MMP321 2024 T1 - Assignment 1 - brief

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1 MMP321 – Advanced Property Analysis – Trimester 1, 2024 Assessment 1 – Statistical Market Analysis Research – Individual Report DUE DATE: 12 April 2024, Date, by 8:00pm (Melbourne time) PERCENTAGE OF FINAL GRADE: 40% WORD COUNT: Up to 2000 words (individual report excluding cover page but including everything else) REPORT FORMAT: Report Writing Guidelines REFERENCING SYSTEM: Cite all assumptions, references and sources using the APA7 referencing system . Marks will be lost for improper or incorrect referencing. Description This assignment requires you to conduct a detailed analysis of a particular property submarket. The case you will be studying is apartments in the inner Brisbane suburb of Teneriffe. You are required to report on housing price dynamics (Topic 1), utilise discounted cash flow methods (Topic 2), and utilise statistical analysis and regression modelling (Topics 3 and 4) to examine past sales of these apartments. The data you will use for this assignment is actual sales data for February 2023 to February 2024 from CoreLogic RP Data. The data are available in CSV form on the unit’s CloudDeakin page. The data provide you with property attributes and the date and price of each sale. You will be required to do an appraisal on an apartment currently listed for sale, using your model and a discounted cash flow method. The assignment is similar to writing a market research report to a client on how you value housing in a particular area. You start with the background of the area (housing price dynamics), then compare your modelled prices to actual prices and describe what factors may drive the differences between them. Finally, you compare the sale price to a similar property in another global city (of similar size), to see if there are any underlying global trends (or anomalies) driving the local market. Specific Requirements Format The assignment is to be typed and presented in the following format: • Cover page • Executive Summary (this briefly explains your findings; it is NOT a summary of how/what you did in the assignment; you should do this after you have finished the assignment) • Introduction • Answers to Tasks (each part to have its own subheading, e.g. Part A, Part B, etc.) • Conclusions • Reference List • Appendices

2 Tasks Part 0: Planning the Project 6 Marks It is a requirement of the assignment that a project plan be created. Please follow the steps in the ‘How to use Microsoft Tasks by Planner and To Do’ document on CloudDeakin to set up your plan. Planning helps in making the assignment more bearable to do. The plan will also be marked and forms part of the assessment (see rubric). The plan is to be shared on Microsoft Teams with Nicholas Sheard ( n.sheard@deakin.edu.au ) for marking (does not need to be submitted via Turnitin). Part A: 8 Marks Due to long-term changes in technology and lifestyle, many cities have inner-city neighbourhoods that in the past were occupied by factories and warehouses but have now been converted into residential areas. These neighbourhoods are often fashionable places popular with young people, due to proximity to city jobs and amenities, unconventional urban landscape, lack of legacy residents from older cohorts, and housing suited to current tastes as it is either newly built or converted (Loures, 2015; Maiztegui, 2021). Teneriffe in inner Brisbane is an example of such a neighbourhood (Gillan, 2014). While not rich in amenities such as bars and restaurants itself, Teneriffe is adjacent to the major restaurant and entertainment hub of Fortitude Valley and a short ferry ride to the popular restaurant and microbrewery precinct of Bulimba. This type of inner-city neighbourhood often does not have strong natural amenities such as a beach or panoramic views, as those amenities were valued less by the purchasers of industrial properties than by homebuyers. Consider the formerly industrial but now fashionable Melbourne suburbs of Richmond and Fitzroy, which are surrounded by urban development. In contrast, Teneriffe is on the bank of the Brisbane River, with a walking and cycling trail along its edge, and has many places with attractive views. These amenities are likely to be attractive for residents and thus be reflected in housing values (Diamond, 1980; Tyrväinen & Miettinen, 2000). The Brisbane River is also a potential natural hazard for Teneriffe due to the risk of flooding. Brisbane has had two recent major floods, in 2010–2011 and 2022, that caused massive damage and have raised the public consciousness of flooding risk (ABC News, 2022; Brisbane Times, 2011a, 2011b). Though mostly on higher ground, parts of Teneriffe were at risk in the 2010–2011 and 2022 floods and some nearby areas had serious damage (Brisbane City Council, 2024; Courier Mail, 2022). The risk of flooding may be factored into the valuation of low-lying areas near the River. Property prices rose strongly in Brisbane during and after the COVID-19 pandemic, with Teneriffe being a prime example. See the suburb profiles on realestate.com.au and domain.com.au for further information. Discuss the current state of the residential housing market in Teneriffe, Queensland, identifying the drivers of this development growth. Include any capital market issues (e.g. credit availability and exposure, interest rate expectations, potential tax changes) that you think may impact the sub-market in your discussion. Part B: 5 Marks Using the dataset provided on the MMP321 CloudDeakin page, in the file “Teneriffe_QLD_sales_data_MMP321_2024_A1.csv”, complete the following tasks: i) Produce a descriptive statistics table for the key variables: sale price, number of bedrooms, number of bathrooms, number of car spaces, and floor size. ii) Provide a brief discussion of the statistics (mean, median, mode, standard deviation, min, max, range) for each of the variables. You may use charts to highlight your discussion. Note: The dataset includes houses and units . An initial step is to ‘clean’ the data, by keeping only the units .

