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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: First Home Buyers

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


What Melbourne’s Apartments Will Cost You

In this update, we present a more thorough look into the price per square metre rates of apartments by suburb, further categorising sales according to the number of bedrooms. These results are shown in Table 1.

The overall average price per square metre rate for apartments in inner Melbourne is $8,687/sqm. 

Overall, the three most expensive suburbs to purchase an apartment  are Albert Park ($13,276/sqm), East Melbourne ($11,914/sqm) and Middle Park ($10,720/sqm). These areas have consistently topped our index.

The least expensive apartments per square metre can be found in Travancore ($6,563/sqm), Kensington ($6,869/sqm) and Flemington ($7,079/sqm).

A few things can be observed when considering apartments with a larger accommodation. In some suburbs, the increase in number of bedrooms also leads to an increase in price per square metre, as seen in the CBD region, Carlton, Collingwood, Clifton Hill and South Yarra.

We can see that most of the inner North and inner West suburbs tend to have decreasing price per square metre rates as apartments grow in accommodation size. However, note that some of the data may be inaccurate due to the small number of sales available for that particular apartment type.

price-per-square-metre-melbourne-apartments-q3

Click to view table in fullscreen mode.


The Secret Agent Report – Motherhood

We have just released our latest Secret Agent report! This month, we revisit the subject of health in the living environment, but with a particular focus on expectant mothers and newborns. As the harm from toxins and chemicals is amplified on our young, choosing a new family home must be carefully considered.

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the Motherhood report now!

Motherhood Report


The Secret Agent Report – EOFY Review

We have just released a special mid-month Secret Agent report! In this release, we take an in-depth look at the property market over the last financial year.

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the EOFY review now!

EOFY Review 2014/15

 


The Secret Agent Report – Healthy Environments

We have just released our latest Secret Agent report! This month, we take a look at the unseen hazards in our internal living environments, and suggest ways to look out for these in your next home.

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the Healthy Environments Report now!

Healthy Environments Report

 


The Secret Agent Report – 2014 Review

When the number of factors coming into play in a phenomenological complex is too large scientific method in most cases fails. One need only think of the weather, in which case the prediction even for a few days ahead is impossible.”
– Albert Einstein

Urbanisation. We’ve said it once, we’ve said it twice and we would not be able to provide an accurate end of year review without mentioning it again. The top performers for 2014 were in suburbs that were flush up against the CBD highlighting the increasing value of proximity to home buyers and investors.

We also take a look at what we can expect from 2015. This section of the report aims to study the underlying momentum in Melbourne’s inner regions, without all the noise associated with average house prices.

We hope that you enjoy this reflection on the year that has passed and we look forward to providing you with many more exciting stories as 2015 progresses. 

Register to receive our report monthly and access this latest release – Sign up on our Thinking page.

Year in Review Report

Excerpt:

2014 has been a buoyant year for housing in general. Interest rates did not move a whisker with Australia embarking on some of the most accommodative financing conditions in its history. Will this continue is the big question. Advanced economies have all seen very low interest rates stay, as part of their central bank policies. This effort appears directed at fighting deflationary conditions, since the 2008 crisis ripped through world economies.

The role of expanding credit growth is directly linked to momentum in housing prices. The big question next year will be what happens if interest rates drop a further 0.25-0.5% and how will this impact on the property market. The reserve bank is cautious about stimulating the housing market too much, however may be forced to do so with further rate cuts. Australia’s deteriorating terms of trade and the desire to further devalue the Australian currency may force the RBA’s hand.

The business community seems to be engaging in further investment with higher credit growth starting to emerge again after the long de-leveraging period between 2008 and 2013. This will be good for the economy however the impacts might not be felt for a further few years after this investment has had time to produce fruits. Housing which had also been de-leveraging has showed a bounce back as we’ve seen with market conditions overall quite solid.

Most capital cities have started to see stalling growth with the exception of Sydney. Its growth curve now resembles a hockey stick which will also be worrying the RBA.

Low interest rates are most likely needed to help support regional areas and Australia’s smaller cities. However, Sydney looks to be getting to a danger point of blowing up if this trajectory keeps running its course. The RBA may introduce controls, such as have been done in New Zealand, which would force prospective property buyers to not be able to use the same amount of leverage to purchase a property. This way they can cool the market without cooling the economy which would be a symptom of higher interest rates.

