Is Selling My Apartment in Southbank, VIC a Good Idea?

lockmc on 15/02/2021 - 20:38

My wife and I own an apartment in Freshwater Place in Southbank. We have the most amazing view that can't be built out.

We have had the apartment for about 5 years now and are trying to sell it. Essentially, the price of the apartment hasn't gone up in 5 years (it may have but COVID really put a spanner in the works). We almost sold it last week (without advertising, just through an agent that knows alot of people in the building) and agreed on the same value that we bought it for 5 years ago. The sale fell through due to finance issues unfortunately.

I'm trying to make a semi-informed decision if keeping it for another year is a good idea, or if I should get rid of it. I'm hearing a lot about prices going up and where I live on the Mornington Peninsula, it certainly has, but I assume this doesn't apply to apartments in the city.

Further, my assumption is that people are going to move out of the city due to working from home, further driving the price down.
Our rental income is essentially covering the P&I mortgage and all other costs (body corp, rates etc).

What is everyone's thoughts on apartment prices in the city? How would I research what the general sentiment is?

My current thinking is to list it for sale on realestate.com.au (~$2,800) and try and find a buyer and just be done with it. Then perhaps buy an investment closer to home.

Financial

Comments

  • pharkurnell on 15/02/2021 - 20:43
    +1

    Dunno bout in Southbank, but mate was looking at house around Vermont to Mooralbark…. was advertised for 700k - it sold for an "offer" of 800k…

    Everything I read says properties disappear in days. Hope so, selling mine due to divorce in few weeks I hope.

    • JimmyF on 15/02/2021 - 20:45
      +2

      It depends…. Was $700k a true value for the property, or was it under quoted to get 'buyers' in the door.

      • firestint on 15/02/2021 - 22:15

        It's illegal to underquote nowadays, especially at such a huge gap of $100k.

        • jjjaar on 15/02/2021 - 22:17
          +4

          It’s illegal yes, but if the realtor can “prove” that other “similar” properties sold for X, they can put the price as that, even if they’re comparing it to incorrect properties.

        • JimmyF on 15/02/2021 - 22:38
          +5

          It's illegal to underquote nowadays, especially at such a huge gap of $100k.

          I see you're new here to property purchase……

          As jjaar said,'prove' that it was underquoted, thats the hard part and then the even harder part is finding someone to listen to your complaint!

          • firestint on 16/02/2021 - 10:21

            @JimmyF: I have 4 properties so I am not new, but yes agreed with you the hard part is trying to prove that it was underquoted but doesn't mean it's not illegal.

            • JimmyF on 16/02/2021 - 10:51
              +1

              @firestint:

              I have 4 properties so I am not new

              I'm confused, with so many properties owned, then you should know that underquoting is the normal, legal or not and no one in the industry gives a crap about it as they all do it and no one enforces it.

              Its a pretty said business to be in, its not much better than a used car salesman!

              • firestint on 16/02/2021 - 11:49

                @JimmyF: You're missing my point, I don't disagree that underquoting is normal and not heavily enforced but I am just stating that it's illegal. To be fair, this practice is getting more scrutiny in recent years with higher penalties so there's some progress but just not enough.

                • JimmyF on 16/02/2021 - 12:21

                  @firestint: I agree its illegal, I agree it is happening way too much. I disagree anyone 'cares' and any scrutiny or higher penalties talked about are just lip service.

                  Talk is cheap, rarely are any agent/company being fined for underquoting.So it just carries on. If they HAD been, it would stop overnight!

    • Islund on 16/02/2021 - 07:52
      +2

      you hoping to sell in few weeks or hoping to divorce in few weeks?

      • pharkurnell on 16/02/2021 - 09:54

        paperwork submitted to trade her in, then sell house :( having just spent about 25-30k on rennos.

  • JimmyF on 15/02/2021 - 20:49
    +5

    Essentially, the price of the apartment hasn't gone up in 5 years (it may have but COVID really put a spanner in the works)

    No that isn't COVID, that is city apartment ownership in general. Many many articles around about the lack of apartment value increases after 5-10 years of ownership.

