News

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


Bond Yield Update: September

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.

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7 Reasons Future Apartments Still Disappoint

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.Blog-1  Read the full post


The Secret Agent Report – Melbourne’s Supply of New Developments

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.

Access the Supply report now!

You can also explore our interactive map of Melbourne’s supply of new apartment and townhouse developments here:

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The Most Overlooked Element of Urban Design – Places to Sit

When an empty train pulls in to Flinders Street Station, the first thing people look for is a place to sit down for their journey home. If they are lucky enough, they will score a seat before there is no longer any sitting space available. As much as prolonged sitting isn’t great for our health, most of us would prefer to sit than to stand. This is not just on the train ride home; we prefer to sit to eat lunch, socialise, soak up the sun, or read a book.

“People tend to sit where there are places to sit.” – William H. Whyte

Sittable space is something that is easily overlooked in urban planning. It is one of the most important traits of great urban spaces according to William H. Whyte, a seminal figure in urban design thinking. Most of Whyte’s findings come from observing pedestrians going about their daily activities in the streets of New York City. In his film entitled “The Social Life of Small Urban Spaces”, Whyte describes what he means by sittable space and why it is so crucial. You can watch the film here.

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Inner Melbourne’s Smallest and Largest Apartments

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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.

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Inner Melbourne’s Most Affordable and Expensive Apartments

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Secret Agent has updated its price per square metre index for secondary apartments in inner Melbourne. An additional 478 apartments have been added to the index so that it now consists of a total of 870 apartments which have sold between 1st January 2016 to 30th June 2016. The new average square metre rate for apartments in inner Melbourne is $8,679/sqm.

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Bond Yield Update: August

“Record low interest rates”. This seems to be the headline of the year, having been used so many times it is hard to remember any other kind of interest rate. Each time we see this, expectations for another rate cut decrease momentarily, only to return to the same, pre-cut probability-levels after a few weeks.

Figure 1 paints a clear picture of a similar short-term outlook, yet weakening long-term expectations. While this graph does not include data since the rate cut (yields on 10 year treasuries have lifted a whopping 0.03% since the July levels shown in Figure 2), we can see almost identical movements at each maturity date from May to June and from June to July.

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The Secret Agent Report – Recreating Period Homes

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

Start reading this report by clicking on the link below:

Register to receive our report monthly and access the Recreating Period Homes report now!


Bride and Bridesmaid Suburbs

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.

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A bride suburb is a relatively expensive suburb with good capital gains. It may be out of reach for a large proportion of property investors due to the high entry point.

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A bridesmaid suburb is a neighbouring suburb that boasts a lot of the qualities that make the bride such a good investment, yet with properties selling for much lower prices.

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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Sustainable Urban Landscapes

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Secret Agent recently reported on sustainability and looked at various ways sustainable features can be incorporated in the design of commercial or residential buildings. In this post, we take a look at sustainability from an urban planning perspective. Sustainability in the urban setting is about “finding new and better ways to achieve the same or better functionality, new materials and new technologies” as demonstrated in the following emerging trends.

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