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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: Local Interests

The Secret Agent Report – Downsizing: The Inner City

We have just released our latest Secret Agent report!

To downsize or to not downsize? That is the question many older Australians are asking themselves as they weigh up the benefits and disadvantages of each option.

In this report, Secret Agent revisits the subject of downsizing, with a focus on those moving from the suburbs to the inner city. 

Access the Downsizing: The Inner City report now!

Cover of The Secret Agent Report Volume 58 Downsizing The Inner City


Carlton North Homes Benefit from Bicycle Lanes

Drawing of a bicycle with a speech bubble containing a dollar sign next to it

Over 10,000 cyclists commute into Melbourne’s inner city every morning. Many popular routes are located along residential streets. Secret Agent wanted to find out if the presence of a bicycle lane had any impact on house sale prices within a suburb.  Read the full post


Inner Melbourne Rental Yields for Houses 2012-2017

Infographic showing highest and lowest rental yields in inner Melbourne, Australia in 2017

Last week, Secret Agent released our report on the current state of rental yields for houses across inner Melbourne. Here is a summary of our findings:

  • Over the last 5 years, yields have dropped by 0.42%, from 3.06% in 2012 to 2.64% in 2017.
  • During this period, median house prices have increased by 38% (9% p.a.), compared to only an 11.8% increase in weekly rents (2.88% p.a.).
  • On average, median weekly rents are between $500 and $700 for most suburbs. Sale prices tend to fluctuate significantly according to suburb.
  • Suburbs with lower median prices tend to have higher yields, as weekly rent is mostly consistent across all regions.
  • High and low yields are not concentrated in any particular region of inner Melbourne.
  • Collingwood, Cremorne and West Melbourne had the highest median yields in 2016/17 at 3.69%, 3.32% and 3.26%, respectively.  Median prices were well below the $1million mark.
  • Burnley, East Melbourne and Alphington had the lowest median yields at 1.35%, 2.07% and 2.31%, respectively. Median prices were all above $1.3million.
  • Sale price is strongly, negatively correlated with yield (-47%). Yield is more dependent on purchase price rather than rental income.
  • Yields are even lower for larger properties, as sale price increases faster than median rent.
  • In 2017, 2, 3 and 4 bedroom homes can expect to yield 2.72%, 2.61% and 2.52%, respectively. All three types have had the lowest yields since 2012.
  • Investors paying high prices for properties are even more reliant on capital growth to increase their returns.

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


Better Apartments: Room Depth

This week, we continue to explore the results of our Better Apartments Design Standards study.

One of the factors that had a very high pass rate was maximum room depth. However, given that this standard simply measured whether the depth of habitable space was less than a fixed value (1.5 times the ceiling height, or 9.7m if there is a rear kitchen, see Figure 1), this may not necessarily be a good thing. Smaller apartments are more likely to pass simply because if room dimensions are smaller, apartment depth will naturally be smaller too.

Read the full post


The Secret Agent Report – Better Apartments: Before There Were Standards

We have just released our latest Secret Agent report!

This month, Secret Agent reviews the quality of apartments built in the last 6 years and compares them with Victoria’s new Better Apartments Design StandardsIf constructed today, how many of these apartments are actually compliant? In which criteria do we observe the highest fail rates?

Access the Better Apartments: Before There Were Standards report now!


Differentiating in the Development Space: Owning Your Own Backyard

Drawing of a man with a cap, holding a beer in one hand, barbecuing sausages with another, standing in his own backyard. The lawn is tagged with a note that says Belongs To Mike.

“They like to know that when they’re barbecuing outside, they’re doing it on their own land.”
– Anthony DePalma

This bulletin is one about ownership, inspired by an article in The New York Times. The piece discussed the supply of property in New Jersey and how developers were pivoting from condominium townhouses to fee simple townhouses; in other words, from property with more common areas and regulations to property that passes on more control to the individual.

Had the location not been revealed, one would almost mistake the article for a report on the current state of housing in Australia. In fact, it was published in 1985. Over 30 years later, Australia is observing the same shift in new developments. The more things change, the more they stay the same. Read the full post


Pools Add At Least $140,000 in Value to a House

Slim Aarons, Nice Pool, 1955

In the past few weeks, we’ve discussed the changing attitudes towards the amount of backyard inner city buyers prefer. We found that the ‘sweet spot’ in the ratio of internal space to land size for period terraces was between 1:0.3 to 1:0.47, however this was likely skewed by larger properties bought by the extremely wealthy. For this section of the market, the focus is on creating a dream sanctuary with the largest block size. Here, where space is no longer a luxury but a given, swimming pools are a common addition to backyards.

As Melbourne skinny dips in and out of summer’s hottest days, Secret Agent thought we’d revisit our research on these cool inner city retreats to find out the value created by having a pool in your house.  Read the full post


The Perfect Ratio of Period Terrace House to Land

Diagram showing the range of ideal land to indoor area ratio in attached and freestanding terraces including an increase in sale price.

Last month, Secret Agent investigated the ‘sweet spot’ in the density of a townhouse. We found that a total indoor area that equalled or slightly exceeded the land area (i.e. 1:1 – 1:1.27) sold at a higher price than denser developments. This time we decided to see what the data says about period homes.  Read the full post