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 – Melbourne Metro Rail Project

We have just released our latest Secret Agent report! This month, we are reviewing the Melbourne Metro Rail Project and investigate its potential effects on property prices.

Start reading this report by clicking on the link below:

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Melbourne Metro Rail Project 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:

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EOFY Review 2014/15


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. 

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Year in Review Report


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.

The Secret Agent Report – From Rags to Riches

Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”
– Jane Jacobs

The extraordinary changes to our inner cities and downtowns are unprecedented in modern times.

The movement to the inner city is not just a local phenomenon but a worldwide trend that can be observed whether you are in London, San Fransciso, New York, Sydney or Melbourne. It is important to realise that what is being discussed here is not a general movement to a city, rather, this trend is a movement to the real inner core of the city. As cities grow the density of their cores increase and at the same time the density falls in their peripheries. This story looks at the consequences of urbanisation. It is about the extreme premiums being paid to be in a position that is highly walkable, close to the commerce opportunities of the CBD, rich in transportation options and a way of avoiding traffic congestion.

Our cover image this month has been provided by one of Secret Agent’s own connections. The house pictured is in Drummond Street Carlton North. The rooftop pictures are also in Carlton North. The celebration is not with champagne – but with a found litre of rotten milk!

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From Rags to Riches Report


The drastic changes in sale prices as a result of the urbanisation trend have been none larger than Melbourne’s very own CBD and surrounds. In the 90s and early to mid 2000s the focus of the property market was on the tremendous change in rezoned farm land on the fringes of Melbourne. People could buy property or land cheaply and chose to set up their dream homes in the outer suburbs. Now, the focus has shifted and has become more about the centre of each capital city as waves of foreign investment clashes with local resources to secure prime centralised real estate in the inner city regions. 

Let’s go back in time to the year 1969, when the Soviet Union launched Venera 6 towards Venus, Nixon became President of the United States of America and Rod Laver won the Grand Slam for a record-breaking second occasion. It was a simpler life. A time when the humble restaurant menu had three choices. When coffee was coffee, and not spoken about as if it were a tropical fruit, “…sweet and well rounded with hints of pineapple, apple and red berries, with subtle vanilla on the finish.” Many of Melbourne’s young and adventurous creatives, artists, and bohemians embraced living in the inner city suburbs, while others fled to escape the dirt and slums that had developed.

In 1969, you could buy a terrace like the one pictured above in Drummond Street Carlton North, for a modest $7,000. The surroundings were a little less comfortable back then and the neighbourhood was truly edgy. Edgy back then was more of a negative connotation rather than how we would use the term today as a positive description of many inner city pockets. This was a time when gentrification wasn’t even in the vocabulary.

To put the sale price for the property in perspective, consider the cost of a round the world airline ticket at that time. An airline ticket of this kind (like the one pictured above) could be purchased in 1967 for $567 – roughly a tenth of the value of the North Carlton terrace. The same type of airline ticket is now valued at four times the 1969 price.

On the other hand, the $7,000 terrace is now worth almost a million dollars which is 142 times the original price paid. Even after adjusting for inflation, the house has experienced an extremely large turnaround. $7000 in 1969 is approximately $76,000 in today’s dollars. In inflation adjusted terms a terrace in Carlton North would still be valued at over 13 times that of the one purchased in 1969. 

The cost of airline tickets is becoming cheaper and cheaper whilst house prices in the inner city continue to rise steadily.

The question on everyone’s mind is will this huge change in property value be repeated?

The East West Link – One Step Closer to Reality

The East West Link Project moves one step closer to reality. 
Secret Agent has paid careful attention to the upcoming East West link since releasing the East West Link Report. 
The Victoria State Government has today announced its selection of Lend Lease as the company responsible for building the project. This will create many opportunities/ disadvantages in Melbourne over the coming decade. 
Lend Lease today announced that is has entered into an estimated $5.3 billion Public Private Partnership with the Victorian State Government to finance, design and construct stage one of the East West Link in Melbourne. The project remains subject to financial close which is expected to occur during October.
Lend Lease Group Chief Executive Officer and Managing Director, Steve McCann, said, “Lend Lease is pleased to be announced as the Victorian Government’s partner to deliver this important infrastructure project. The East West Connect Consortium will leverage it’s international and local expertise to deliver an outstanding outcome for the people of Victoria.”
We encourage you to read the East West report to examine this in further detail. Property owners and aspiring property owners should try and get as much information as possible around this topic to optimise their financial decisions. 


