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

Category Archives For: Property Investment

A recent Acquisition

fosterstSecret Agent on Sunday made a significant purchase of an entire block of apartments in St Kilda (see left) at auction.

The deco block in Foster Street is just a short hop, skip and a jump to Acland Street, the beach, Luna Park as well as being easy reach of transport. The street is a quiet one way street that consists mainly of top quality residential homes and leafy surrounds.

Consisting of 3 x 2 Bedroom apartments and 1 x 1 Bedroom with a study, the property itself has never been subdivided meaning the block had to be sold as one whole. This gives out clients a prime opportunity to sub divide so each unit has its own entity to be sold separately down the track thus enhancing its value.

Each apartment has some fantastic period features and original floorboards that ooze character. The structure of the property is as solid as a rock and presents a further opportunity to enhance its value without significant investment.

The property has been under let for some time so we expect rents to increase to market value upon settlement.

 Having a property offering so many lifestyle opportunities on its door step will be highly desirable with top quality tenants and will provide a great re sell value down the track. Its boutique style also will yield great benefits to all parties: The Vendor, tenants and future buyers.

What’s so great about having an entire block of flats in your portfolio is the following:

  • Lets you take advantage of Melbourne unbelievable rental shortage
  • Allows a higher return as the property has a number of dwellings
  • Lets you down sell your asset slowly and to a more competitive market which is individual apartment buyers.

Our client is also looking as having one or possibly two units furnished and used for short term accommodation. The recent hotel room shortage in Melbourne is providing some great returns for those that can think ‘outside the box’ with their rental properties.

The purchase price was $1.63 Million; this we feel is a terrific buy.

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Cars, Proximity and Property

I get many questions as to the next ‘in’ suburb or Melbourne ‘hotspot’ that is just about to take off.

Many experts keep talking up suburbs that are in the growth corridors of Melbourne and those outer suburbs as areas to ‘take off’ in growth in the near future.

I feel some of the next ‘jewel’ suburbs are actually the discovered suburbs but we just haven’t valued them enough, we perhaps haven’t taken into account future trends and how Australian cities will evolve.

Melbourne ranks 8th (some expert’s say 2nd) on the planet in terms of sprawled out cities, what we consider ‘inner city’ for instance would not be classified that way in say New York or Tokyo were these cities are much more condensed.

The Financial Review produced a fantastic article on ‘how cars drive property prices’ and the power of proximity to a properties value.

Cars play an important role in all Australian regions no matter where you are. We are so spread out (Australia) and have the lowest number of people per square kilometre on the planet: cars have been essential to how we’ve all lived since our ancestors were riding on horseback!

Cars have also never been more affordable than now; it takes 32 weeks of an average persons earnings to buy a V6 car compared to 42 weeks back in 1995, there are 705 cars to every 1000 people. The flipside to this as we all know is never before has a car been so expensive to maintain.

Residents in transport rich inner city suburbs pursue 50% of their trips from home by car compared to the outer suburbs which rely on 80% of their trips from home and the gap is widening.

Now consider the above with the fact that petrol prices are at ‘never seen before’ highs and it’s hard to see movement in the downward direction, many argue that peak oil production may have been reached and this translates to further price hikes.
Driving to work and parking in a parking station will cost approx $1000 per month for a city worker.

Congestion is also at its worst so it’s no wonder so many people are riding their bikes to work, bicycle sales hit record highs last year of 1.5 Million units sold and growing while Scooter sales have quad tripled in the past 12 months.

Public transport rose 14% 2003 – 2006 and this is expected to grow at a rapid rate.

Researchers have proven that a one hour threshold exists for workers who commute to and back from work meaning any longer and people can’t do it, this is because we have become ‘time poor’ and work longer hours this number will drop dramatically and this intensifies.

If we could save 2 hours a day in commuting times by living 5 minutes to work, we would be saving approx 10 hours a week to do other things and not pay the high cost of travelling long distances in today’s environment.
The inner city offers not only a great lifestyle that more and more people are seeking but the option to throw away the car keys and the high costs involved. Being close to a massive workforce such as Melbourne’s CBD gives people so many benefits that are still undervalued today.

One could argue (I would agree) that many inner city areas are still great value if you look at what our future cities provide and the ‘convenience’ factor which is ever so important.

Here’s a snapshot of Melbourne & Sydney for its inner suburbs compared to each cities more car reliant suburbs.

Melbourne Median:   
Inner $772,000
South East $293,000

12 Month Change:
Inner 22.5%
South East 9.7%

Sydney Median
Inner $1,075,000
South West $340,000

12 Month Change:
Inner 12%
South West -0.6%

It’s very possible these figures will widen much more especially for Melbourne over the coming years.

It might help to remember this word: proximity

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The truth about Median values

We often look at figures such as Median values to help us understand how a property market is performing.

While the Median value is a very useful tool, you must be mindful of these measurements and how they relate to property.

For example, a Median only incorporates sales results that are sold not the ones that failed to transact of were pulled from the open market. In the March quarter this year Melbourne’s Median dropped however so did the clearance rate and property sold which could suggest more forced sales in the quarter pushing down Median values.

