” When you make a mountain out of a molehill, don’t expect anyone to climb up to see the view.” This quote aptly applies to the exaggerated statements that have been made recently about the state of the property market. December is always a somewhat quiet month, due to the distractions of Christmas and the ongoing hangovers of the festive season. If one looks at the property market overall, there is still plenty to smile about and the vocal chords of ‘the fat lady’ are a very long way from being heard. As a business, we look forward to the 2004 market. Once again it will be a very exciting one as we have an excellent business plan and market strategies awaiting application. This is the time of year to see where RWM has been in 2003 and chart a new course for 2004.

It was interesting to read Title Deeds “Top 50 House sales for 2003″ last week and once again we made the podium with five sales (the most by any agencies in our area). We achieved the fifth and sixth highest sale prices which were also the highest and second highest in Mosman for 2003. The highest was the second time that Mosman has posted a double digit sale. This is now the second highest behind our $15.5 million Balmoral sale. Whilst it is nice to receive the kudos for holding the records, it is our Internet side of the business which really excites us the most. In 2001 we made 24 sales to VRN subscribers, with a total value of $32,210,00 and an average of $1,342,000 per sale. In 2002, this increased to 36 sales at a combined value of $48,993,000 and the average sale price was $1,360,000. This year the sales jumped to 46 with a value of $75,041,000 and the average sale increased to $1,631,000. Overall our subscriber base increased twenty three per cent and sales to VRN subscribers now account for thirty six per cent of our total. More and more people are using the Internet to purchase property and this is one of the reasons why we are confident that we can further improve on this in 2004. We have now made 135 Internet sales with a value of $229,544,000 at an average of $1,700,325.

If you look at the 2003 year, there were no significant breakthroughs with new technology regarding the Internet, which is somewhat disappointing. For most it was just fine tuning and making adjustments to further improve the services to their client base. I recently predicted that it will be the franchises that will suffer the most from not hosting an independent web site as Head Office insists on hosting the mother ship, because they believe “big is best”. All this does is see the franchises learn absolutely nothing about technology, by further retarding their knowledge of an exciting concept that will go on to dominate the property industry. A greater understanding of the Internet is necessary for anyone who wants to “get it right” and succeed in the Real Estate industry. “Right” is a bigger word than either success or failure. It is when we look at our figures for 2001 then 2002 to 2003 that we know our business model for RWM is well down the path to being “right”.

At a breakfast meeting this week it was pointed out that in Mosman, there are forty-four real estate agencies with street addresses, which really explains the agent overload. Within five years we believe this number will reduce to twenty agencies and possibly less, as the vast majority have already turned a blind eye to technology. I well remember that once, it was a selling point to offer a blown-up colour photograph of a property in the office window. Then the local papers offered colour advertising. Today, we have the Internet taking over which is what makes it so exciting. In 2004, we should see virtual tours replaced by video streaming, which will present the homes so much better as photographs will be replaced by videos. Instead of offering three rooms, we will be starting at the front gate and going to the back fence (with sound effects) and the videos will play for approximately ninety seconds. In 1988 it was a break through when VCR tapes entered the property market and homes were filmed at a cost of $8,000 per tape. Video streaming can be e-mailed, and the cost will be under $500.00 per home.

Interesting to read the AoMD (Articles of Mass Destruction) last Sunday suggesting that the property market had disappeared completely for 2003. Our Double Bay office auctioned four properties and sold four from four and our Newtown office auctioned five and sold four, so the news coming from our network is very positive indeed. Our Chief Auctioneer, the great Peter Baldwin, did offer some interesting insights as to the major cause for the lower clearance rates. He said that the Auctioneers across the board are saying that the newer agents are having great difficulties coming to terms with the market, as they have never experienced a market like this before. I guess if they’d had to work the 1993 market they would now be on medication. Last week we exchanged six million dollars worth of property and this week we negotiated a further seven million so the market is far from broken.

You get out of the property market what you put back into it and we will be putting plenty into it in 2004. It is all about market share and ours is increasing each year. I am predicting that our subscriber sales at VRN will increase from forty six to seventy five. For us to achieve this we will be working the database overtime. I look forward to our edition same time next year, to see how close we are to this prediction, as all we need is six sales a month to VRN subscribers, which is very achievable.

On behalf of the ‘happy chappies’ here at RWM, we wish you all a fantastic and safe Christmas. Our next edition will be on January 30, 2004 where once again we will go weekly through to December 10, 2004. Thanks to all, for being part of our little world on the www !! Cheers and clink, Merry Christmas and a very happy, safe and prosperous New Year to all…^__^

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13.12.03Robert SimeonNo Comments »

No doubting the news has travelled fast to the North Pole, where Santa would have been told that Prancer, Blitzen, Dancer and Cupid will not be required for the trek to Australia this year – as the ‘Governor of Moolah’ has spoken. With calls for ‘lighter Christmas stockings’, this amazing turnaround has seen the cash rate target have two upward adjustments in the space of twenty nine days. What is somewhat confusing is that we had none over the prior five hundred and eighteen days!! In jargon, he tried to explain why it is necessary (given that he believes we are in a strong growth period)! On the contrary – what we are seeing now, is an interest rate binge, which could see many areas of Sydney forced into a property market evacuation!!

