public transport are important as is the need for a car space. I would advise against buying an apartment on Doncaster Hill because it lacks the infrastructure to support the huge glut of high rise apartments being built.

    • Mulliwarne says:

      East Doncaster would be a better option than Doncaster Hill for a property investment because there are less apartments in the three storey buildings. While you don’t get the capital gain, as you would with a house, at least the rental would cover a large portion of your outgoings and eventually you would own it.

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