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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

Airbnb: 8 Tips for New Hosts

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Planning on listing your property on Airbnb? Here are a few things new hosts should consider.

1. Location of your property and potential demographic of your guests.

Guests usually plan to stay close to the centre of activity and culture they would like to experience. For example if your property is near a stadium, there’s a high chance your guests may be attending sports events. Think about the biggest demographic of sports attendees and ask yourself the extent of behaviour you would tolerate in your property.

2. De-risk your home against bad apples.

You can request a security deposit prior to the guest’s arrival. Be wary of Instant Bookings, as this does not give you the opportunity to review the guest before they book in their stay. As a final precaution, have your guests sign a contract before they arrive. This can clearly lay out the check-in and check-out dates and times, rules of conduct, deposit refund or any other concerns you may have. While it may put off some guests, those who have nothing to hide should have no problems with signing it.

3. Make sure your home is safe for occupation.

When leasing out your property, it is your property manager’s role to ensure the safety of the premises are kept. If you’re putting up an Airbnb listing, this responsibility falls on you. You’ll need to check that the smoke alarms are working and that heaters (if any) have been serviced in the last 2 years. Make sure that all doors and locks work smoothly in the event that evacuation is necessary. While Airbnb does not conduct any routine inspections on the safety of your property, it’s a simple favour you are doing your guest that may save their life.

4. Check your home insurance coverage for accidents or damage.

You’ll need to fully insure your home against the risk of irresponsible guests causing major damage, as seeking damage compensation from Airbnb is difficult. Read the fine print of Airbnb’s Host Guarantee, and don’t assume it will protect you fully. It also does not cover a refusal to vacate.

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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.

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7 Reasons Future Apartments Still Disappoint

Size is yet again compromised in the apartments soon to be developed in Melbourne, but not just in terms of their total floor area. Here are 7 primary observations about the upcoming supply of apartments in Melbourne over the next 12 to 18 months.

1. Balconies remain small

Whilst most apartments will have a balcony, many will have one that is too small (less than 8m2 for a single bedroom and 10m2 for a two bedroom apartment).

2. Snorkel bedrooms are common

This L shaped layout is an ineffective way to provide light access to a second bedroom in two bedroom apartments. The snorkel is often too narrow to be habitable and the natural light often does not reach the actual room. These are still a popular option despite the waste of space.Blog-1  Read the full post


The Secret Agent Report – Melbourne’s Supply of New Developments

We have just released our latest Secret Agent report!

Demand is a hot topic in the apartment market at the moment, and assumptions about what buyers want are being made by almost everyone with the right to an opinion. Predicting future demand for a property is one way for investors to estimate the future capital growth of an asset. However, too little attention is paid to the supply side of the equation.

In this report, Secret Agent will move the focus from demand to supply, and forecast Melbourne’s upcoming stock of new developments.

Access the Supply report now!

You can also explore our interactive map of Melbourne’s supply of new apartment and townhouse developments here:

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The Secret Agent Report – Recreating Period Homes

We have just released our latest Secret Agent report!

The original period homes that remain in Melbourne are frequently purchased for record-setting prices. It is difficult to quantify the value of character, however it is possible to estimate how much these houses are truly worth if we were to build them from scratch today.

This month, Secret Agent investigates the cost of rebuilding two period homes in inner Melbourne. We demonstrate that the prices paid for period property fairly represent the quality, history and scarcity of these types of homes in today’s market

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the Recreating Period Homes report now!


Bride and Bridesmaid Suburbs

Suburbs such as Fitzroy and East Melbourne have historically strong capital gains. Conventional wisdom is that by investing in neighbouring suburbs that have lower median prices, an investor would achieve stronger growth than in the blue chip suburb. This is because they would benefit from the spillover effect of buyers being unable to afford the blue chip locations and the subsequent gentrification of the suburb. This bulletin aimed to test if this is the case by analysing the growth of 5 bride and bridesmaid suburb pairs in inner Melbourne.