Even the newly elected Member of Werriwa, failed to acknowledge the hardships that faced the 85,000 or so enrolled in his electorate, which has a reputation for being one of the youngest demographic areas for a fast growing populace. I guess he is still basking in the sun following his defeat of Kim ‘Green Peace’ Beazley, who has a habit of beaching himself at different times in the calendar year for reasons unknown. Then his loyal supporters sponge him down and usher him back-out to sea. As he submerges, the words amongst the bubbles are heard, “I am one hundred per cent behind the ALP”.

If you have a closer look at the property market, it is the Member for Werriwa, whose electorate is the highest performing in Sydney and these rate movements in all probability will not produce a gold star. Over the last twelve months, Green Valley homes have had capital appreciation in the vicinity of 24%, and apartments 27%. Hoxton Park has identified appreciation of houses at 22% and apartments at 27%, whilst Liverpool has eased a bit with houses showing 18% and apartments at 25%. From my investigations this week, these areas usually have mortgages of seventy-five per cent of the property’s value, so it will be absolutely crucial, that this market can hold its composure in the January 2004 quarter, as against the worse case scenario of a property evacuation out in the wild wild west. It would be fair to suggest that the vast majority participating in this market, were not property owners in the 1991 – 1993 market.

On the other side of the property spectrum we see that Sydney Harbour property markets will hold their own, with supply well and truly being reduced. Our research revealed that the general mortgage borrowings here are around thirty-five to forty-five per cent of the property’s value, so that alone, will see the market trade well within itself. One other interesting observation, is that these days, when a property sells, within forty-eight hours we have a property valuer on the phone wanting to arrange an inspection for finance purposes. Quite frequently we will sell a property and no inspections are requested as the purchase has been made in cash.

Following the collapse of property spruiker Henry ‘decay’ Kaye, the inner city apartment market will need some time to readjust its composure, as lending institutions will be monitoring this market very closely and not offering any financial assistance. What this market needs to identify is that it is capable of withstanding the ‘Governor of Moolah’s’ recent rate binge. What we are seeing now is a probable changing of the guard in the entire property market. I would suggest by the recent announcements, that the property market will now adopt a much more cautious approach, and marketing trends could very well be altered at the beginning of the 2004 market. Next year, the market could very well start with a walk, as compared to the energetic pace of recent years. This could see a positive move back to the more economical forms of marketing such as Internet marketing where the database is already established. This enables the vendors to test the temperature of the market with a minimal capital outlay.

Whilst on the subject of Internet marketing, following the successful results of last year’s Expat Christmas House Hunt, once again we will be running this over the Christmas vacation. So if you are wanting to sell or buy, click on the link and we will hopefully weave a little magic again.

Given the recent Reserve Bank somersaults, (the verdict is still out with the jury), we are now in strategy planning mode for the likely marketing scenarios that could present themselves for our market in 2004. It will be very interesting to watch the buyer registrations over the next forty to fifty days as that is one of our most accurate barometers. Whilst some may say the Mosman market looks positive again, spare a thought for those who just received a Christmas Card from Bob ‘State of Taxes’ Carr. Yes, it is Land Tax time, and for those lucky property owners it is also Premium Property Tax for those who have a land value exceeding $1.68 million. I hope they invest it very wisely as Stamp Duty in 2004, may follow in the same direction as property prices in some areas!! Perish the thought, then the boys on Macquarie Street would have to think of something else to put in their stockings!!! Final edition for 2004 next week, cheers and clink ^__^

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6.12.03Robert SimeonNo Comments »

The only real way to actually pass judgement on the state of play within the property market, is to access the previous quarters. The September quarter figures announced this week will certainly raise more than a few eyebrows. Whilst the NSW property market performed well in the September quarter, it was considerably down compared to previous quarters, which clearly indicates that the property market is in cruise-mode. However, it is interesting to note that it is good news for the Mosman market and bad news for the real estate agents. Woollahra, recorded the highest median price of $1,560,000 for Local Government Areas with a 12.9% increase. This is the first time in quite a while that Mosman has dropped to number two position, with a median price of $1,535,000. This is a -1.76 reduction from the previous quarter. This clearly indicates that the volume of properties for sale in Mosman is reducing. Given that we only have some 5,900 houses, the vast majority of those sold are now going into home-renovation mode. Another significant factor contributing to the lack of houses on the market is the Stamp Duty. Many now have decided to renovate as in some cases the cost of moving, equates to the cost of renovation. I would anticipate over the next few years that the volume of sales in our area will continue to diminish, which will all but guarantee property values in the area will not show any significant decreases.

