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Apr 19, 2024
False Prophets
In the dynamic Victorian real estate market, reliance on quarterly median prices to gauge the health of local markets and guide decisions in property transactions may prove folly. Recent data from the Real Estate Institute of Victoria (REIV) highlights significant growth in house prices across regional Victoria and metropolitan Melbourne, with towns like Lakes Entrance and Jan Juc, and suburbs like Brighton experiencing substantial quarterly rises, as much as a 35% increase in median house prices. No one is disputing the accuracy of the data collected and analysed by the REIV - their insights are incredibly value. However, while these figures present an appealing snapshot of market vitality, they often do not tell the whole story. Quarterly median prices can be heavily influenced by a variety of factors that do not necessarily reflect the overall market conditions. For instance, a small number of high-value transactions in a particular area can skew the median price upwards, while a similar number of lower-value sales can do the opposite. In East Melbourne, we have witnessed quarterly changes in the median value of properties of more than $1 million. This quarter, Melbourne’s perennial blue-chip suburb, Toorak, was dethroned as the most expensive suburb by Brighton. Even though Brighton is a stunning area to live in with magnificent homes, no one will genuinely believe that it is a more expensive suburb to buy property in than Toorak. Variances of this magnitude make it difficult to draw accurate conclusions about the true state of the market from a singular median figure for a single moment in time. These statistics often reflect the types of properties that happen to sell during that quarter rather than the overall market conditions. It is not uncommon to see a chain of similar properties sell based on the psychological security owners experience from seeing properties comparable to their own selling within the neighbourhood. In periods when higher-end homes are sold, the median price will naturally appear higher. Conversely, if the market is more active at the more affordable end, the median price will seem to decline. This aspect makes median prices a volatile metric that can change significantly from one quarter to the next without genuinely indicating long-term trends. The focus on regional centres in the REIV's report underlines another critical point: regional disparities. While metropolitan areas might see different trends, regional centres can perform distinctly based on local economic conditions, changes in amenities, and shifts in buyer preferences towards more lifestyle-oriented properties. Similar disparities can also exist between neighbouring suburbs, whether the announcement of new housing development or the planning of big infrastructure - properties on either side of a single road can experience radically different levels of interest. These local nuances are often lost in the broader data, leading to potentially inaccurate assumptions about more comprehensive market performance. A common refrain of our weekly blog is: make sure you consult with a real estate professional before making a decision about buying or selling a home, their expertise will help you make an informed decision that could save or secure you a significant amount of money.
Nov 3, 2023
Have you heard of Passive House?
Australia is witnessing a surge in sustainable construction practices, and leading the charge is C Street Projects with their groundbreaking development, Echo, in Hawthorn. Echo promises not just a modern luxury but also a commitment to a sustainable, energy-efficient future for its residents. At its core is the internationally acclaimed concept of Passive House construction, a game-changer in energy-efficient building. So what is Passive House? Originating in Germany, Passive House construction is gaining global recognition for its energy-saving potential. Now, Australia is embracing this approach, and C Street Projects is at the forefront with their Echo development. Passive Houses set a new standard for Australian construction, showcasing the synergy between luxury living and environmental responsibility. Here are some of the key features: Energy Efficiency: The design significantly reduces energy consumption through insulation, airtight building envelopes, and energy recovery ventilation. Superior Comfort: Residents enjoy consistent indoor comfort year-round with minimised temperature fluctuations and excellent air quality. Sustainability: Eco-friendly materials and energy-efficient systems minimise the project's carbon footprint. Financial Savings: The design leads to cost savings on energy bills, making it an appealing financial choice for residents. As the popularity of Passive House construction grows in Australia, we can expect more projects like Echo to transform our cities. These developments offer both luxurious living and sustainability, improving residents' quality of life and contributing to a greener, more energy-efficient future. If you're curious to experience the Echo project firsthand, don’t hesitate to contact me to arrange a tour and see the future of sustainable living for yourself. Written by Peter Hannon Partner & Auctioneer
Aug 25, 2023
What Does Your Property Manager Do?