A median also does not take into account property that has had added value to it such as a renovation, extension, etc. Each year, more and more people pump money into their properties: consider a home purchased in 2006 for $500,000 the new vendor then renovates the home spending $150,000 and then it’s sold in 2008 for $750,000. This would show a 50% jump in the Median price however the profit would be very little considering all the other costs associated with selling plus the renovation costs.

Use Median as a helpful guide, but don’t rely too heavily on it.

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Negative Gearing

It has almost become ‘fashionable’ to buy a property that is negatively geared.

Investors keen to trim the amount they pay in tax often buy properties that return a loss (sometimes substantial) in the pursuit of reducing the amount of tax they pay.

This is a little concerning, remember that the ATO (Australian Tax Office) has been looking very hard at this strategy from investors and could make changes at any time leaving investors exposed to a bad property purchase for the pursuit of reduced tax reasons only.

Many property purchasers have fallen in the trap of pursuing for negatively geared reasons first rather than the quality of the actual property itself, when you consider many people spending half a million dollars on an investment this can have disastrous consequences!

Take a good look around

It's amazing the amount of property buyers that don't have a good look around their chosen area before they buy a property, Let's face it, you're about to spend a lot of money on your property purchase and particularly if you are going to owner occupier then it might be worth while getting a better understanding of a suburb if you are slightly unfamiliar with it.

Here's what I do, when looking for a property on behalf of a client I tend to always go for a long walk around the suburb, check out the nearby streets, the milk bar, coffee shop (and its coffee!), shopping facilities and the local pub! This gives me a great feel for the people and the amenity.

Other things to think of include public transport, gyms, recreational activities, parklands and if you’re a dog owner then maybe off leash zones so your fury friend can stretch the legs!

If you don't like walking then use a bike, it's amazing the difference when roaming a suburb by foot or bike rather than driving the car. The car gets us to places quickly but often we miss out on the finer details.

When we buy property to live in, often lifestyle is more important than the property itself. If we spend time and money on checking out the quality of a house before buying it which is the right thing to do then surely it’s also wise to give the locality a detailed check to.

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Rental property expenses

Whether you have just made your first property investment or have a number of properties in your portfolio it's always handy

having an idea as to what you can claim on your property investment when it comes time to lodge a tax return.

Be aware that you can only claim for the period that the property is rented or available for rent, check out the

Australian tax office for more information.

Expenses could include:

  • Advertising for tenants
  • Bank charges
  • Body corporate fees
  • Borrowing expenses
  • Council rates
  • Decline in value of depreciating assets
  • Gardening and lawn mowing
  • Insurance
  • Land tax
  • Pest control
  • Property agent fees or commissions
  • Repairs and maintenance
  • Stationery
  • Telephone
  • Water charges and travel undertaken to inspect the property or to collect the rent.

If part of your property is used to earn rent, you can claim expenses relating to that part only. You will need to work out a reasonable basis to apportion the claim.

Peter’s private residence includes a second storey which he rented out. The second storey represents 30% of the total floor area of the house. Peter also shared the laundry with his tenant. The laundry takes up 10% of the total floor area of the house. If half is a reasonable figure for use of the laundry by the tenant, Peter can claim 35% of the expenses for the property – that is, 30% + (1/2 x 10%) = 35%.

Always speak to a qualified accountant first as to the correct advice!
For a recommended accountant contact us, happy investing!
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Game of Thrones Season 7 Episode 1 Spoilers Rumors & Updates

Game of Thrones Season 7 Episode 1 : Cersei and the Faith Militant Lancel Lannister along with the Faith Militant comes to Cersei to take her to the High Sparrow to which she blankly refuses. When one their men tries to attack, he is brutally killed by the Mountain. She then tells the Militant that the High Sparrow is always welcome to see her in the Red Keep. Moreover, King Tommen announces the royal decision to end trial by combat.Dissapointed by this Cersei meets Qyburn who through Varys’ little spiders has found out something important.

Game of Thrones Season 7 Episode 1 Spoilers Rumors & Updates

Arya attacked

Watch Game of thrones season 7 episode 1 spoilers and updates online from our site. Lady Crane, the actress Arya was to kill, finds her lying in her chambers wounded. She nurses her helps hr stitch the wounds. Later we see the Waif finally finishing Arya’s job by killing Lady Crane. She then attacks Arya who escapes this time. The Waif follows Arya in the city until she reaches Arya’s hideout. We see Arya standing there cutting the only burning candle in the place with her sword needle. Later in the house of Black and White JaqenH’ghar finds a trail of blood and follows it to hall of faces. He finds Waif’s face lying there and Arya pointing her sword at him. He then congratulates her on finally becoming a No One, to which Arya refuses and tells him she’s Arya Stark of Winterfell and that she’s finally going home.  Jaqen looks at her proudly as she leaves. Arya’s training is finally complete, which is certainly a bad news to the ones on her hit list.

The episode, just like its predecessor, has set up to tone for the penultimate and the finale episode. While the viewers now await the great battle in the north, it would be equally exciting to know Cersei’s ultimate plan now that trial for combat is gone. Also, Khaleesi has returned, so fans are also keen to know how she plans to defeat the Masters and finally set upon her journey to Westeros. To know all this and more Game of Thrones info, feel free to visit us.