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The East West Link Report – It’s here.

On the 20th of August 1860, Burke and Wills led a 19 man expedition to cross the continent of Australia, beginning the journey from Melbourne. 23 horses, 6 wagons and 26 camels were the unsophisticated transport methods helping the 19 men navigate the Australian landscape that was previously uncharted by European descendants. 15,000 Melburnians gathered at Royal Park to cheer off the great explorers. Now 154 years later, the exact spot that Burke and Wills set off from has become the subject of controversy for many Melburnians.

Directly below the starting point of the expedition will sit the proposed East West Link tunnel. This new infrastructure is set to revolutionise transport in Melbourne. From camels to concrete tunnels, we explore the latest milestone soon to be added to Melbourne’s fabric. In this special report Secret Agent takes a look at the most recent road infrastructure project in Melbourne: The East West Link.

“Without deviation from the norm, progress is not possible” – Frank Zappa

Our cover image this month has been created by freelance illustrator Jasmin Neophytou. Frank would have been proud of Jasmin. Her works deviate from the norm by way of her playful use of colour, shape and proportion. Her cover brings a lightness to the serious topic of the East West Link project.

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The East West Link Report – Coming Soon

Secret Agent is soon to release its latest findings on the East-West tunnel, and the likely impacts on Inner Melbourne. 
The paper discusses the pricing implications for many inner city property owners, and is a must read report for prospective purchasers considering any inner city suburb that sits North, West and East of the CBD. 
Issues covered:
  • Pricing projections during and after construction of the East-West tunnel. 
  • Potential health risks associated with the East-West link during and after construction. 
  • Long term benefits that may be achieved after construction. 
To be one of the first to receive a copy when it is released to the public, please sign up to The Secret Agent Report via our Thinking page.

Bitcoin and Property

Bitcoin (BTC) has experienced an extraordinary and turbulent run in the market over the past few months. The conversion rate has at times been upwards of $1000 USD per Bitcoin. If you held one BTC for 12 months you could have made returns in excess of 50x.

Paul Osborne and Julian Faelli recently attended Paris’ LeWeb conference ( to explore this intricate currency further and shed some much needed light on the topic.

These digital currencies are a serious play now. The fact that we are talking about it seems to suggest it has some real staying power. US senate committee hearings have deemed the rise of digital currencies as legitimate. Property developers in China have started to offer their apartments for purchase with fixed BTC exchanges from a purchaser. Last month there were three independent Bitcoin events held in New York by Wells Fargo, New York State’s Superintendent of Financial Services and the New York City Economic Development Corporation (NYCEDC), an organisation set up to drive economic development, growth and jobs in New York.

Secret Agent was the first company to accept BTC payments within the Victorian market for real estate services. We are proud to welcome Cosmo McIntyre to our team, the catalyst to our start into digital currencies. Cosmo continues to help Secret Agent explore this emerging market.

There are many sceptics; Jamie Dimon CEO of JP Morgan, arguably one of the most powerful bankers in the world, has recently canned the crypto-currency; “it’s a terrible store of value”. While we still think that the risks are great, there is no doubt that Bitcoin has a future in itself or as a catalyst for paving the way for other e-currencies. It has some very interesting attributes recently highlighted by tech- entrepreneur legend Mark Andeessen who is behind such ventures as Digg, LinkedIn and Twitter.

Bitcoin can be bought, sold and transferred for free with no transaction fees, or for a very minimal amount depending on which broker you use. BTC solves the problem of trust, establishing a fool proof method of transferring money between two unrelated parties over an un-trusted network – the internet. The possibility of other digital property being transferred in this way is very real. Digital contracts, digital keys, digital signatures, and digital ownership of physical assets, could be one day safely transferred.

BTC is a very practical solution for micropayments over the internet. Traditionally merchant fees, credit card fees and exchange rates have been a prohibitive factor when wanting to pay/charge small amounts over the internet. Bitcoin’s ability to be almost infinitely divisible makes it the perfect payment solution for micro payments. Online news publications could charge a fee per article, train tickets purchased individually, and songs streamed over the net could be charged on a per listen basis. These are all very viable solutions.

It’s likely that the Bitcoin currency could fail in its quest to be the prime adopted digital currency. However in doing so it will have paved the way for another digital contender to emerge in its place. There are now over 60 virtual currencies. A home purchase taking place with a virtual currency, or even a landlord accepting rent payments are all future possibilities.