What Does Your Property Manager Do? Understanding a Crucial Role in Real Estate Property Managers are the unsung heroes of the real estate world. Often perceived through the lens of a few negative experiences, their reputation may not always reflect the incredible value and complexity they bring to the property management landscape. Let's dive into the key responsibilities that make the role of a residential Property Manager so essential: Rent Management: Ensuring timely rent collection, monitoring and chasing arrears, and managing rent adjustments, Property Managers play a vital role in maintaining a steady income stream for rental providers (rental providers). Routine Inspections: Conducting regular property checks to assess condition and compliance; they ensure the property is maintained according to the lease agreements and identify issues now and those that may be coming. Client Liaison & Care: Serving as the main point of contact between rental providers and renters, Property Managers provide consistent communication, problem-solving, and relationship management. Capital Growth Protection: Through strategic planning and oversight, they contribute to protecting and enhancing the property's value over time - by maximising rental returns, making recommendations for property maintenance and upgrades, and placing high-quality renters that care for the property. Insurance Coordination and Claims: Property Managers handle the coordination of insurance policies, manage claims, and liaise with insurance providers, alleviating the stress of navigating this frustrating landscape from rental providers. VCAT Case Preparation and Representation: Preparing for and representing rental providers in VCAT cases requires expertise and dedication, ensuring rental providers' rights are protected. Monthly & EOFY Financial Reports: Detailed financial reporting helps rental providers keep track of income and expenses, aiding in tax preparation and financial planning. Market Analysis and Rent Reviews: Staying ahead of market trends, Property Managers ensure rents are in line with the current market, conducting regular rent reviews. Maintenance & Repair Project Management: Coordinating maintenance, repairs, and renovations, Property Managers ensure that properties are in top condition, enhancing renter satisfaction and long-term value. The role of a Property Manager goes far beyond mere administration. They are strategic partners, quasi-legal advocates & financial consultants, as well as hands-on managers. Their breadth of responsibilities requires expertise, empathy, and efficiency, all geared toward making the lives of rental providers and renters smoother and more prosperous.
Aug 11, 2023
NIMBY - NIYBY - NIABY
Earlier this week, our team had an impromptu debate about the impact of a new “Sobering Up Centre” to be opened down the street from our Collingwood offices. The area is gentrifying - rapidly. Helped along by one developer in particular, who just happens to have a luxury “mansions” development in the works directly across the road from the new Sobering Up Centre. Questions and opinions bounced around the room. Will the centre have a negative impact on property values? Is this the right place for a Sobering Up Centre? What is a Sobering Up Centre? I don’t know about you, but I hadn’t heard the term NIMBY until fairly recently and candidly, I quite like it. The first time I saw it written, I was mystified as to what was meant. It was used in the context of the current (permanent, really) housing shortage and referenced the perceived double standards of a certain Queensland MP in opposing developments within his home suburb whilst simultaneously calling for more development elsewhere. This somewhat paradoxical ideology is not entirely uncommon when it comes to matters that are literally and metaphorically “close to home”. It is, however, entirely problematic for resolving some of the bigger societal issues critical to functioning modern cities. We can see this thinking evidenced in attitudes toward renewable energy infrastructure. People might advocate for green energy and acknowledge the climate crisis yet oppose the construction of wind turbines or solar farms in their local community, fearing decreased property values or degradation of scenic views. Similarly, public transportation is, at least notionally, uniformly considered by the community as an eco-friendly and traffic-reducing solution. Still, many residents are prone to oppose the construction of a new rail line or bus route near their home, citing concerns about noise, property value, or crime. I go to a gym in the city and discovered early on Monday morning that an entire row of car parks across the road from the gym had been lost to an expanded bike lane…I was outraged! Yet, at dinner parties, will extol with great gusto that “they’ve got it right in Amsterdam”... just to be clear, I mean the bikes. And by “dinner parties”, I mean eating dinner with my wife and kids in our kitchen. Affordable housing, crisis accommodation and homeless “shelters” fall into the same category. Though we recognise the grave issues that necessitate these types of accommodations, when proposals arise to build low-income housing developments in certain neighbourhoods, residents tend to rail against them, fearing it will impact property values or change the character of their community. Likewise, proposals to build shelters or transitional housing are frequently opposed due to worries about increased crime and safety concerns. Our local council recently declared itself a “nuclear-free zone”, which I’m sure is a relief to residents that feared the construction of an AUKUS submarine repair facility on Sydney Road. However, within the energy sector, nuclear is very much back on the table for experts that realise a “clean and green” transition to a sustainable renewable energy future is going to prove challenging without alternative options. If there’s one thing Australians like less in their suburb than wind turbines, level-crossings, bike lanes, homeless people and drunks, it's anything nuclear. We’re all NIABYs when it comes to nukes! The problem remains; we need all of the above, at least some version of them. So, if not here - then where? I’m lucky enough to own property very close to the proposed Sobering Up Centre, and I’m fine with it. If that means someone is less of a danger to themselves and the public - that’s good, right? There are things on the list above that I’d be less cool about opening up on my street, but and it’s a big BUT, we’re all going to have to be OK with some of this stuff in our “hoods” if we’re going to keep enjoying living in this pretty great society, we’re lucky enough to live in.
