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The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.


Category Archives For: Economy

The Secret Agent Report – Shifting Preferences

We have just released our latest Secret Agent report!

Change is the one thing that is a constant in our lives. Sometimes we are forced to change, other times we evolve naturally.

There is no doubt that all of us have been forced to change how we do things in recent months as a result of COVID-19. Quarantine has meant new habits have been put into place, many of these may stay around even after the virus dissipates.

This report, Secret Agent will look at some of the things that may change in terms of property preferences as a result of the time we’ve had to spend in quarantine.

Many of these changes will likely be amplifications or deviations of existing trends, rather than dramatic shifts, as will be discussed.

Access the Shifting Preferences report now!

 


The Secret Agent Report – Rent Shock

We have just released our latest Secret Agent report!

What started out as a health crisis in Wuhan China has quickly become an unprecedented global problem. The implications for people’s health and the overall health care system is dire. Financial markets have been left reeling as the lock downs have created large revenue disruptions to businesses; the forward-looking nature of markets—its speciality—is struggling to price what remains an uncertain future.

Australia, has been tremendously successful thus far, of containing the virus. Thanks to our lucky geography—an island continent—and an adhering society, that has accepted the current social distancing measures implemented by the Government. Yet, our main weapon: social distancing—creates an economic problem; particularly within the commercial property market.

Landlords, Tenants and Banks are in a bind. Social distancing has rendered many commercial properties unusable, while the underlying financial commitments remain in place. The Morrison Government has implemented a mandatory code that landlords and tenants must adhere to. Yet, the situation remains a precarious one. This report examines the impact of COVID-19 on commercial property. Will the current impact on commercial leases survive the downturn, or will the current social distancing methods cause deep problems for commercial property that could threaten the wider economy? We do our best to examine the issues at hand and what can be expected to follow as we approach “the other side” of the virus’ impacts.

Access the Rent Shock report now!

 


The Secret Agent Report – Coronavirus

“While progress in infectious disease prevention, control, and treatment has improved our ability to respond to such outbreaks, globalisation processes relating to human behaviour, demographics, and mobility have increased the threat of pandemic emergence and accelerated global disease transmission.”

(Krewski et al, 2016)

We have just released our latest Secret Agent report!

In a range of ways, globalisation can be seen as a something of a double edged sword. On the one hand it enables the expansion of businesses into new locations, increases shareholder wealth, makes travel easier and enhances the rapid exchange of ideas and technology across the globe. On the other hand, it has resulted in increasingly distorted social hierarchies, expansive fossil fuel usage, and the swifter, more pervasive transmission of both mental viruses (such as terrorism), and infectious disease.

When the newest (yes, we have actually been historically exposed to them) coronavirus initially broke out, it seemed distant enough not to worry about, unless you had travel plans to China.

Skip forward just a month and it has quickly spread enough to force many people to cancel their travel plans and stock up on essential supplies. The economy, as well as the sporting world, seem almost certainly to be highly affected by the virus.

In this report, Secret Agent will consider some of the downstream effects of the new coronavirus outbreak.

Access the Coronavirus report now!

 


The Secret Agent Report – A Turning Point Year: Reflections on 2018

We have just released our latest Secret Agent report.

2018 was quite a turbulent year for real estate, both in Melbourne and many other parts of Australia. Stagnation and negative growth have been touted as being the beginning of a property crash.

This month, Secret Agent will analyse indicators and metrics which affected the Melbourne property market in 2018, including Australian bond yields, auction clearance rates, housing prices, household debt and negative gearing changes. We’ll also discuss how they are likely to affect prices further into 2019.

Access the Reflections on 2018 report now!


The Secret Agent Report – Philip Lowe’s Perspective on Banking Crises

Happy New Year! We have just released our latest Secret Agent report.

Moments in history like now, it’s important to take stock and get into the head of Australia’s most important financial person. Head of RBA: Philip Lowe. 