Whilst the volume of property sales in Mosman is down, it is alarming to see that the growth areas are Illawarra with 11.5 per cent growth and the Hunter region which recorded its highest annual growth since September 1995. What has not been determined is what proportion of these sales actually went to investors from Sydney as against their own domestic market, which is not renowned for being a high trading market. Moving back to Sydney, again the Campbelltown area is highlighted with just a 2.8 per cent quarter increase and 17.1 per cent overall for the year. With regard to the highest turnover areas, again, it is the Western Suburbs leading the way with Blacktown first and Penrith and Baulkham Hills following close behind. What is interesting to note is that this September quarter did not have the .25 per cent rate increase, so many will be eagerly awaiting the results of the December quarter. The home unit market for the September quarter was thirty per cent down from the previous September quarter, so I am sure that the ‘Governor of Moolah’ will be very happy with these statistics. Also great news was that the residential vacancy rate dropped to 3.7 per cent for the quarter, which is well down on the 4.4 per cent for the same period last year.

One of the most insightful articles to appear in the print media was one written by Alan Kohler for The Sydney Morning Herald. It was titled, “It’s not property on fire, it’s debt, silly” and it was one very intelligent and brilliant interpretation of the property market. As a few have been saying all year, Mr Kohler is right on the money!!” The Reserve Bank is trying to target a debt/property binge with an increase in the interest rate, probably in the order of 1 percentage point by the middle of next year. It wants us to stop borrowing so much and start saving, so it has put up the price of money. Kohler then went on to say that, “but pretty soon, possibly within 12 months, it will have to turn around and cut rates again to prevent the slowdown becoming a recession.” There is plenty of talk that the rates may hit six per cent. All this will do, is send the market into a ‘holding-pattern’ mentality which many will see as a positive step.What many forget is that the cash rate target on May 3, 2000 was six per cent which is hardly a long time ago and I am sure that the investors will encourage this as an increase only highlights the advantages of negative gearing. The last thing the ‘Governor of Moolah’ wants to see is more investor money being driven back to the investment unit sector.

There is absolutely no doubting that the property market is becoming a science, as at this time every year we record the lowest clearance rates. The December quarter is historically, the only quarter of the year where the purchasers have a greater control over the market, as was evidenced at this exact time last year. The interesting outcome was that the buyers united to sit-out the quarter and see what happened in the January quarter of this year. The result was a twenty per cent hike in prices from the December quarter! What remains to be seen is which of the purchasers will execute contracts in this quarter or take a punt for the January quarter. May I offer this little bit of advice – “a bird in the hand, is worth two in the bush”.

From our perspective the intensity of the market has eased. We are still trading, however and this week we exchanged eight properties with a value of $7,680,000. This figure accounted for three houses and five apartments, so it is still most encouraging to see balance in the property market. We at RWM continue to read a totally different market to many of our colleagues in the industry who are having trouble coming to terms with ‘increased intensity’ to secure the sale. As we keep saying here in the office, “it’s easier to open the door of opportunity after you have a key position”. Simply, it is all about which key one selects to ignite their market!! Cheers and clink…^__^

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29.11.03Robert SimeonNo Comments »

I think the two greatest ‘bloops and blunders’ in 2003 were from those who doubted the ability of the Wallabies, and those who predicted a property market collapse. I, like many others, backed the property market and had no faith in the Wallabies. Now I am backing both and my apologies go to all those brilliant Wallabies for their sensational performances last week!! It takes courage to admit mistakes and make amends for them, so it was great to see all those who were doubters, stand up to be corrected. Shame the same can’t be said for those who have been niggling all year at the property market. They have been consistently one hundred per cent incorrect!! Some started as early as the first week in January this year. To make a mistake is only human-with the property market, the mistakes were well and truly overdone.

Great to see the Productivity Commission is alive and well. For the first time they came out snarling with their dentures locking-in to the property market. The problem as I see it, is that they have identified the investment market as a great place to start. I guess they share the same view as the ‘Governor of Moolah’ in that they identify three factors that drive the investors to the property market. One being the attraction of capital gain, second the availability of attractive finance rates, and third, tax minimisation. How convenient that they failed to identify the big ‘CC’, otherwise know as Corporate Collapses, that constantly appear in the newspapers with gloomy forecasts marinated with non-profit warnings and earnings downgrades. Maybe the Productivity Committee might wish to rinse their dentures as they contemplate these figures, which are compiled by the Australian Bureau of Statistics and researched by Australian Property Monitors.

Mosman property prices twelve months to 31 October, 2003. Average price for a home $1,795,129, median price $1,420,000 and the median price change over the last twelve months sits at 0 per cent. Average price for a unit $$596,253, median price $451,000 and the median price change over the last twelve months sits at – 1 per cent.

Cremorne property prices twelve months to 31 October, 2003. Average price for a home $1,281,046, median price $1,052,500 and the median price change over the last twelve months sits at – 4 per cent. Average price for a unit $572,243, median price $487,500 and the median price change over the last twelve months sits at 1 per cent.

Neutral Bay property prices twelve months to 31 October, 2003. Average price for a home $1,051,013, median price $884,250 and the median price change over the last twelve months sits at – 2 per cent. Average price for a unit $705,960, median price $506,500 and the median price change over the last twelve months sits at 13 per cent.