3 Part C: 10 Marks Again, using the Teneriffe dataset from CloudDeakin, run a regression model using ‘sale price’ as the dependent variable. The independent variables are the other variables that you have calculated the descriptive statistics for in Part B i). i) Provide the regression statistics and ANOVA table you have generated, culminating in your regression equation. ii) Discuss the predictive power of your equation. You must address, at a minimum; the goodness of fit (standard error and R -squared) and the implications and significance levels of the independent variables. Part D: 5 Marks In this part, you will compare the price of an apartment currently for sale in Teneriffe with your regression results. You will then compare the price with result from using a discounted cash flow model of your choice. i) Identify one apartment currently for sale in Teneriffe. Estimate the sale price of the apartment using your regression equation. Tabulate your results, then compare and discuss any differences between your calculated value and the current asking price of the property. Note: You should try to select an apartment from a building not in the dataset. Furthermore, the selected apartment should have characteristics within the minimum and maximum of the independent variables in the dataset. For example, the units in the dataset have between 1 and 4 bedrooms, so do not select an apartment with 5 or more bedrooms as the model may not price it well. ii) For the apartment currently for sale that you used in Part D i), use the capitalised resale value or the discounted cash flow method from Week 2’s lecture to calculate the price of the apartment. Justify the input that you used in the formula such as how you have projected net rental income (see Week 1 part 2 and Week 2 part 1) and capitalisation/discount rate (Week 2 part 1). How did you come up with these numbers and what assumptions did you use? Compare the calculated capitalised resale value/discounted cash flow valuation to the actual price and the estimated sale price from your regression model. Discuss what property market dynamic factors that exist or are missing in the models that make the values differ. Part E: 5 Marks In this section you will compare the apartment selected in Part D with an apartment in a comparable global city. For the apartment you used in Part D, identify one comparable condominium (common American term for an apartment) in the neighbourhood of Wynwood, Miami in the US state of Florida currently for sale (use www.zillow.com ). The apartments in Teneriffe and Wynwood should be comparable by distance to the central business district, number of bathrooms, number bedrooms, building age, and being of the same density (low, medium or high). Alternatively, if Wynwood is not to your liking, you may choose a different neighbourhood in the US that is comparable to Teneriffe in characteristics. Compare the prices and discuss what housing price dynamic factors differ for there to be pricing differentials. You should consider: a) Differences in capital/space markets b) Short-, medium-, and long-term dynamics c) Geography

