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

Category Archives For: Random Thoughts

Take note

The most popular story on the age newspaper online is how hard it is to get rental property in the CBD; clearly many people are feeling this issue at the moment.

Investors should take note.

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Petrol hits record high

News yesterday the petrol prices hit a record high in Melbourne ($1.62 Litre) has continued the long term trend of rising petrol costs throughout the country.

This as most would agree, is only the tip of the ice berg on were fuel prices might go to, it’s been reported that petrol could soar to $3.50 per litre over the next decade making a car impossible to run for many ordinary people.

Properties with a selection of good transport options close by are increasing in demand; however I still feel the full value is yet to come with this being a more and more important feature in the years to come.

In countries such as London, the price for a property skyrockets (providing the area is also of good standard) when close to a tube station as do other cities such as New York, Tokyo etc.

A gentleman asked for my help yesterday who wanted to move closer into the city from were he currently owned a home in Gladstone Park. He figured out its costing him $300 per week just to travel to work via car as he had large petrol costs, city link costs, parking plus cleaning. This did not take into account his car repayments insurance or mechanical repairs.

He is now expressing interest in an inner city property which he always thought was not obtainable, however realising what it now costs him to work he realizes he can put that money to buying a property in the inner city and using transport to get him to work.

This looks like a strong trend.

How much are you spending on you car travels?

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Holiday Blues

When market conditions change, naturally many areas that have a high proportion of holiday homes such as coastal areas feel the pinch.

Victoria's coastal locations have at this stage still been largely unaffected however one surprise is Noosa which has lost some ground in recent months with a large decrease in values that are lower to middle tier property.

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The local shopping strip

A decade ago Melbourne’s inner city retail shops were under threat from the big shopping malls such as Highpoint, Chadstone etc. However with more people relying on transport and bikes due to high petrol prices and the trend for more people wanting to live close to the city we are now finding the shopping strips start to flourish again and people start to ‘look local’.

A report by Savills highlighted the above information as well as the fact that a big supermarket with lots of free parking is still key to drawing people to the many retail strips that exist in Melbourne. Once people are drawn to their weekly shopping at the supermarket, the ‘fringe shops’ that exist close by offering specialty products or services are thriving.

The most expensive shopping strip in Melbourne is Chapel Street, South Yarra. For a 100sm2 shop expect to pay $1300 – $1500 per metre for prime position however as the property gets closer to Windsor Street the rent drops substantially to $500 – $700 per square metre. As of last month Chapel Street had a 5.2% vacancy rate.

The 2nd highest shopping strip in Melbourne is Burke Road which also currently has a lower vacancy rate than Chapel Street of 3.3% and with rents currently averaging $800 – $1200 per square metre.

As these strips become more and more important for people’s shopping and lifestyle habits, so do to does the proximity of residential real estate to these amenities.

Thank you to the Financial Review and Savills for the statistical information provided.

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Where is it?

I met a lady yesterday that I hadn’t seen for about 5 years who used to look at the odd property from time to time.

She had purchased an apartment 12 months ago off the plan in Drummond Street, Carlton and was so excited by the prospect of completion of the unit that she wanted to show me her property.

We went to see the unit in her car where we had just one problem, she couldn’t find the unit as she had never seen the property before and was not sure of the apartment building number.

With so much ‘off the plan’ property out there, it seems many buyers often forget to do the basic research and it’s amazing how many times the above does happen.

Often when these properties are purchased they are done so in display suites that can be far away from the development itself.

Remember to do the research including inspecting the site of any new development you might consider making a purchase in, it is vital to making the right choice!
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Melbourne to Ballarat in 1 hour?

A few weeks ago I had the opportunity to travel up to Ballarat and check out the local property scene with David Wilson who is a leading property consultant there.

Here are some things you might not know about Ballarat, Thanks David!

1. The express train is taking commuters from Ballarat to Southern Cross station in Melbourne in less than one hour and likewise on the return journey. This is quicker than say catching a local service train from Frankston to Melbourne!

2. Ballarat’s population is growing at 1.5% per annum

3. Enjoys excellent health services and some of the best public and private schools in the state

4. Excellent rental market with a vacancy rate of just 1.4%. (Source: REIV September Quarter Stats 2007)

5. A good solid local economy with private industry headquarters including McCain’s, Mars and IBM as well as a strong public sector consisting of the University of Ballarat, State revenue office and rural ambulance service also have their headquarters in Ballarat.

All in all 2007 was a modest year for Ballarat with only a 2% growth rate recorded but here’s the deal. Local knowledge is that Ballarat traditionally experiences strong growth about 12- 18 months after a surge in Melbourne which means Ballarat might not be far away!

End of week funny

It’s the end of the week for most of us so let's finish with a funny real estate clip.

This is an episode from the 'fone jacker' who makes daring prank calls over in the UK. He is calling up an estate agent and asking whether they have any bungalows for sale, very funny!!!

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More Americans on the way

You might have heard recently that an open skies agreement between the USA and Australia is going ahead. This is great news for Tourism in Australia with approximately 800,000 Americans expected to visit annually by 2016.

When I was over in America their certainly seems to be a mentality that Australia is just to far away to travel to, with an open skies agreement going to cut flight costs between the two countries this could be just the thing to spur more Americans to come to this great land.

So what does this mean for property? Well it's great news for hotels, serviced apartments and general short term rental accommodation as well as the communities that surround who would no doubt benefit from American spending habits. Locations like the Gold Coast have always been popular and this could push the prices up for short term apartments etc making a real estate investment in targeted areas more valuable.

Who knows, while more people come and visit they will get to see the massive opportunity in Australia right now leading to more foreign investment.

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Donald Trump set for Melbourne

trumpWhile not personally coming to Melbourne (as far as I'm aware) it looks like there’re might be a Trump tower coming to Melbourne some time soon.

Rumours are that the Schiavello family who run a prominent development company may have secured the rights from Donald Trump to build a Trump tower in Southbank.

So how would these apartments sell in Melbourne? If you have been to New York and have seen Trump’s work you would have noticed it’s often very extravagant while at the same time not to everybody's tastes! Donald Trump's buildings tend to have an abundance of Gold and Glass which many people think is either beautiful or tacky. Often with Trump there’re is no in between! 

Donald Trump also tends to attract a lot of Asian investors for his apartments and if the building does go ahead it would be expected to be heavily marketed in Asia.

I don't think the apartments will have any trouble selling if built in Melbourne unless of course they are way off the mark when it comes to pricing; hopefully the builders do a better job of the construction than Donald does with his hair!

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