Since the last edition we have had four apartment sales fall over due directly to unobtainable finance. All four were first home buyers with approved finance. Well the approvals were “approved” until the ‘Governor of Moolah’ upped the rates on Melbourne Cup Day. Now the banks are reassessing the borrowings/equity ratios. This week we sold four apartments with a fifty/fifty split between home owners and investors. Even more confusing are the attempts by agents to explain why the auction clearance rates dropped to 56.5 per cent last weekend, and 51.5 per cent if withdrawn properties are included. Not one agent commented that the new legislation now stops them from dummy-bidding so at the risk of attracting a fine, together with adverse publicity properties are now withdrawn. The reality is that the numbers of prospective purchasers attending open for inspections have halved. Then, take into consideration the current stance taken by the banks, which is the ‘RRR’, reality realty rate!! This equates to applications for 2003 which are now denied the “please re-apply next year” response, when we can work out what is happening. Merry Christmas, your re-establishment fee has been waived as your business is important to us.

Sydney’s residential vacancy rate dropped to 3.4 per cent in October, which is a further improvement on the September 3.7 per cent figure. These figures from The Real Estate Institute identified that the reduction was greatest in the areas within a 10km radius of the city. Well, I guess that also confirms why our Property Management team is so busy.

Whilst on teams, our great team, The Wallabies will be the first ever nation to win back-to-back World Cups this Saturday night. Spare a thought for our English friends. I guess the words “age does not weary them” no longer applies, maybe a name change from the Barmy Army to Dad’s Army. Memo to: Sean Fitzpatrick picked his ANZAC team and not one Australian player made it. Don’t give up your day job mate, baaaaaaaa byeeeeeee!! Cheers and clink ^__

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22.11.03Robert SimeonNo Comments »

All in the name of a good read, it seems that once again many are speculating on what the Reserve Bank and our very own ‘Governor of Moolah’ have in store for the economy. However once again it is the hands that are moving faster than the eyes. Yes, the ‘Magician of Money’ came out this week and released his “Statement on Monetary Policy” and the property market barely rated a mention. Whilst they did voice concerns about the rapid rise in household debt, the report certainly made no mention that this is being fuelled by runaway house prices. Personally, I think the reported journalism is running away at a much faster rate than the housing market. The latest Consumer Price Index figures showed that housing costs increased by just 1.8% from the June Quarter, and for the twelve months from September 2002 to September 2003, the overall increase was just 4.6%. There are strong similarities between the odds on the Wallabies retaining the Rugby World Cup and the housing market; they are both blowing out. The ‘Governor of Moolah’ did identify that all signs are pointing to strong economic growth ahead and in all probability that is the reason why he stopped short of discussing the property market because there is anecdotal evidence of a slight cooling in the key Melbourne and Sydney property markets. Much of the steam has evaporated out of the high-rise apartment sector and the September 2003 Bureau of Statistics’ figures revealed that first-home buyers accounted for just 13.3 per cent of all new loans. This certainly places The Reserve Bank in a quagmire with regard to further rate increases as this will only accentuate the problems with regard to easing the affordability crisis facing first home buyers and those on low incomes.

Still smarting at being overlooked for the “invitation only” Rugby World Cup cocktail party at the Mosman home of Australian Rugby Union boss John O’Neill, not even our very own Steve Patrick managed to crack an A-list invite. As many know, Steve is still acknowledged as the man who introduced “running rugby” to Australia, when he was the highly regarded fly-half for Gordon first grade, back in the late seventies. Steve, was also one of the first Australian players to venture overseas when he took up a contract playing for glamour club, Perugia University in Italy. Whilst discussing the chances of the Wallabies in this week’s up-coming game against the All Blacks, Steve served up his homemade Gamberi rossi conaglio e mollica, with a magnificent Don Pietro Rosso 1997. It should be noted that no team has ever won back to back World Cups (yet), which casts doubts as to why we were not using a youth policy in this World Cup? I had better not say too much as Mosman is now the retirement home for many past Wallabies.

Aside from the World Cup, many have been asking what effect the recent rate rise will have on our market. The simple answer is what rate increase? Our market was the very first to show significant capital appreciation, which in turn forced adjoining suburbs to follow suit. Over recent years our annual appreciation has been consistent around eight to twelve per cent capital appreciation, which is sustainable. What is interesting is that the surrounding areas of Liverpool and Campbelltown, have over the last few years, been recording capital appreciation of thirty-four to thirty-eight per cent. This would be very difficult to sustain, should there be a significant rate increase. These areas would then be referred to as “high-risk”.

With investors moving back to the established suburbs, the rental market here continues to surge ahead. The Corporate market is very strong with the new 2004 executives out here at present looking to lease properties for January occupation. We are experiencing strong enquiries from $300 a week to $4,000 per week, which also explains why one in three apartment sales are going to investors.

