This week, Secret Agent illustrates the importance of time value of money when investing in property.

There is a saying that money earned today is worth more than money earned tomorrow. The main reasons this is true are:

1. Inflation (rising price levels deteriorate the spending power of cash)
2. Interest rates (money that can be invested today earns interest, which compounds over time
3. Opportunity cost (the ability to use money now rather than having to wait for it)

Read the full post

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

Who knew that the walls of former breweries, factories and mills would become one of the most irresistible apartment styles to own and occupy in inner Melbourne.

Warehouse apartments are unique in that they successfully and seamlessly merge historic and trendy. Characterised by their exposed brick walls, steel trusses, sleek interiors and impossibly high ceilings, warehouse style apartments are limited in supply, further adding to their appeal.

In this bulletin, Secret Agent examines inner Melbourne’s warehouse apartment market. 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!

In this update, we present a more thorough look into the price per square metre rates of apartments by suburb, further categorising sales according to the number of bedrooms. These results are shown in Table 1.

The overall average price per square metre rate for apartments in inner Melbourne is $8,687/sqm. 

Overall, the three most expensive suburbs to purchase an apartment  are Albert Park ($13,276/sqm), East Melbourne ($11,914/sqm) and Middle Park ($10,720/sqm). These areas have consistently topped our index.

The least expensive apartments per square metre can be found in Travancore ($6,563/sqm), Kensington ($6,869/sqm) and Flemington ($7,079/sqm).

A few things can be observed when considering apartments with a larger accommodation. In some suburbs, the increase in number of bedrooms also leads to an increase in price per square metre, as seen in the CBD region, Carlton, Collingwood, Clifton Hill and South Yarra.

We can see that most of the inner North and inner West suburbs tend to have decreasing price per square metre rates as apartments grow in accommodation size. However, note that some of the data may be inaccurate due to the small number of sales available for that particular apartment type.

Click to view table in fullscreen mode.

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.

Read the full post

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.

Read the full post

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.

Read the full post