Melbourne buyer’s agents slam analysts

Melbourne-located buyer’s agents have hit back against comments that investors should take their money to other cities than Melbourne, with a number saying that it represents good buying opportunities.

In response to yesterday’s story where investors were warned to avoid Victoria’s capital by wHeregroup’s Todd Hunter and BIS Shrapnel’s Angie Zigomanis, Wakelin Property Advisory’s Monique Wakelin came out in defence of the city.

“I’m frankly not interested in [Zigomanis’] charts, numbers and statistics."

“I see with my own eyes people queuing up at auctions, first-home buyers come through the door of this office hysterical as they can’t afford a place to live and I’d like Mr Zigomanis to tell me how he’d like to solve the affordability crisis in this country other than to build more dwellings,” Wakelin said of the accusations the city is in an oversupply.

While she admitted that yields were low across the city, she argued that this is only part of the picture for investors, with capital growth being the name of the game for Melbourne investors.

“He should understand that investing in property is probably only 30 to 40% about the yield and the main game of investing in residential property, he clearly doesn’t understand a thing about the residential market as the [main] game is about asset growth,” she said.

“I have read all of BIS Shrapnel’s prognostications and reports and I’m struggling to remember a single instance whenever they’ve been right.”

With the population growing strongly, she argued that it’s not the case that the city is oversupplied.

Docklands, Wakelin noted, is an exception with a lot of supply being evident. However, the new unit market is not where the savvy investors are looking.

“If he truly wants me to believe that the inner city unit developments, at zero to two kilometres, is going to completely undo the entire Melbourne property market then he should stick to comment on what he knows about, which is probably the stock market,” Wakelin said.

“Clearance rates do not necessarily measure whether the market is pricing itself up or pricing itself down. They measure the level of supply to demand and it was at 72% this weekend just gone. That is still telling me there is pent up demand and insufficient supply. If it drops to something in the 60% range then it’s closer to balanced. Clearance rates are very good at measuring over supply.”

Empower Wealth’s Cate Bakos also criticised the comments made yesterday, arguing that it generalised the entire Melbourne market.

“Melbourne does have terrible yields and in the short-term they have been pretty rubbish for quite some time but that’s not why anyone would invest in Melbourne,” Bakos said. Yield-chasing investors would do well elsewhere.

“I’m surprised that those comments were made at this stage of all times in the last two years as it’s in an upwards trajectory right now and it’s very hard to put a value on anything in such a buoyant market.”

Results Mentoring’s Brendan Kelly also said that in every market there are opportunities for investors, and Melbourne is no exception, perhaps even due to the repressed conditions.

“If you have a 30-year buy and hold in mind and Melbourne is meant to be the dreadful, miserable arm pit of Australia then doesn’t it make it good for a buy and hold for growth?

“Quite frankly, if yield is your primary driver then don’t buy in a city, or buy commercial. If you’re excited about a 3% yield then put cash in bank.”

Wakelin’s tips for buying in the Melbourne market:

- Aim for within two to 12 kilometres of the CBD

- Look for established stock rather than new

- If buying an apartment seek out those from the 1930s to the 1970s and always elect for parking

- If looking over $650,000 then look for two-bedroom period-style properties from the 1880s to 1940s