The rate-debate will not be on the vast majority of minds this week-end as all eyes, hearts and emotions will be on the World Cup semi-finals. My tips, the Wallabies by a leap and a bound, because how can the Kiwis know what they are up to, when we don’t even have an idea. The French over the Poms, by half a croissant!! This could see Fleet Street, re-named Struggle Street!! Go you Aussies!! Go you good things!! Cheers and clink…^__^

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15.11.03Robert SimeonNo Comments »

Do you think, or do you just think you think? Well our esteemed ‘Governor of Moolah’ has a plan in place for the property market and I think I know what it is !! If you asked the Gov. which month of the year he dislikes the most, I would hazard a guess he would say February, as that is the month that launches the property market each year. Next year, 2004 will be the eighth year of unprecedented trading and I think the Governor will try and slow the February market down to a mild walk. Our ‘Governor of Moolah’ mounted phase one of his stealth attacks on Melbourne Cup Day and he certainly ambushed the market, as nobody called it, given that interest rates last moved way back in June 5, 2002. I predict that we will not see another rate increase until they meet in February 2004 and then we can expect a ‘rate slap’, aimed at taking the wind out of the property market for 2004. In 2001, September 11 stopped the market, as was the case in 2002 with the Bali bombings. The 2003 market has not had to contend with terrorism. When the Governor issued his Media Release on Monetary Policy on November 5, he left plenty of fingerprints on it and it is abundantly clear that he has a hidden agenda. Time will tell if we are correct with our interpretation of where the property market is headed; it will be an interesting February edition.

Now back to our market, which has just weeks left to trade before the close of business 2003. Many are saying that the market is now dead and buried with the market coming off big time. Well, I may have something to add to that as in the last ten days we have exchanged $23,590,000 in local property, of which $11,365,000 went to subscribers of ‘VRN’. This knocked our Internet sales up to 132 at a value of $224,609,000. This is an amazing story in itself, as we are the only agency that uses this method. Gone this week, 7 Wallaringa Avenue Neutral Bay which only confirms that the waterfront market is still alive and well, sale price confidential. 39-41 Aubin Street, Neutral Bay sold ahead of the closing date. Both the purchaser and vendor are subscribers, so again a confidential sale price (the purchasers flew in from Singapore). 28 Ryrie Street Mosman sold at auction for $2,300,000; purchaser is a subscriber, 1 Cabban Street Mosman went prior to auction and is confidential as the purchaser is a subscriber and I owe him a bottle of port. 4 Queen Street Mosman was sold for $2,500,000 and 5 Murdoch Street Cremorne went early and again a confidential sale price. 7 Hodgson Avenue Cremorne sold to a subscriber and the price is confidential. The home unit market still remains strong with 8/ 10 Clifford Street Mosman selling to a subscriber for $701,000, 26B/2 Brady Street Mosman sold for $800,000 and 3/20 Killarney Street Mosman sold for $925,000. Just goes to show that some just “think they think that they know” what the market is doing.

The ‘Queen of Apartments’ Marize Bellomo has the flush of success stamped all over her, as she is currently marketing fourteen apartments, which once again shows that Marize sells more apartments in the area than any other agent. An interesting statistic with this market is that one in three sales is to an investor, so as soon as we sell the property it is back up for rent and the rental market still remains very strong. This again confirms the Wizard Home Loans’ survey which revealed that nearly 900,000 Australians will be back investing in the property market next year. The most amazing statistic to come from this is that three years ago, the same survey identified 246,000 investors and three years on it has tripled. We anticipate a strong home unit market as Mosman, Cremorne and Neutral Bay are blue-chip investment areas that are very well established with strong tenant enquiry. Jasmine Dimitriou has joined us also and both Marize and Jasmine, or as I call them ‘Maz & Jaz’, will be the dominant forces in this market again in 2004.

It is a very interesting market at the moment and we are loving every minute of it. The dynamics are changing weekly and who would have guessed that the ‘Governor of Moolah’ was reading a different form guide on Tuesday. What remains to be seen with a Federal election looming is, will the Governor be on the Treasurer’s Christmas Card list this year? It is alright to think globally, however for quite a few the real issues are local, the only problem is that most of us just don’t get the big picture!! I never did understand macro-economics, cheers and clink!! ^__^

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8.11.03Robert SimeonNo Comments »

When it comes to the property market the one thing that the critics have in common is indigestion as they constantly have to eat their own words. Many believe it is the clearance rates that are the determining factor to best monitor the state of play within our real estate industry. Those who use this archaic measure are not responsible enough to comment on the market, given that their consistent attacks have never been followed up with a search warrant. Auction clearance rates are compiled from Penrith to Palm Beach, and as most know they are entirely different markets and bear not the slightest resemblance. One must not forget also that the property market has private treaty and expressions of interest sales, although for some absurd reason, they are not included in the overall picture. In the vast majority of cases, auctions that are passed in, generally sell within the preceeding week. Sadly however those who compile the information do not believe in follow-up. So backward is the method to monitor the auctions that even in 2003 they do it all by telephone and this speaks volumes for their systematic correlation of data. Who knows, in 2004 they may even discover the merits of e-mail. Maybe I should write them a software program and sell it to them as their collection of data is actually an embarrassing measure of the overall property market.