    Why?

    Well just as you hinted, so many 'new' towers being built, why pay lots for a 'old' used apartment when you can get a brand new one just next door for the same price!

    • Kramo on 15/02/2021 - 20:51
      +1

      Yeah that seems to have been the case. Media always talking about 'property' rising, and ignoring how apartments and houses are doing completely different things. Apartments (esp. CBD) have been flat for a few years now.

      • RockyRaccoon on 16/02/2021 - 07:45

        Not just the media, there are property always rises/makes money advocates here as well.

    • The-Kremlin on 15/02/2021 - 23:40
      +2

      Just like those 'amazing' house and land packages out in the fringe suburbs…they are a dime a dozen.

  • plmko on 15/02/2021 - 20:55
    +3

    Don't go chasing imaginary gains. Sell, move on and look towards better investments in the future.

  • CyberMurning on 15/02/2021 - 21:03
    +6

    "We have the most amazing view that can't be built out."
    then hold on. you have something that others dont. this is make your unit unique.
    its ok to invest in apartment as long it is different from the other 100s in the same building/area.
    some people still want apartment. otherwise no one will build apartment.

  • brendanm on 15/02/2021 - 21:10
    +11

    If rent covers all expenses why sell? Eventually you will own it, without having to pay for it.

    • conan2000 on 15/02/2021 - 21:35
      +5

      Definitely, what's the reason for selling OP? An investment that pays for itself and will be an unencumbered asset in the future either bringing in income or can be sold for play money. If it was pulling you down financially it would make sense.

      Also why would you buy an investment closer to home? I have a couple of investment properties, one I have never seen and the other I went to look at once. Them being close to where you are is a bit pointless, that's what real estate agents are for.

      • RockyRaccoon on 16/02/2021 - 07:49

        that's what real estate agents are for

        Correction. Thats what good real estate agents are for.

        Hence buying close by means you can check on the agent and the property. Does that lock really need replacing?

        Arguments for both scenarios.

        • conan2000 on 16/02/2021 - 09:46
          +1

          I don't think it's a big enough issue to limit yourself to investing near where you live.

          I have perhaps had $2k worth of maintenance bills over the last 3 years, the equivalent of about one month of rent for a single property. If it was a large expense I might want to check, but not for a couple of hundred here and there.

          It's always better to invest based on potential capital growth/better rental yields/negative gearing potential etc (depending on your goals), rather than just picking somewhere close to home so you can check on insignificant issues.

    • lockmc on 16/02/2021 - 11:26

      Well because although it might be making rental return, capital gains might be nothing and perhaps there is a better place to put my money?
      My main worry is the market in Southbank apartments going down due to the effects of COVID.

      • lainey13 on 16/02/2021 - 19:16

        It's already down. If you can afford to hold onto it, don't sell now you will only be locking in your losses and trying to sell in a (limited) buyer's market. There will be no uptick in apartment dwelling demand when there's no migration, international students or tourism BUT that won't last forever and if you can afford to wait another year or two that would be a better time to sell.

  • bazingaa on 15/02/2021 - 21:31

    list it for sale on realestate.com.au (~$2,800)

    does it cost that much for an advertisement ?

    • JimmyF on 15/02/2021 - 21:38
      +2

      Yes….domain is even more!

    • lockmc on 16/02/2021 - 11:26
      +1

      Apparently includes 60 days listing, 30k impressions or there abouts, premium listing blah blah.

      • bazingaa on 16/02/2021 - 11:30

        :O

        • lockmc on 16/02/2021 - 11:31

          Bargain, huh!

          But to list a property for rent, its like 1/4 of that or something similar.

  • VeganJerky on 15/02/2021 - 21:37
    +4

    Melbourne CBD is a ghost town right now, COVID has hit it hard. Students have gone back overseas or moved beck to their parents house and there are no tourists to AirBnB a place.

