We have just released a special mid-month report!

As most of us begin to celebrate the Queen of Australia’s birthday over the long weekend, Secret Agent decided to take a moment to look not to the West – but to the East.

9.4 million high school students in China would have completed the most important college entrance exam in their lifetime as of yesterday. But from the 1st of July, under the Australian government’s new student visa framework, Chinese parents will have a new and cheaper way to afford their children education – right here in Australia.

With an approximate savings of $360,000 by sending children to the top primary schools in Melbourne instead of Beijing, Secret Agent cannot help but feel that a property boom may soon be reignited.

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We have just released our latest Secret Agent report!

Comparing square metre rates for houses is common and quite simple as land measurement data is readily available. Apartments are slightly different since it isn’t possible to make comparisons based on the land area they are built on. Floor plans are necessary to do this and the plans provided are often lacking full dimensions. Advertised floor sizes are often rounded-up figures that include external walls and non-habitable areas in the total, making them appear bigger than what they really are.

To overcome this, Secret Agent has manually measured the floor plans of apartments sold from January to March 2016 to create a square metre index for apartments in inner Melbourne. This report will showcase our results with an in-depth look at square metre rates for regions, suburbs and particular apartment types.

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Click here to download Secret Agent’s orientation guide

This week, we’ve put together a short guide to help you maximise the benefits of passive design solutions by understanding orientation in your home. With a particular focus on light and wind, we break down each aspect and offer suggestions for a more environmentally friendly and comfortable home.

North

• Mornings generally receive Northerly winds from the inland due to land breeze. During winter this is the dominant source of wind. In summer, Northerly winds can be quite hot.
• Direct sunlight and an excellent source of passive heating.
• Necessary to use shading methods, such as planting deciduous trees (which permit low-angle Winter sun through) or installing eaves and blinds.
• Suitable for daytime, living and dining rooms or courtyards.
• Ideal orientation of the home with the long side facing North, or 20-30° off from the center.

West

• Be wary of hot Northwesterly winds in summer and cold Southwesterly winds in the cooler months.
• Evening sun can be quite harsh and hot in summer.
• Option to strategically plant trees and shrub to divert undesirable winds and provide shading in the evening.
• Alternative is to place utility areas facing West (e.g. laundry, bathrooms, storage) which insulate and shade living areas.

East

• Little to no Easterly wind all year round. Design should promote cross-ventilation from other rooms.
• Direction of sunrise and cool morning light.
• Suitable for kitchens, breakfast rooms or bedrooms, as morning light is beneficial to regulate our circadian rhythm (natural body clock).

South

• Evenings generally receive Southerly winds from the ocean due to the sea breeze effect. Southwesterly winds in the cooler months can be quite harsh.
• Indirect light, therefore requires little to no shading. Borrowed light methods include use of skylights or reflections off neighbouring buildings.
• Should be properly insulated as there are minimal passive heating options. Active heating may also be necessary.
• Suitable for bedrooms or artist studios, as South light produces cool and controlled colour values.

We have just released our latest Secret Agent report!

Averages are frequently relied upon to determine key indicators such as capital growth. While an average may be a quick and easy metric to measure a data set, it can also produce very misleading results. This is especially true when looking at the capital growth of a suburb. Changes in average property prices and actual capital growth are not the same thing. There are many factors that determine the price of a house and the average growth in property values. Using more reliable methods, Secret Agent uncovers the true capital growth of suburbs across inner Melbourne.

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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.

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For the fifth consecutive year, Melbourne has been named the world’s most liveable city by The Economist Intelligence Unit’s annual survey. While the ranking is based on a range of factors such as healthcare, culture, education and infrastructure, Secret Agent believes that Melbourne’s success is due to thoughtful urban design.

We owe it to Jan Gehl, the Danish architect and urban designer who worked together with Melbourne City Council in the early 1990s to transform the city from, in his own words, “neutron-bombed, not a soul – not even a cat”, into a place for people. Much of our laneway culture and outdoor dining today can be attributed to Gehl’s visionary thinking and humanistic approach to urban design.

Three main principles can be drawn from Gehl’s work:

1. Design the city at 5km/h

Cities had always been designed for people, who move at a modest speed of about 5km/h, up until the boom of the automobile in the 1960s. New cities were then designed at 60km/h – wider, further apart, less accessible by foot. Gehl’s intervention in Melbourne applied the human scale of the older, 5km/h cities, giving birth to our laneway culture that is now inseparable from the city’s identity. Narrow, dense and brimming with life, there is a certain magic that comes with compact spaces.

Thanks to Gehl and planning changes, Melbourne CBD has gained 20 hectares of footpaths over 15 years. Designing walkable urban spaces encourages people to do so, resulting in a healthier population. Think about how far a person has to walk to get from A to B; is it a comfortable distance? If it necessarily becomes a lengthy walk, can it be a safe, pleasant and eventful journey?

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Changes in average prices are frequently used by commentators to draw conclusions about the property market. Our recent post on Fitzroy’s true capital growth gave some insight into why statistics like averages and medians are not sufficient to make judgements on property value in a given suburb.

To find true growth in value, many factors including property size, location and renovation levels need to be accounted for. This can be done by observing resales of the same property over time, given no structural changes have occurred between sales. When we compare the annual average price changes (reported) and our own index based on resales only, we start to see that capital gains are mostly exaggerated using averages alone.

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You might have walked the streets many times over the past 12 months and noticed the substantial number of construction sites and cranes in air throughout Victoria.

The Victorian Building Authority (VBA) has released its latest findings on reported building permits and the total value of building reported in 2015. In summary, this is what they found.

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One of the effects of urbanisation is an increasing number of people choosing to live in the inner city, particularly in high density neighbourhoods. Re-zoning has allowed many residential areas to become mixed use zones whereby apartment high rises, houses and restaurant strips exist all on the same street. In Victoria, these zones are often centred around transport hubs, nearby either tram lines or train stations. All these elements make the hustle and bustle of the city, but one might argue it’s getting a little too noisy. External noise has become a modern day pollutant that is difficult to escape, and has captured our attention.

In our Healthy Environments report, we recommended buying property that is not located on a main road or nearby train stations to avoid high levels of external noise while at home. Noise can have detrimental health effects such as cardiovascular disease, even if you think you’ve become accustomed to the low grumblings of traffic and passing trains.

We recently discovered that, in addition to poor health outcomes, external noise can negatively impact the value of property. These are some of our findings.

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We have just released our latest Secret Agent report!

When deciding to invest in the property market, most of us will first obtain approval for a loan, find a suitable property to buy and then pay off the mortgage accordingly, dealing with any rate rises as they come. It can be that simple. A more clever way to invest would be to consider how mortgage rates are likely to change in the near future, prior to making the decision to purchase. This is where the yield curve plays an important part in making general predictions about future mortgage rates.

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