There are many idiosyncrasies that those who care to offer their often misdirected opinions on the real estate market, fail to understand. In years gone by, the general rule of thumb was to sell first, then buy. Well that phenomena has changed (believe it or not) due to market capital appreciation. With the real estate market appreciating at an average of fifteen per cent per annum, the vast majority simply refuse to be out of the market until such time as they have identified a suitable property. What we are seeing now is those buyers withdrawing from the market due entirely to the Christmas and New Year holidays, as they are faced with the reality of bridging finance over this period. So the mere suggestion that the market has finally met its Armageddon, makes as much sense as Michael Egan being awarded ‘Treasurer of the Year’. Those buyers will return in 2004 and the market will retain the current status quo, as there is definitely no anecdotal evidence to suggest any change to market dynamics. The ‘Governor of Moolah’ remains tight-lipped about his intentions and many economists are wearing a shade of crimson. In 2003 interest rates have not had a single alteration, despite many joining the chorus by suggesting that we will see an interest rate increase this year. For the record, our clearance rate this week was 100%, (we had just the one auction).

Not a week goes by that our remarkable Premier Bob ‘State of Tax’ Carr, and his merry men do not make a human headline. Not content with the current level of taxes in our ‘State of Poverty’, they are back at it again. As quick as they launched their Wealth Water Tax, now they are back on the waterfronts looking to raise the taxes now on jetties. The reason being is that they have “forgotten” (I mean not implemented) a rate rise in fifteen years, despite their website saying that” rents are reviewed and reassessed at regular intervals”. Transport Minister, Michael (I know boats) Costa has joined hands with Lands Minister Tony Kelly to review this horrendous error I guess someone at the Waterways has been on a great liquid lunch. Given that they see an opportunity to assess the 1400 private jetties, boatsheds, harbour pools, ramps and pontoons all for the sake of another quick buck, it appears once again, that the Members of the Nonsensical Fanatical Illocutionary Club, alternatively referred to as NFI club, have simply missed the boat. Mr Costa and Mr Kelly believe that these rentals are well below market rental given that they significantly add to the value of the property, so it is off to the Independent Pricing and Regulatory Tribunal they go. It seems to me that they have forgotton Mr Carr’s favourite tax being Land Tax and the Premium Property Tax which are specifically directed at these land owners. Well if they are looking to assess a market rental, that will be amusing, as those who lease the waterfront improvements, have a monopoly. They have exclusive use, as it is attached to their property. If all those being assessed, band together and send a cheque in for $1,000 they will have in excess of $500,000 to fight it should IPART believe they have a case. The Government would have no chance of winning that one. What is confusing is that when you sell a waterfront now, Costa’s Waterways Department will provide no undertaking that they will renew the leases, as Waterways is on a mission of reducing pontoons and jetties. They believe that waterfront owners should share facilities and now they are pressing for demolition with a shared pontoon (one hopes that the neighbours get on). So Mr Costa is in the process of reducing the number of improvements which in turn will reduce the revenue received.

Interesting that the NSW Government is upset that they have not reviewed the rents since 1990. While they are at it, they should review Stamp Duty which has not been reviewed since December 1986. Back in those days we had “Bob a Job”, I guess some things never change. We still Dib Dib Dib and Dob Dob Dob!! Cheers and clink ^__^

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1.11.03Robert SimeonNo Comments »

What a difference a week makes, the real estate industry has to thank the Aussie $ for ensuring that properties will trade well in the final quarter of 2003. It would appear that we will not see any rate adjustments for some considerable time, although many believe that we were not going to see one at all. It has been well documented that the ‘Governor of Moolah’ prefers to organically grow the economy, hence his decision to leave the rates alone since 5 June 2002. With the Aussie $ climbing past the US70c mark for the first time since November 1997, one must not forget that the property market has been climbing since September 1996. 2003 will be the seventh year of this unprecedented run, and it is the overall dynamics of the market that need to be closely monitored. Back in September 1996 the cash rate target was 7.00 per cent then in December 1998 it hit today’s rate of 4.75 per cent. Then on August 2000 it had climbed back to 6.25 per cent and in December 2001 it hit the all time low of 4.25 per cent, and 5 June 2002 the ‘Governor of Moolah’ locked in the present rate of 4.75 per cent. Really, when you look back at the cash rate targets, talk of rate rises is not much more than “a storm in a tea cup”.

The burning question for most will be how the property market performs in this final quarter given that in 2001 and 2002 at this same quarter we were coming to terms with effects of terrorism. The December quarter for 2002 was a disaster with clearance rates being the lowest in living memory. This in turn led to a hang-over of failed properties over the Christmas break. Then the market for the March quarter jumped twenty per cent, which once again contradicted many who were of the belief that the property market was ailing. From our perspective we are seeing a market that still continues to look strong and confident. Our Home Unit Department has listed thirteen apartments so far this quarter, and eighty per cent of sellers are young couples making the natural progression to trade-up. The other twenty per cent are either retiring or selling an investment property to fund a renovation. The Rental Department is averaging one new lease a working day, and this market is very buoyant and healthy. Then the Sales Department, is in the middle of the first run of marketing campaigns and all the properties are in the process of identifying new owners. At this stage we are unsure if we can emulate last month’s record sales of $42,500,000 however we believe that we can go close to matching this. One of the greatest market dynamics is without a doubt the role of the Internet, and that dynamic salesperson data-base. I had a laugh when I spoke with a subscriber this week who was questioning other agents on what they use to monitor the market ? Their response was “number of pages in The Mosman Daily”, which is the complete opposite of our business model. We look at the long term and where the market will be in 2005/2006 and what technology will be at the forefront of our industry. Just ask the founder of “Penthouse”, Bob Guccione who has just placed the magazine on the market for sale, as a result of falling sales. Playboy Inc has not posted a profit since 1999. This is a classic example of those at the top failing to recognise what effect the Internet will have on their business.