The Royal Commission’s upcoming report into banking is likely to be a huge deal for banks and future lending practices. Risks remain for banks to be heavily wounded from these findings. 

In this report, Secret Agent wanted to look into Mr Philip Lowe’s views on banking crises. 

Access the Philip Lowe’s Perspective on Banking Crises report now!


Budget 2017 – Winners and Losers in Property

WINNERS

First Home Buyers
First home buyers will be able to use voluntary contributions to their superannuation to save for a house deposit. Withdrawals will be taxed at a lower rate, but the amount you can contribute is capped at $15,000 a year and $30,000 all up. Both members of a couple can take advantage of the scheme.

In Victoria, the state government will abolish stamp duty for first time buyers of homes valued up to $600,000, make cuts to stamp duty on homes valued up to $750,000, and also double the First Home Owner Grant to $20,000 in regional Victoria.

With the first home super saver scheme, we may see increased demand for property below $600,000. This will push up the prices of houses and townhouses in outer suburbs such as Cranbourne. Inner city suburbs will be less affected, as average prices are typically above $600,000. Developers will also have to compete more agressively for development sites that allow sub-$600,000 townhouses to be built and sold in these outer suburbs.

Downsizers
A person aged 65 or over will be permitted to make a non-concessional contribution to superannuation of up to $300,000 from the proceeds of selling a principal residence owned for the past ten or more years from 1 July 2018.

This is good news for real estate agencies operating in areas popular among downsizers, such as the inner city, as there is more incentive for elderly property owners to sell their home. Developers can also benefit from creating stock in these areas. Read the full post


Bond Yield Update: February

official yields on australian treasury bonds 2016While many media outlets paint a rather bleak and uncertain future for the world economy, long-term bond yields in Australia finished 2016 higher than at any other point throughout the year.

This is even more impressive considering that the cash rate (which has a strong correlation with bond yields) was cut twice for a total of 50 basis points over 2016. Figure 1 shows how much long-term rates increased towards the end of last year and into 2017. Yields on 10-year Australian government bonds have increased by 74 basis points since September and nearly 100 points since the last interest rate cut in August. Read the full post


Investment Tips: Time Value of Money

Icon of a clock multiplied by an icon of a dollar note equals a question mark, to illustrate the concept of time value of money.

This week, Secret Agent illustrates the importance of time value of money when investing in property.

There is a saying that money earned today is worth more than money earned tomorrow. The main reasons this is true are:

  1. Inflation (rising price levels deteriorate the spending power of cash)
  2. Interest rates (money that can be invested today earns interest, which compounds over time
  3. Opportunity cost (the ability to use money now rather than having to wait for it)

Read the full post


Trump Makes Bond Yields Great Again

A look at the bond market reveals a very large jump in bond yields the day after Trump was elected.

What a year it has turned out to be. From the mild (Western Bulldogs Premiership) to the momentous (Brexit and Trump presidency), 2016 has seen it all. Before discussing more recent events, let’s take a look at how bond yields have been performing since our last update in September. Read the full post


Bond Yield Update: September

There are two ways to be a consistent winner in investment: information asymmetry (mostly through insider trading, which is illegal) and holding assets in the long term. Both of these methods are protected from short-term volatility.

The first expects and profits from these movements (often very risky as all public information is already factored in the price), while the latter can safely ignore the daily peaks and troughs, knowing that these will cancel out over a longer period of time. Investing for long-term returns and robustness is the appropriate reason to buy treasury bonds, yet it is very counterintuitive for most of us to ignore weekly or monthly yields (even changes over one year can be irrelevant with the right strategy).

Business Insider recently published a story called “The week is underway and Australian bonds are getting destroyed” with an image of a building being demolished. Yet as the article correctly points out, yields are still below pre-Brexit levels (bond yields rise as prices fall), which was less than three months ago. It can be difficult to separate signal and noise from information when there is such an abundance of data.

Read the full post