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A bride suburb is a relatively expensive suburb with good capital gains. It may be out of reach for a large proportion of property investors due to the high entry point.

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A bridesmaid suburb is a neighbouring suburb that boasts a lot of the qualities that make the bride such a good investment, yet with properties selling for much lower prices.

To compare, the median sale prices and annual growth rates since 2011 for all suburbs shown in Figure 1 were gathered. These suburbs were divided into suitable pairs, based on locality and differences in median prices. The results are shown in Table 1.

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Capital Growth Update: June

The capital growth index is a very accurate way of measuring the long-term returns on an investment in the property market. It removes a lot of the noise usually present in real estate statistics, such as construction or renovations, a lot of large or small houses being sold and seasonality.

Median capital growth is based on the resales of the same property over different time periods (see methodology for more detail). Over the second quarter of 2016, inner Melbourne capital growth was 1.63%, or 6.67% when annualised. This is slightly lower than the median of 6.80%% over 2015, but above the five-year median of 6.31%.

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Apartment Price Per Square Metre: $2million Market

Earlier this month, Secret Agent released our findings on the price per square metre of apartments in the secondary market. In this bulletin, we look closely at apartments in the upper tier of Melbourne property, exclusively those that have sold for above $2 million.

The same methods from the previous study applied: each floor plan was manually measured for its internal habitable space, and the final measurement excluded external walls or structural elements, outdoor space, car spaces and storage cages. Sales were included only if a price and scaled floor plan were available.

Key findings:

  • This study included 12 penthouses, which are typical assets in the top end of the market.
  • More than half of the sampled apartments have a North-facing aspect, balcony or terrace. This is the most desirable orientation for optimum natural light and passive heating.
  • Apartments in the $2million plus market were 59% more expensive on a per square metre basis than the rest of the market (below $2million).
  • On average, 3 bedroom apartments sold at a higher cost per square metre than 4 bedroom apartments (Table 2).
  • 5 of the apartments were located in period or Art Deco buildings, while the rest were constructed from the 1990s onwards. Most of these newly built apartments were designed by renown architects such as Fender Katsalidis, Robin Boyd, Woods Bagot, Ashton Raggatt McDougall, Bates Smart, or boutique developers such as Neometro.

For this study, 32 apartments sold between the 1st of May 2015 to 31st of May 2016 were analysed. The average sale price for these apartments was $2,571,469. The sample mostly consisted of apartments from the central, inner East and inner South of Melbourne. The average price per square metre for $2million plus apartments was $13,653. The results by suburb are shown in Table 1.

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The Secret Agent Report – The New Student Visa: What This Means for Chinese Buyers and Melbourne Property

We have just released a special mid-month report!

As most of us begin to celebrate the Queen of Australia’s birthday over the long weekend, Secret Agent decided to take a moment to look not to the West – but to the East.

9.4 million high school students in China would have completed the most important college entrance exam in their lifetime as of yesterday. But from the 1st of July, under the Australian government’s new student visa framework, Chinese parents will have a new and cheaper way to afford their children education – right here in Australia.

With an approximate savings of $360,000 by sending children to the top primary schools in Melbourne instead of Beijing, Secret Agent cannot help but feel that a property boom may soon be reignited.

Start reading this report by clicking on the link below:

Register to receive our report monthly and access The New Student Visa mid-month special now!

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The Secret Agent Report – Apartments Price Per Square Metre

We have just released our latest Secret Agent report!

Comparing square metre rates for houses is common and quite simple as land measurement data is readily available. Apartments are slightly different since it isn’t possible to make comparisons based on the land area they are built on. Floor plans are necessary to do this and the plans provided are often lacking full dimensions. Advertised floor sizes are often rounded-up figures that include external walls and non-habitable areas in the total, making them appear bigger than what they really are.

To overcome this, Secret Agent has manually measured the floor plans of apartments sold from January to March 2016 to create a square metre index for apartments in inner Melbourne. This report will showcase our results with an in-depth look at square metre rates for regions, suburbs and particular apartment types.

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the Apartments Price Per Square Metre report now!

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