    Do a quick search on realestate.com.au and you'll see the glut of property for sale and rent in the CBD.

    It will come back, but it might take a few years. I don't think now is the time to sell.

  • capslock on 15/02/2021 - 21:51
    +4

    Melbourne city apartments are good to occupy for lifestyle reasons but they are not good investments because there is no capital appreciation.

  • SydStrand on 15/02/2021 - 21:51

    Inner city apartments have flatlined for a while, and COVID kept it that way. No more international students cramming themselves into the CBD, and I wouldn't be surprised if prices stay depressed for a while, as some employers might come out of this more open-minded to WFH.

    That being said, if the rent is covering P&I, then why sell?

    • lockmc on 16/02/2021 - 11:28

      That's my concern, that prices drop because people are WFH.

      Why sell? Perhaps there is a better place for me to put my equity, or perhaps the future is looking bleak with apartment prices and that in a few years time, it may be worth less.

  • miwahni on 15/02/2021 - 22:52
    +3

    I've seen a few reports recently that Melbourne CBD, Southbank and Docklands are losing residents fast, and the trend is expected to continue. I've noticed valuers putting risk rating 4s on for market direction due to this. Also comments re a surplus of rentals in those areas - I know a few months ago (during Vic lockdown) they were quoting vacancy factors between 11% - 14% for these areas. These are factors that have investors looking elsewhere, so you will have a reduced pool of prospective buyers for your unit. Probably owner occupiers, or investors who are willing to gamble on the long shot of an eventual capital gain on a unit that could sit empty for some time.

    So basically what I'm saying is the same as a few commenters above - not a good market to sell in. If it's tenanted, and the tenancy still has a while to go, I'd be hanging onto it if I could manage to.

  • whitelie on 15/02/2021 - 22:57
    +2

    I nearly always stay in that building when I travel to Melbourne from Perth, great spot & views like you said.
    Hard call if it's essentially paying for itself. a) You're not losing anything to make up the costs but b) You may make more on another property increasing in value.

  • pencilman on 16/02/2021 - 01:25

    I've been thinking of buying into a city apartment as a bit of a 'reverse sea change'.

    After reading this post I just had a look - wow! - there's a lot out there in the market, and so many apartments coming on the market in the next few years.
    And with COVID, the supply and demand equation looks to be tilting majorly one way.

    So the question for me if I'm a buyer, when to go in?

    • conan2000 on 16/02/2021 - 09:49

      I wouldn't touch an apartment in the major cities at the moment/for the foreseeable future. I wouldn't expect any capital growth and with so much oversupply you may have to drop your pants on the rent as well.

      Plenty other good investment opportunities around.

    • pharkurnell on 16/02/2021 - 09:55
      +1

      Wait for the next 10 high rise buildings to be completed, and all be empty.. then 2-5 mths later the panic sales

      Theres that much empty office space, and apartments why they approve more is confusing, apart from backhanders from the developer mates.

      • capslock on 16/02/2021 - 10:02

        They have been saying for years that there is an over supply of city apartments but the price crash never ever seems to come. Even now, despite high rental vacancies, sale prices are still holding.

      • pencilman on 16/02/2021 - 10:12

        Timing is everything. As the OP said, Southbank (incl Freshwater place) hasn't done much in growth over the last few years. But the prices haven't plummeted.
        I think if investing I wouldn't currently look at a city apartment, but as another poster said, it would be very enjoyable living in the city. ie. still nice to buy to stay versus buying to invest.

        • lockmc on 16/02/2021 - 11:34

          We used it as an AirBnb - originally purchased not for capital gains, but to rent out on Airbnb and have a getaway in the city.
          We loved it. I live on the Mornington Peninsula but worked at the time in the city, so I always had somewhere to stay during the week when it was free (which as not very often but usually a night here and there every few weeks).
          If we didn't have a border collie, we absolutely would have moved in.

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