Whilst many are concerned about household debt, which set a new record at the conclusion of the June quarter posting an incredible $693 billion, what needs to be defined is how much of this is managed debt, and are there sufficient resources to absorb any overflow should there be a sell-off? I personally believe that there is (in our market anyway) and the market for 2004 is certainly looking promising, given that we will be entering the eighth consecutive trading year. It is really interesting to look at the enormous changes that have occurred in our industry since 1996, the most interesting phenomenon is how fast our industry is changing. We have fast tracked a long-term relationship with technology, and agencies are now moving into the banking/finance arena. When we start 2004, we will also be launching some new exciting brands under the RWM business plan, and every new brand will be completely Internet driven. We are in the process of registering the Domain and Company names, so watch this space.

It is fair to say that we don’t know what the future holds for any of us, but from our perspective we know that the future will start with www!! Sadly, some just don’t get the ‘point’. Cheers and clink…^__^

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25.10.03Robert SimeonNo Comments »

Great to see The Australian Prudential Regulation Authority has a grip on what is possibly happening out there in the housing market. So re-assuring to hear that if there was a thirty per cent fall in home prices, the banks would be more than able to weather the storm. There would have to be an extreme economic trigger to see such an occurrence eventuate, which more than likely would lead us down the path to a ‘recession, that we don’t have to have’. Such “stress testing”, merely tests the intelligence quotient of those who compiled the report. I guess they are still ‘smarting’ after their involvement with HIH.

The ‘Assylum of Anecdotes’ creates many of today’s unique expressions that inaccurately describe the property industry. This week, the ‘Brick Award’ goes to ‘debt binge’!! Yes, a survey conducted, revealed that one in four would have trouble meeting mortgage payments if rates went up one percentage point. A two percentage hike would leave 44 per cent of those surveyed in dire straits, and three-quarters said that should rates jump three percentage points, they would be well and truly up the proverbial creek without a paddle. An enormous amount of work went into the compilation of this report. Between September 23 – 28 they polled (wait for it) a massive one thousand people. This quite remarkable poll failed to reveal the residential addresses of those who participated, nor did it reveal if it was referring to investment property, which quite often is falsely construed as the principal place of residence. It did reveal that out of the one thousand who participated sixty percent believed that homes would keep rising. Might I suggest that the next survey be conducted in the Heiniken Beer tent at the Rugby World Cup, when Romania play Namibia.

One must give credit where credit is due, and NSW the “State of Taxes”, has all but run out of credit !! Yes, our outstanding leader Mr Robert John Carr has managed to do it again with his implementation of economic policy that really has exceeded all expectations. In just six months he has managed to squander a very respectable $1.5 billion. The Daily Telegraph, revealed that this quite remarkable institution which is better known as an elected Government is fast making One.Tel look like a smart business plan. They blew $470 million on the Millennium train, and Ronald Biggs could have told them that it would not work, and that great Treasurer Michael Egan lost $305 million due to negative investment returns. Throw in another $519 million in managed funds blowouts. I guess neither can expect an invitation to speak at the next breakfast meeting of the Chamber of Commerce.

Given that his new Water Wealth Tax, is just there to whet their appetites, they are coming back with an up-dated version of the Land Tax Grab. Yes, although the Courts have labelled the Government’s application to applying Land Tax as being fraudulent and inaccurate, that is not enough to stop Bob and his merry men. Our modern day Robin Hood, who can’t see the forest for the trees, can see with Land Tax, that the threshold is lifted by a staggering eighteen per cent. Of course the rich peasants in the villages would not know that property prices have jumped by thirty per cent. Mathematically it makes great sense why he would collect this money, what does not make sense why it is consistently blown away.

The clearance rates this week for some agents and agencies were nothing short of atrocious, sitting around ten per cent. Before the dogs start barking, most were away in kennels because their owners were away on School Holidays. One would think that those agents who ran campaigns would have worked this out. For the record, our auction clearance rate for 2003 is 98%!! There is a clue there, holidays and property marketing don’t exactly mix, and some are blaming it on the new regulations!! Cheers and clink, oops that could be perceived as a new binge…^__^

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18.10.03Robert SimeonNo Comments »

Great to see our ‘Governor of Moolah’ continuing to sing his modern day rendition of “My Way”!! It should be very obvious to most that he sees the economy in a totally different way to the minority, who keep making monumental mistakes on how the economy should be run. There is no denying that Australia’s domestic economy has well and truly out-performed our overseas counterparts, with the increase in housing wealth being one of the major contributors to our economic growth. It will be very interesting to see the September quarter 2003 figures to see if they are up from the June 2003 quarter, which was the seventh consecutive quarter where median house prices have risen in Sydney. As at 30 June 2003 the median house price is rising at a rate of 19.8 per cent. As I have stated in past editions, our September quarter was an all time record for sales, and it should also be stated the rental market is very strong also as we have leased twenty properties over the last ten days.

