News

The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.


Category Archives For: Property Development

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


The Ideal Ratio of Indoor Space to Land Size in Townhouses

Diagram showing the ideal density of a townhouse in terms of its ratio of outdoor space to indoor space

What is the ideal ‘density’ of a townhouse development?

Across inner Melbourne, townhouse developments are becoming increasingly common. With limited block sizes closer to the city, developers have to constantly negotiate the size of the actual house with the amount of land available. Because of these varying levels of building density, Secret Agent wanted to find out if there was a ‘sweet spot’ in the ratio between indoor area and land area. Are we paying more for a certain ratio? Read the full post


How much value does a balcony add to an apartment?

Diagram showing that balconies cost 2800 per square metre in 1 bedroom apartments and add up to 11.7 percent more to its sale price

This week, we take a closer look at balconies and other types of outdoor area in apartments. While no doubt desirable, many developers are uncertain how much value outdoor space will create for them. This was reflected in our Supply report, which showed that outdoor space for both one and two bedroom apartments being planned in Melbourne was barely above the minimum suggested in the Victorian Government’s recent apartment design standards draft. Read the full post


New apartments: What to expect

melbourne-upcoming-apartments-secret-agent

[Click to view image in full size]

Key findings

  • 1 bedroom apartments will be 8% bigger on average.

  • 2 bedroom apartments remain the same size.

  • 3 bedroom apartments will be 4% smaller and remain rare.

  • Little to no 4 bedroom apartments are being proposed.

  • Most apartments meet the minimum balcony size.

Following up on our recent Supply report, Secret Agent wanted to dig deeper into what sort of apartment buildings are being proposed by developers. Using planning permit applications sent to local Melbourne councils, we sampled 1,680 proposed apartments from 34 buildings in 15 suburbs of metropolitan Melbourne.

Read the full post


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:

Read the full post


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!


Settlement Risk Looms

The development space in inner Melbourne and Sydney is set to be severely challenged. Conversations between Secret Agent and various developers over the past month have revealed their increasing anxiety about potential settlement issues. These developers, who have settlements due in the next 18 months, are worried that many of their apartments may not be able to settle due to the restrictions placed on foreign buyers by local banks. This is likely to have substantial implications.

For some time now, developers have used successful business models to sell their projects directly to Asia. Sales companies who specialise in selling unseen apartments to the Chinese market have made large financial gains. These apartments, many of which are tiny by local standards, have been purposely designed for the overseas market. Committed contracts, once thought to be rock solid, are now on shaky ground.

To understand the problem at hand, let us consider a hypothetical situation. An investor group, on behalf of a developer, sells a small two bedroom CBD apartment to a buyer based in Shanghai. The buyer pays $714,000 for the 68sqm apartment, which is $10,500 per square metre, and pays a 10% deposit. Since the transaction was entered into 12 months ago, the investor has no stamp duty to pay at settlement. It so happens that this purchaser defaults. The developer gets to keep the 10% deposit minus fees. The problem is that there is a need to sell the apartment to someone else.

Read the full post