Aug 4, 2023
Selling your investment property while tenanted?
As a landlord in Victoria, you may be feeling the pressure of recent interest rate increases, prompting you to consider selling your investment property and exploring other opportunities. If you find yourself in this position, it's important to be aware of the challenges and potential pitfalls associated with selling a property while it is still occupied by a tenant. Current laws in Victoria stipulate that the tenant must be given proper notice of the intention to sell the property. This notice can be provided at any time during the lease, whether it is a fixed-term or month-to-month agreement. It's crucial to remember that the tenant has the right to give only two weeks' notice to vacate the property without any penalties. Additionally, you are required to give the tenant at least 24 hours' notice of entry prior to any marketing activities, such as taking photos or creating floor plans. Please note that such activities should be conducted between 8 am and 6 pm, and the tenant may object to having their belongings photographed, which could present an issue during the sales process. During the sales campaign, the tenant is entitled to compensation for half a day's rent or $30, whichever is greater, for each open house inspection. However, sales agents are limited to conducting only two open house inspections per week. One of the challenges in selling a tenanted property is the condition in which the tenant maintains it during the sales process. According to the law, tenants are not required to make any special effort or incur expenses to enhance the property's appeal to prospective buyers. They are only obligated to maintain the premises in a “reasonably” clean condition. The presentation of the property may vary depending on how organised and tidy the tenant is. Although there are financial challenges of not having a tenant in place during a sales campaign, it remains more cost-effective than selling a property in poor condition, considering the adverse effect it would have on the sale price. To avoid such a scenario, I recommend that your sales agent visits the property and discusses the sales process with the tenant. This is to see if the property will be presentable for a sales campaign and if the tenant is willing to cooperate. Surprisingly, many tenants are more than willing to assist in making the process as seamless as possible. Offering a small financial incentive to the tenant can go a long way in fostering cooperation. Remember, a well-presented and cooperative property can yield better results in terms of sale price and overall buyer interest, making the temporary financial sacrifice worthwhile. If you have any further questions or concerns, please do not hesitate to reach out to me or your real estate agent for guidance and support throughout the selling process. Written by Elli Blanco
Jul 21, 2023
Navigating the Melbourne Rental Market: Understanding Seasonal Trends
In the ever-changing landscape of the Melbourne rental market, there is a season for everything. As we reflect on late 2022 and early 2023, one thing becomes clear: renters faced an unprecedented surge in demand while searching for their next home. However, as with any market, there are ups and downs, and understanding seasonal trends can be crucial for both rental providers and renters alike. Melbourne Winter, in particular, has historically witnessed a drop in demand. With fewer people starting new jobs or commencing university courses, and the weather taking a turn for the worse, many tend to hunker down, leading to a decrease in rental activity. However, it's essential to note that some property types and areas may still enjoy sustained demand, while others might experience a slowdown. Rental providers need to be mindful of media reports indicating low vacancy rates across the board. While this might be true for certain suburbs, it doesn't necessarily apply to every area. In some neighborhoods, there could be a notable number of vacant residences, giving renters the advantage to choose and even negotiate for a better rental price. As the rental market can fluctuate rapidly, being able to adapt to these changes and consider price adjustments if necessary will ensure securing a tenant sooner rather than later. For renters, it's wise to keep an eye on seasonal trends and market shifts. Understanding the patterns can help plan the search for a new rental property strategically. While competition may be fierce during peak seasons, waiting for off-peak times like Winter could present opportunities for better deals and more options. As the market continues to evolve, both rental providers and tenants should stay informed and proactive. Being in touch with property management professionals can provide valuable insights and guidance to navigate the rental market successfully. For any questions or assistance related to property management, please feel free to get in touch. Our team is here to help you make informed decisions and thrive in the ever-changing rental landscape. Written by Jordan Palma
Jun 30, 2023
Two Trick Pony
