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

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Suburbs such as Fitzroy and East Melbourne have historically strong capital gains. Conventional wisdom is that by investing in neighbouring suburbs that have lower median prices, an investor would achieve stronger growth than in the blue chip suburb. This is because they would benefit from the spillover effect of buyers being unable to afford the blue chip locations and the subsequent gentrification of the suburb. This bulletin aimed to test if this is the case by analysing the growth of 5 bride and bridesmaid suburb pairs in inner Melbourne.

To compare, the median sale prices and annual growth rates since 2011 for all suburbs shown in Figure 1 were gathered. These suburbs were divided into suitable pairs, based on locality and differences in median prices. The results are shown in Table 1.

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The capital growth index is a very accurate way of measuring the long-term returns on an investment in the property market. It removes a lot of the noise usually present in real estate statistics, such as construction or renovations, a lot of large or small houses being sold and seasonality.

Median capital growth is based on the resales of the same property over different time periods (see methodology for more detail). Over the second quarter of 2016, inner Melbourne capital growth was 1.63%, or 6.67% when annualised. This is slightly lower than the median of 6.80%% over 2015, but above the five-year median of 6.31%.

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We have just released our latest Secret Agent report!

Cities with dynamic streetscapes make inner city living attractive to many, and inevitably stimulate the growth of property prices as demand becomes greater. Arguably, what makes a city liveable is the quality of its public spaces.

As Melbourne’s city apartments continue to grow in number, and yet shrink in size, it is important that we maintain the desirability of public, shared spaces for mutual enjoyment.

This month, Secret Agent wanted to find out what differentiates a great urban space from the rest.

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Earlier this month, Secret Agent released our findings on the price per square metre of apartments in the secondary market. In this bulletin, we look closely at apartments in the upper tier of Melbourne property, exclusively those that have sold for above $2 million.

The same methods from the previous study applied: each floor plan was manually measured for its internal habitable space, and the final measurement excluded external walls or structural elements, outdoor space, car spaces and storage cages. Sales were included only if a price and scaled floor plan were available.

Key findings:

• This study included 12 penthouses, which are typical assets in the top end of the market.
• More than half of the sampled apartments have a North-facing aspect, balcony or terrace. This is the most desirable orientation for optimum natural light and passive heating.
• Apartments in the $2million plus market were 59% more expensive on a per square metre basis than the rest of the market (below $2million).
• On average, 3 bedroom apartments sold at a higher cost per square metre than 4 bedroom apartments (Table 2).
• 5 of the apartments were located in period or Art Deco buildings, while the rest were constructed from the 1990s onwards. Most of these newly built apartments were designed by renown architects such as Fender Katsalidis, Robin Boyd, Woods Bagot, Ashton Raggatt McDougall, Bates Smart, or boutique developers such as Neometro.

For this study, 32 apartments sold between the 1st of May 2015 to 31st of May 2016 were analysed. The average sale price for these apartments was $2,571,469. The sample mostly consisted of apartments from the central, inner East and inner South of Melbourne. The average price per square metre for $2million plus apartments was $13,653. The results by suburb are shown in Table 1.

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The bond market, even more so than the stock market, is often a key indicator of investor expectations and the overall health of the economy.

Figure 1 shows the RBA reported bond yields on treasury bonds from 90-day bills to 10-year, long term bonds. From March to April this year, long term yields decreased more than short term ones. This is called “flattening” of the yield curve and is often a sign of lower investor confidence and a bleaker future outlook for the economy. From April to May, the opposite effect can be observed: while yields for all maturity dates decreased, the yield curve steepened slightly. The drop in short term yields reflects the RBA’s decision at the start of May to cut the official cash rate by 25 basis points (0.25%).

So what has happened since the interest rate cut?

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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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