The fastest growing section of the market in 2014 was the investor purchaser. Investors have caught up with owner occupiers for mortgage approvals. Also on the rise has been the foreign investor who is even better placed thanks to a lower Australian dollar. The importance cannot be stressed enough of the value of Australian property to many overseas. The safety in the asset is so highly prized that many investors have looked at Australia as simply a place to store wealth, rather than to create wealth.

The Chinese economy will be the most important economy to watch for Australia in 2015. China continues to get more important to Australia when it comes to exports. It’s hard to believe that in 2008 Australia captured more value in exporting to Japan than it did to China.

The economy of Australia is at a cross roads. Unemployment seems to be on an up trend and average hours worked is decreasing. This is a function of a winding down of the mining industry and technology allowing firms to be increasingly efficient.

The headwinds are a still very uncertain world economy and a slowing Australian economy.

Within the inner city areas of Melbourne the market continued to show strong demand. Houses were the strongest performer and have isolated themselves from the abundance of apartments that have been prevalent in the market. Houses grew in all the four regions we tracked – the inner East, West, South and North. The rush for homes within close proximity to the CBD is being fuelled by downsizers and young families looking to capitalize on the strong ranking state schools that have started to flourish over the past few years.

On the other hand apartments have actually gone backwards this year thanks to an oversupply of new apartments with proximity rich positions. This hasn’t affected the classic Art Deco apartment market however it has had a noticeable drag on buildings that are less than 20 years old and are starting to show wear. The explosion of new construction in the CBD has also created a drag on rents with generally no rental growth over 2014. We expect much of the same in 2015.

The interesting observation is that the top performers for 2014 were in suburbs that were flush up against the CBD highlighting the increasing value of proximity to home buyers and investors.

We hope that you enjoy this reflection on the year that has passed and we look forward to providing you with many more exciting stories as 2015 progresses.


On Your Terms

Four years ago, Secret Agent’s founder, Paul Osborne wrote a short book about the property market for anyone looking to make moves in that space.

When released in 2010, it was available for purchase in e-book form from the website for $10. It received wonderful feedback from the industry and the public.

We have decided to reinstate it’s availability in 2014, as a free resource.

 

On Your Terms

The ideas in On Your Terms are simple, well rounded and helpful, a great introduction to anyone new to the market, or those looking to refresh.

We encourage all interested in ‘one’s shelter’ to have a read, to reinvigorate attitudes for the changing times ahead.

Click Here to have a read!


Buy vs Rent

One way to determine affordability is to look at the difference between renting and buying a property. A common measure throughout the world is to use the House Price vs Rent Ratio.


Just like analysing a business of a company share price,  the House Price vs Rent Ratio can help give a property buyer a measure as to whether they should buy a certain property or not.

We’ve looked at some of the key inner city areas, and the ratios that exist in each of those suburbs. The data in the table to the right has been gathered from the 1st of April to the 31st of July,  a third of the year 2012. Interesting findings are below…

  • Lowest Average Price: Kensington at $693,885
  • Highest Average Price: Hawthorn at $1,582,833
  • Lowest Average Annual Rent: Kensington at $25,351.13
  • Highest Average Annual Rent: Middle Park at $38,640.64
  • Lowest Ratio: Brunswick East at 25.08
  • Highest Ratio: Hawthorn at 45.45
  • Despite having the lowest Rent and Prices, Kensington does not appear to be the lowest ratio.

A Rent vs Buy ratio of over 31 is really making renting more favourable overall.


Going green for ‘the green’

An unusual study conducted in the U.S. by the Pacific Northwest Research station has suggested that properties with trees planted on or in the surrounding areas somehow boost the value of the property itself!

In the study, it was observed that rental units with trees on the property experienced an increased valuation of $5 monthly, $21 if the street the unit is situated on is lined with trees and as much as a $13,000 sales price hike if trees are found on the next door neighbour’s property (which was suggested by the utility of shade without the hassle of raking leaves!).

The question to ask is whether this merely relates to a desire for shelter from the meteorological elements or other intrinsic factors. Trees by themselves provide a carbon sink, absorbing carbon dioxide from the surrounding air and thus providing a more oxygen rich environment, and their root systems help to keep soil together, preventing erosion from occurring.

Additionally, on a psychological level, it would make sense that a neighbourhood adorned with healthy trees, lush gardens and well kept lawns would not only suggest that the residents love their homes and neighbourhood but that the neighbourhood as a whole is ‘of the good sort’ to live in.

Whatever the reason, and whether this study is to be believed, there would be no harm in adding a bit of flora to your properties, if not for money then for beauty.