Australia's recent ranking of 19th out of 64 countries in the World Competitiveness Yearbook report is further evidence of our over-reliance (dependence) on digging things out of the ground and importing people to prop up the economy. While the country excels in life expectancy and health coverage, its position in entrepreneurship (62nd of 64) and productivity (46th) is alarming. A preoccupation with immigration and reliance on China’s consumption of our natural resources has hindered Australia's ability to foster innovation and diversify its economy. What does this mean for Australian property? World Competitiveness Centre director Arturo Bris in discussing the results of the report, noted that “resource-rich countries – and Australia is one of them – are naturally more productive… However, the challenge for resource-based economies is how to translate such efficiency into prosperity, for example, how to make people’s lives better”. Professor Bris emphasised that countries like Australia must transform efficiency into prosperity through sound policies and institutions. To achieve this, Australia should look to nations such as Switzerland and Singapore, which have successfully built highly productive economic models without significant natural resources. Innovation, particularly in the fields of quantum computing and medical research, could unleash new possibilities and fuel economic growth. The Federal Government’s National Quantum Strategy, announced in May this year, is the type of initiative Australia should be pursuing to realise innovative economic diversity and growth. Still, at a maximum investment level of $1b AUD, it fails to signal genuine intent to succeed. By investing more heavily in research and development, Australia can position itself at the forefront of technology and attract global talent and investment. Australia's heavy reliance on commodity exports exposes its vulnerability to fluctuating global markets. The Committee for Economic Development of Australia highlighted the need to diversify the economy beyond traditional trade strengths. The recently formed AUKUS pact provides an opportunity to strengthen defence capabilities, promote advanced manufacturing, and create high-skilled jobs. By investing in industries such as aerospace, defence technology, and renewable energy, Australia can foster further innovation, reduce dependencies, and secure its economic future. Australia possesses world-class healthcare and research institutions, making it well-positioned to lead in medical research and development. By increasing investment in this sector, the country can nurture groundbreaking discoveries and attract global investment. We witnessed Australia’s capacities during the research, development, and production phases of COVID-19 vaccines. Subsequent investments in mRNA capacities (particularly the Victorian State government) are, as with quantum computing, the right moves, but not at a sufficient level to be considered much more than lip service. Australia has the potential to become a global hub for biotechnology and pharmaceutical innovation, fostering job creation and strengthening its competitive position. Immigration is a divisive and complex issue, one I’m not qualified or capable of distilling into a neat “for” or “against” position in a 500-word (ish) blog piece. On the issue of housing, however, at least in the Victorian context, I have some insights. The simple supply/demand equation demonstrates to real estate agents, renters and buyers, on a daily basis, that there are currently too few homes for the number of people needing to be housed. Matt Barrier, CEO of Freelancer, speaking recently at The Sydney Morning Herald Sydney 2050 Summit, described how he sees Australia’s approach to immigration as it relates to property: “The US uses quantitative easing to drive ‘easy, relentless’ growth — Australia uses quantitative peopling…This is not about ‘growth’ but inflating demand for housing. It’s not about the ‘economy’ but inflating GDP. But population growth does not increase GDP per capita.” These are pretty incendiary observations, and there are plenty of counter-arguments to Mr Barrie’s view. The central observation, however, that we, as a country, have an increasing demand for housing is unequivocal. In order to realise the innovation and economic diversification proposed above, we’re going to need plenty of smart and skilled people from around the world to work alongside the smart and skilled people already here. We’re also going to need somewhere for them to live… this continues to be the core issue for housing accessibility and affordability in this country and one that our governments (past and present) continue to fail to address adequately. Written by Jacob Caine CEO
Jun 2, 2023
Preparation first, then go for it!
Renting out your property can be a lucrative investment opportunity, but it requires careful preparation to attract quality tenants and maximize your returns. Whether you're a seasoned landlord or a first-time property owner, getting your property ready to lease involves preparation done the right way. Minimum standards are items that must be adhered to before a tenancy commencement can take place. The annual smoke alarm checks with the gas/electrical checks to be completed every two years are minimum standards that many rental providers don’t know about. Within current rental legislation, renters rights include ending the rental agreement immediately without costs should minimum standards not be met within a property before they move in. Preparing your property for lease requires careful attention to detail and proactive measures to attract desirable tenants. By cleaning, decluttering, conducting necessary repairs, enhancing curb appeal, updating the interior, and setting a competitive rental price, you can position your property as an attractive and desirable living space. Remember, a well-prepared property not only attracts quality tenants but also establishes a positive landlord-tenant relationship, leading to long-term satisfaction and success in your leasing endeavors. Written by Jordan Palma