Finance Assignment: Property, Market, Rental, and Growth Analysis

This finance assignment analyzes a property located at 2204/250 Elizabeth Street, Melbourne, VIC 3000. It includes a description of the apartment, comparable property analysis, and calculations of gross annual rental revenue, annual rental costs, and the annual growth rate of rents. The assignment utilizes data from Domain.com.au and Smartasset.com, as well as Australian Bureau of Statistics (ABS) data on house and equity prices. The student calculates the implied total required rate based on the net annual rent. The assignment also involves the splicing of data from different ABS tables to analyze market trends and financial metrics related to property investment.

FINANCE
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QUESTION 1
a) Description about the property
Address- 2204/250 Elizabeth Street, Melbourne VIC 3000
Type of property- Apartment
Features- 2 Bedroom ad 1 bathroom
Condition of house- Unfurnished house
Floor space- 55 m²
Amenities- Central bathroom, separate kitchen with gas cook top, large king/queen size bedroom
with inbuilt wardrobe and one study room. Video security intercom, gym and swimming pool
Near by places- This place is closer to Myer, David Jones, china town as this particular place is
located in the famous street.
Rent per week-
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b) Comparison of one property with another
Details of Comparable House Prices
Address
Be
d-
ro
o
m
s
Flo
or
spa
ce
(m
^2)
Last
sale
date
Last
sale
price
Location Bond
Compared
Average sale
price
2204/250 Elizabeth
Street, Melbourne
VIC 3000
2 55 08/0
5/17
$550/
per
week
Elizabeth
Street
$2,390.00 $550.00
1303/620 Collins
Street, Melbourne
VIC 3000
2 55 19-
05-
201
$590/
per
week
Collins
Street
$3,540.00 $590.00
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Compared average
price
$570/per
week
c) Estimate the gross annual rental revenue from leasing this house
Rental value per week in Elizabeth Street= $550 per week
Monthly rent = $1500*4
= $6000
Annual rent revenue= $6000*12
= $72000
Source: 2204/250 ELIZABETH STREET, Melbourne VIC 3000, 2016. Available through: <
https://www.domain.com.au/2204-250-elizabeth-street-melbourne-vic-3000-11344720>.
[Accessed on 2nd May 2017].
d) Estimate the annual rental costs of leasing your home
Market value of property Amount
Average Sale price of apartment in Melbourne $550,000.00
Annual gross rents $26,400.00
Gross Rent multiplier 20.83
Property value Annul gross rents*Gross rent multiplier
Property value 26400*20.83
Market value of Property in Elizabeth street in
Melbourne
$550,000.00
Calculate of rent charged by landlord
Market value Amount
Property in Elizabeth street in Melbourne $550,000.00
Rent percentage(1% standard charged on
market value)
550000*1%
Rental charge $5500/ monthly
Annual gross rent $66,000.00
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Source: Charge for rent, 2016. Available through: <https://smartasset.com/mortgage/how-much-
you-should-charge-for-rent> [Accessed on 2nd May 2017].
e) Estimate the annual growth rate of rents
According the fact and figures of Australian Bureau of statistics there is 8.2% rise in the
prices of property located in Melbourne which count as increase in the rent rates
f) Calculate implied total require rate
Particular Amount
Gross rental revenue 72000
Less: rental costs -66000
