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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: Market and Humans

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


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


Deflation and Commercial Property

For the first time since December 2008 in Australia, consumer prices have fallen. According to the ABS, the March 2016 quarter saw the consumer price index fall by 0.2%. This is big news.

Whether the deflation numbers are noise or signal, it’s hard to say just yet. However, it poses an interesting question: what would be the impact on the Australian property market if deflation were to creep further into our economy? Secret Agent intends to cover this a little further over the coming month, but for today, let’s look at the impact on commercial property.

Commercial property is a much desired asset for investors. The allure of a lease that guarantees the investor a return over a period of time is highly attractive, especially in a world of low returns. Rent increases every year are a common component of leases and either a fixed percentage increase or CPI measure is used. This begs the question; what happens if we continue to move into deflationary conditions?

While most new leases use a fixed percentage increase, some leases are still using CPI as the rate of increase. Also, many older leases that are still current operate on a CPI basis. We may start to see leases that produce rent decreases for tenants annually and erode the value of some buildings, especially where long leases and terms have been secured by tenants.

The current reality is that negative bond yields are being acquired globally. A world with deflation could mean future tenants secure a fixed rate of decrease over the term of the lease, or negotiate hard for CPI-only leases.

Read the full post


The Secret Agent Report – Sound

We have just released our latest Secret Agent report! In this report, we discuss an important yet often overlooked consideration prior to buying a home: sound. Why does sound matter, especially in today’s highly urban environment? And does proximity to noise, such as busy roads and railway lines, affect the value of inner city property?

Start reading this report by clicking on the link below:

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

The Sound Report


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 – Temperature

We have just released our latest Secret Agent report! To welcome the first month of Spring, we are investigating if daily and monthly temperatures have any effect on auction results.

Start reading this report by clicking on the link below:

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

Temperature Report


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!

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

From Rags to Riches Report

Excerpt:

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-Secret-Agent-Report-September-2014-The-East-West-Link


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.

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

The-Secret-Agent-Report-September-2014-The-East-West-Link


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.