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4 Report: Structure, Writing Conventions, Referencing and Presentation 1 Mark Your report must be produced in the appropriate structure, referencing must be adequate and correct (including in-text citations), and the grammar/spelling must be to a professional standard. Total 40 Marks References ABS News (2022, February 27). South-east Queensland battered by severe weather, floods as system lingers over Brisbane . https://www.abc.net.au/news/2022-02-27/brisbane-weather-floods-rain-dams-bom- system-warnings/100864790 Brisbane City Council. (2024). Flood Information Online . https://fam.brisbane.qld.gov.au/ Brisbane Times. (2011a, January 11). Brisbane under water: The worst flood in a century rolls into Brisbane . https://www.brisbanetimes.com.au/environment/weather/brisbane-under-water-20110111-19mnt.html Brisbane Times. (2011b, January 11). Queensland flood death toll to rise 'dramatically' . https://www.brisbanetimes.com.au/environment/weather/queensland-flood-death-toll-to-rise- dramatically-20110111-19ldz.html Courier Mail. (2022, February 27). Brisbane suburbs in flood’s firing line as heavy rain and high tide combine . https://www.couriermail.com.au/news/queensland/weather/brisbane-suburbs-in-floods-firing-line-as- heavy-rain-and-high-tide-combine/news-story/dc07298e2af40cbd0a9b2fa105e0f1cc Diamond, D.B. (1980). The relationship between amenities and urban land prices. Land Economics 56(1), 21– 32. https://doi.org/10.2307/3145826 Gillan, B. (2014). Twenty years of urban renewal in Brisbane . news.com.au, https://www.news.com.au/finance/real-estate/brisbane-qld/twenty-years-of-urban-renewal-in- brisbane/news-story/d55c68dadaf0aa1b31463f0c57d17eb5 Loures, L. (2015). Post-industrial landscapes as drivers for urban redevelopment: Public versus expert perspectives towards the benefits and barriers of the reuse of post-industrial sites in urban areas. Habitat International 45(2), 72–81. https://doi.org/10.1016/j.habitatint.2014.06.028 Maiztegui, B. (2021, January 21). Transforming Factories into Living Spaces: The Changing Face of Spain’s Industrial Architecture . ArchDaily. https://www.archdaily.com/955139/transforming-factories-into-living- spaces-the-changing-face-of-spains-industrial-architecture Tyrväinen, L. & Miettinen, A. (2000). Property prices and urban forest amenities. Journal of Environmental Economics and Management 39(2), 205–223. https://doi.org/10.1006/jeem.1999.1097 Learning Outcomes This task allows you to demonstrate your achievement towards the Unit Learning Outcomes (ULOs) which have been aligned to the Deakin Graduate Learning Outcomes (GLOs). Deakin GLOs describe the knowledge and capabilities graduates acquire and can demonstrate on completion of their course. This assessment task is an important tool in determining your achievement of the ULOs. If you do not demonstrate achievement of the ULOs you will not be successful in this unit. You are advised to familiarise yourself with these ULOs and GLOs as they will inform you on what you are expected to demonstrate for successful completion of this unit. The learning outcomes that are aligned to this assessment task are:

5 Unit Learning Outcomes (ULOs) Graduate Learning Outcomes (GLOs) ULO 1 Organise and develop discounted cash flows incorporating debt and tax for investment purposes GLO1: Discipline-specific knowledge and capabilities GLO4: Critical thinking ULO 2 Collect and categorise public domain data and organise it into a suitable format for analysis purposes GLO1: Discipline-specific knowledge and capabilities GLO3: Digital literacy ULO 3 Analyse, test and appraise complex information on local and global property markets using a range of statistical and interpretive techniques GLO1: Discipline-specific knowledge and capabilities GLO4: Critical thinking ULO 4 Apply well developed judgement and responsibility to independently undertake a complex property market analysis research project GLO1: Discipline-specific knowledge and capabilities GLO6: Self-management Submission You must submit your assignment in the Assignment Dropbox in the unit CloudDeakin site on or before the due date. When uploading your assignment, name your document using the following syntax: <your surname_your first name_your Deakin student ID number_[unitcode].doc (or ‘.docx’) . For example, ‘Jones_Barry_123456789_MMP321.doc’. Submitting a hard copy of this assignment is not required. You must keep a backup copy of every assignment you submit until the marked assignment has been returned to you. In the unlikely event that one of your assignments is misplaced you will need to submit your backup copy. Any work you submit may be checked by electronic or other means for the purposes of detecting collusion and/or plagiarism and for authenticating work. When you submit an assignment through your CloudDeakin unit site, you will receive an email to your Deakin email address confirming that it has been submitted. You should check that you can see your assignment in the Submissions view of the Assignment Dropbox folder after upload and check for, and keep, the email receipt for the submission. Marking and feedback The marking rubric indicates the assessment criteria for this task. It is available in the CloudDeakin unit site in the Assessment folder, under Assessment Resources. Criteria act as a boundary around the task and help specify what assessors are looking for in your submission. The criteria are drawn from the ULOs and align with the GLOs. You should familiarise yourself with the assessment criteria before completing and submitting this task. Students who submit their work by the due date will receive their marks and feedback on CloudDeakin 15 working days after the submission date. Extensions Extensions can only be granted for exceptional and/or unavoidable circumstances outside of your control. Requests for extensions must be made by 12 noon on the submission date using the online Extension

6 Request form under the Assessment tab on the unit CloudDeakin site. All requests for extensions should be supported by appropriate evidence (e.g., a medical certificate in the case of ill health). Applications for extensions after 12 noon on the submission date require University level special consideration and these applications must be must be submitted via StudentConnect in your DeakinSync site. Late submission penalties If you submit an assessment task after the due date without an approved extension or special consideration, 5% will be deducted from the available marks for each day after the due date up to seven days. 1 Work submitted more than seven days after the due date will not be marked and will receive 0% for the task. The Unit Chair may refuse to accept a late submission where it is unreasonable or impracticable to assess the task after the due date. An example of how the calculation of the late penalty based on an assignment being due on a Thursday at 8:00pm is as follows: • 1 day late: submitted after Thursday 11:59pm and before Friday 11:59pm– 5% penalty. • 2 days late: submitted after Friday 11:59pm and before Saturday 11:59pm – 10% penalty. • 3 days late: submitted after Saturday 11:59pm and before Sunday 11:59pm – 15% penalty. • 4 days late: submitted after Sunday 11:59pm and before Monday 11:59pm – 20% penalty. • 5 days late: submitted after Monday 11:59pm and before Tuesday 11:59pm – 25% penalty. • 6 days late: submitted after Tuesday 11:59pm and before Wednesday 11:59pm – 30% penalty. • 7 days late: submitted after Wednesday 11:59pm and before Thursday 11:59pm – 35% penalty. The Dropbox closes the Thursday after 11:59pm AEST/AEDT time. Support The Division of Student Life provides a range of Study Support resources and services, available throughout the academic year, including Writing Mentor and Maths Mentor online drop ins and the SmartThinking 24- hour writing feedback service at this link . If you would prefer some more in depth and tailored support, make an appointment online with a Language and Learning Adviser . 1 ’Day’ means calendar day for electronic submissions and working day for paper submissions.

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7 Referencing and Academic Integrity Deakin takes academic integrity very seriously. It is important that you (and if a group task, your group) complete your own work in every assessment task Any material used in this assignment that is not your original work must be acknowledged as such and appropriately referenced. You can find information about referencing (and avoiding breaching academic integrity) and other study support resources at the following website: http://www.deakin.edu.au/students/study-support . Your rights and responsibilities as a student As a student you have both rights and responsibilities. Please refer to the document Your rights and responsibilities as a student in the Unit Guide & Information section in the Content area in the CloudDeakin unit site.

MMP321 2024 T1 - Assignment 1 - brief

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