Net annual rent 6000
Price= Net rent/(r-g)
=6000/(72000-8%)
= 6000/(66240)
= 9.05%
QUESTION 2
Visit the following links and download the ABS data on house and listed equity prices
Table 1
Residential Property Price Index ;
Weighted average of eight capital
cities ;
Unit Index Numbers
Series Type Original
Data Type INDEX
Frequency Quarter
Collection Month 3
Series Start Sep-2003
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Series End Dec-2016
No. Obs 54
Series ID A83728455L Quarterly returns
Sep-2003 69.0
Dec-2003 71.6 3.77%
Mar-2004 71.3 -0.42%
Jun-2004 70.6 -0.98%
Sep-2004 70.6 0.00%
Dec-2004 71.8 1.70%
Mar-2005 71.7 -0.14%
Jun-2005 72.2 0.70%
Sep-2005 72.1 -0.14%
Dec-2005 73.5 1.94%
Mar-2006 74.3 1.09%
Jun-2006 77.0 3.63%
Sep-2006 78.4 1.82%
Dec-2006 79.8 1.79%
Mar-2007 80.5 0.88%
Jun-2007 84.1 4.47%
Sep-2007 87.1 3.57%
Dec-2007 90.4 3.79%
Mar-2008 90.8 0.44%
Jun-2008 90.0 -0.88%
Sep-2008 88.0 -2.22%
Dec-2008 86.8 -1.36%
Mar-2009 86.6 -0.23%
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Jun-2009 90.2 4.16%
Sep-2009 94.0 4.21%
Dec-2009 99.2 5.53%
Mar-2010 102.3 3.13%
Jun-2010 104.3 1.96%
Sep-2010 103.0 -1.25%
Dec-2010 103.6 0.58%
Mar-2011 102.7 -0.87%
Jun-2011 102.0 -0.68%
Sep-2011 100.2 -1.76%
Dec-2011 99.4 -0.80%
Mar-2012 100.0 0.60%
Jun-2012 100.4 0.40%
Sep-2012 100.2 -0.20%
Dec-2012 102.4 2.20%
Mar-2013 103.1 0.68%
Jun-2013 105.7 2.52%
Sep-2013 108.3 2.46%
Dec-2013 112.6 3.97%
Mar-2014 114.2 1.42%
Jun-2014 116.4 1.93%
Sep-2014 117.8 1.20%
Dec-2014 120.2 2.04%
Mar-2015 122.1 1.58%
Jun-2015 127.8 4.67%
Sep-2015 130.4 2.03%
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Dec-2015 130.6 0.15%
Mar-2016 130.4 -0.15%
Jun-2016 133.0 1.99%
Sep-2016 135.0 1.50%
Dec-2016 140.6 4.15%
Table 8
Price Index of Established
Houses ; Weighted Average of 8
Capital Cities ;
Unit Index Numbers
Series Type Original
Data Type INDEX
Frequency Quarter
Collection Month 3
Series Start Jun-1986
Series End Jun-2005
No. Obs 77
Series ID A2333613R Quarterly returns
Jun-1986 61.3
Sep-1986 61.5 0.33%
Dec-1986 62.2 1.14%
Mar-1987 62.9 1.13%
Jun-1987 63.6 1.11%
Sep-1987 64.7 1.73%
Dec-1987 67.8 4.79%
Mar-1988 70.8 4.42%
Jun-1988 74.6 5.37%
Sep-1988 81.9 9.79%
Dec-1988 90.1 10.01%
Mar-1989 97.4 8.10%
Jun-1989 99.3 1.95%
Sep-1989 99.3 0.00%
Dec-1989 99.6 0.30%
Mar-1990 100.1 0.50%
Jun-1990 101.0 0.90%
Sep-1990 100.1 -0.89%
Dec-1990 100.7 0.60%
Mar-1991 100.6 -0.10%
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Jun-1991 101.8 1.19%
Sep-1991 104.9 3.05%
Dec-1991 104.9 0.00%
Mar-1992 104.2 -0.67%
Jun-1992 104.5 0.29%
Sep-1992 104.6 0.10%
Dec-1992 105.6 0.96%
Mar-1993 106.6 0.95%
Jun-1993 107.3 0.66%
Sep-1993 107.4 0.09%
Dec-1993 108.4 0.93%
Mar-1994 109.6 1.11%
Jun-1994 110.9 1.19%
Sep-1994 112.6 1.53%
Dec-1994 112.1 -0.44%
Mar-1995 113.2 0.98%
Jun-1995 112.4 -0.71%
Sep-1995 112.6 0.18%
Dec-1995 112.4 -0.18%
Mar-1996 112.2 -0.18%
Jun-1996 113.6 1.25%
Sep-1996 114.0 0.35%
Dec-1996 114.3 0.26%
Mar-1997 115.3 0.87%
Jun-1997 116.8 1.30%
Sep-1997 118.9 1.80%
Dec-1997 121.2 1.93%
Mar-1998 124.2 2.48%
Jun-1998 126.9 2.17%
Sep-1998 126.9 0.00%
Dec-1998 129.0 1.65%
Mar-1999 131.3 1.78%
Jun-1999 134.3 2.28%
Sep-1999 136.8 1.86%
Dec-1999 141.3 3.29%
Mar-2000 143.9 1.84%
Jun-2000 147.3 2.36%
Sep-2000 147.1 -0.14%
Dec-2000 150.6 2.38%
Mar-2001 153.9 2.19%
Jun-2001 159.4 3.57%
Sep-2001 167.7 5.21%
Dec-2001 174.0 3.76%
Mar-2002 180.6 3.79%
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