It is very interesting to note that with the school holidays now all but over the new run of properties to appear in The Mosman Daily this week is definitely light, as compared to this time last year. One must not forget that at this time last year the clearance rates were falling faster than the time it takes the Carr Government to introduce a new tax!! At the end of last year, clearance rates were sitting at around the 30 per cent mark, as compared to now which sees them still holding up around the 70 per cent mark. We are also entering six weeks of rugby mania with the World Cup 2003 blowing the final whistle on November 22, this will in all probability see the market slow a bit given that we are an area of ‘tweed jackets and leather patches’. We have never held a World Cup in rugby before so nobody can really say what effect this will have on our market as we have no definitive guide.

It is nice to see the Aussie $ climbing towards the US70 cents and once again who can forget those experts who were saying back in April 2001 that it would go lower when it slid to 0.4833. I think that many expats are kicking themselves today as many locals breathe a sigh of relief, that the tables are turning more to their direction. It should be noted that the expat market we believe represents less than five per cent of our overall market.

Back to Bob ‘glassjaw’ Carr who is at it again with the announcement that he is proposing (meaning that he will introduce) a Water Wealth Tax, and surprise surprise, Mosman is at the top of his list. The Carr Government, can be thankful that they are not a listed Public Company as ASIC would charge them for insolvent trading!! Whilst Mosman is in the top five water users, the point is that this government continues to discriminate against areas where they won’t lose votes. I guess they are still smarting over the Spit Bridge fiasco, where it was conclusively proved that “whilst the lights may be on, nobody is at home”… I guess California and NSW have much in common after all!!

Have a look at this week’s ‘House of the Week’. This could be the hottest property to hit the market in 2003. It is also featured in this week’s edition of Domain. Margie Blok of The Sydney Morning Herald did a fantastic feature article on “Reigate”. This really is a very special home.

Cheers and clink…^__^ Go the Wallabies!!

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11.10.03Robert SimeonNo Comments »

There is just one truism when it comes to property reporting in the media ‘the weaker the argument the stronger the words’. Just take this week for example. On Monday in The Sydney Morning Herald we were told “Homes bust ‘within three years’”, with BIS Shrapnel warning of sharp rises in home loan rates which would then bring about the bursting of the bubble. All I can agree with is the “shrapnel” part. The guys from ‘BIS Projectiles’ went on to say that the variable rate of interest would be 10.1 per cent in 2006, and even went on to predict a recession similar to the one that Paul Keating delivered back in 1990-1991. Given that currently the economic fundamentals for the Australian economy remain, in a word, “robust”, one would seriously need to look at their high-risk investment exposure, namely those get-rich quick property seminars. What happened in the past was the dreaded domino theory as investors quickly liquidate their exposure to that particular market. This should not be construed as being the same for our housing market. The two bear no similarities what soever. Even back in those ‘cask wine’ days, Mosman had fewer than 20 mortgagee sales over the entire three years. Now there is a clue!!

The very next day in The Sydney Morning Herald, Mr Alan Kohler (a man I really rate with respect) wrote an article with the headline “Property buyers have just been sensible”. Mr Kohler said, “Apart from the fact that there is not yet a real estate bubble in Australia, as opposed to a sustainable once-off shift up in property values due to lower interest rates, there is another factor that will keep prices where they are for a few years yet.” Mr Kohler then went on to say, “Actually there are two property markets: owner-occupied and investment. Each is dancing to a different drum but neither has gone crazy,” which is exactly what we have been saying all along. They are completely different and bear not the slightest similarity. It is just a few who appear to have confused the two, which in turn led to the creation of their fixation on the imaginary property bubble. It should be clear to all that such a bubble is merely a mirage.

No doubt the ‘Governor of Moolah’ will be happy when he observes that houses and apartments are still selling for higher prices across Australia however, they are now taking longer to sell, according to the “Home Price Guide”. In Sydney, the median price increased by eighteen per cent over the last twelve months, up from $550,000 to $650,000. It was interesting to note that average yields fell to 2.9 per cent, which overall was a drop of 3.3 per cent. The apartment market over the same period jumped from $385,000 to $419,000 , and it was claimed that the apartments are averaging 47 days on the market, as compared to our apartments at RWM, which average ten days. The average price for a Mosman home for the twelve months to 31 August 2003 sits at $1,785,979, and for a unit it currently is $603,179.

It is very interesting to look at the overall dynamics of the property market and what is evolving. We had quite a few e-mails last week regarding our Internet sales which currently stand at $204,438,000. The number one salesperson in our office is not actually a person, it is our database! The July – September quarter for us was an all time record. The month of September was a new monthly record with $42,685,000 in property sales. The simple answer to what, how and why, is that we are mastering the art of the Internet. We have invested hundreds of thousands of dollars in research and development. We, as an agency, would be in the top one per cent in Australia, when it comes to understanding and successfully implementing the Internet with our client base and properties. We will definitely be here in 2006 to see if BIS Projectiles long -term predictions are correct. Sadly for some, many agents won’t be joining us. Love it or hate it, the Internet is fast taking over our industry!! Clink and cheers…^__^

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4.10.03Robert SimeonNo Comments »