The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.
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
We have just released our latest Secret Agent report!
This issue takes a closer look at one of the most important rooms in any home: your kitchen. Whether you live in a cramped studio apartment or a luxurious family home, for many of us, the heart of the home lies in the kitchen.
Access the Kitchens report now!
Secret Agent’s apartment capital growth index tracks price changes of the same apartments over time. Rather than simply using average price changes, basing the index on resales gives a better measure of true capital growth. The index tracks how apartment prices change when buying off the plan, as well as all subsequent sales of the property. This bulletin takes a closer look at apartments in Melbourne CBD, Docklands and Southbank. Note that when talking about annualised growth rate, we are referring to converting the growth rate over one quarter to an annual figure.
Since 2009, CBD and Southbank apartments have been growing in value at about the same rate, with the CBD slightly ahead for all but the first quarter of 2016 (Figure 1). Since the end of 2011, CBD apartments have grown in value by an annual average of 2.83%. while Southbank apartments by 2.60%. Over the whole time period, Docklands growth was well below the other two suburbs, averaging 1.40% over the past five years.
Planning on listing your property on Airbnb? Here are a few things new hosts should consider.
1. Location of your property and potential demographic of your guests.
Guests usually plan to stay close to the centre of activity and culture they would like to experience. For example if your property is near a stadium, there’s a high chance your guests may be attending sports events. Think about the biggest demographic of sports attendees and ask yourself the extent of behaviour you would tolerate in your property.
2. De-risk your home against bad apples.
You can request a security deposit prior to the guest’s arrival. Be wary of Instant Bookings, as this does not give you the opportunity to review the guest before they book in their stay. As a final precaution, have your guests sign a contract before they arrive. This can clearly lay out the check-in and check-out dates and times, rules of conduct, deposit refund or any other concerns you may have. While it may put off some guests, those who have nothing to hide should have no problems with signing it.
3. Make sure your home is safe for occupation.
When leasing out your property, it is your property manager’s role to ensure the safety of the premises are kept. If you’re putting up an Airbnb listing, this responsibility falls on you. You’ll need to check that the smoke alarms are working and that heaters (if any) have been serviced in the last 2 years. Make sure that all doors and locks work smoothly in the event that evacuation is necessary. While Airbnb does not conduct any routine inspections on the safety of your property, it’s a simple favour you are doing your guest that may save their life.
4. Check your home insurance coverage for accidents or damage.
You’ll need to fully insure your home against the risk of irresponsible guests causing major damage, as seeking damage compensation from Airbnb is difficult. Read the fine print of Airbnb’s Host Guarantee, and don’t assume it will protect you fully. It also does not cover a refusal to vacate.
We have just released our latest Secret Agent report!
Earlier this year, Secret Agent set about determining the true capital growth of houses and townhouses in inner Melbourne to provide investors with more accurate figures on previous growth in the local property market.
In this report, apartments get their turn as we analyse the growth in prices over the past 16 years. An updated index for the capital growth of houses and townhouses is also included.
Access the Apartments Capital Growth report now!
[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.
There are two ways to be a consistent winner in investment: information asymmetry (mostly through insider trading, which is illegal) and holding assets in the long term. Both of these methods are protected from short-term volatility.
The first expects and profits from these movements (often very risky as all public information is already factored in the price), while the latter can safely ignore the daily peaks and troughs, knowing that these will cancel out over a longer period of time. Investing for long-term returns and robustness is the appropriate reason to buy treasury bonds, yet it is very counterintuitive for most of us to ignore weekly or monthly yields (even changes over one year can be irrelevant with the right strategy).
Business Insider recently published a story called “The week is underway and Australian bonds are getting destroyed” with an image of a building being demolished. Yet as the article correctly points out, yields are still below pre-Brexit levels (bond yields rise as prices fall), which was less than three months ago. It can be difficult to separate signal and noise from information when there is such an abundance of data.
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.
Read the full post
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.
—
You can also explore our interactive map of Melbourne’s supply of new apartment and townhouse developments here:
Inner Melbourne’s apartments are getting tinier with each new development. But, how small is small? Secret Agent’s updated apartment index reveals that the average size of a 1 bedroom apartment is only 47sqm, and for the more popular 2 bedroom apartment the average size is 73sqm.