It came as no surprise that the first place Prince Harry wanted to visit on touch-down was Mosman, as he began his Aussie culture lesson in mastering the art of the G’day!! He obviously wanted to view the hottest property market on the planet, and no doubt he left feeling suitably impressed having witnessed the internationally accredited Mosman $ first hand.

Not a week goes by that we don’t marvel at the Internet side of our business and this week we hit 122 subscriber sales at a property value of $203,396,000. Marize listed a property at 15/99 Kurraba Road Neutral Bay, e-mail alerts were sent out on Monday and the property was exchanged on Wednesday for $1,800,000. Given that both the vendor and purchaser are VRN subscribers, they both recognised that they were onto the best service available in real estate. This would explain why, over the past twelve months, figures just released by The Australian Bureau of Statistics identified that Australians doubled their spending on the Internet to about $4 billion. It would be fair to assume that not many agents participated in the buying, as the real estate industry is one of the most backward in understanding the virtues of moving into the world of e-business. As I have said on many occasions, the culture of real estate is so rapidly changing, that a vast majority of agents will be facing mental bankruptcy in the very near future. Given that we will exchange $40 million worth of property this month, we are certainly enjoying our voyage as $13,485,000 were directly from subscribers of ‘VRN’. Now that is a successful business plan, and we have just the four selling agents here!

The chins were wagging after our auctions this week which saw us achieve four from four, and there was much talk about 21A Holt Avenue Mosman which sold for $2,225,000. This is the first time Holt Avenue has broken the magical two million mark. Only two months ago we posted the first ever two million dollar sale in the adjoining Spencer Road, and we now hold the street records for Spofforth Street, Cowles Road, Wolger Road and Noble Street. Combined with the ‘Top Three’ sales ever posted in Mosman, and last month’s highest ever sale for a Cremorne home, we believe that we hold more record sales than any other agency. 18A Musgrave Street was also sold this week prior to the scheduled closing date for $4.3 million which is also a new street record.

As each week evolves so do the continual AOMD (Articles of Mass Destruction) about the dangers of the property market imploding. I have nothing against freedom of speech in fact I am an advocate. Totally opposite to the real estate market, where demand exceeds supply, when it comes to property stories in the media, supply certainly exceeds demand. One can see quite obviously that the vast majority simply have no idea what they are talking about as they never bother to differentiate between, what we see as high-risk property as against the markets that are clearly established. Sydney’s newest suburb Edmondson Park which will attract around 20,000 new residents when the subdivision is released soon, is what we would call high-risk. Balmoral, on the other hand is what we would refer to as well founded and strong, just ask Aristrocrat Technologies Aust Pty Limited. Given that the one-arm bandits are having a devilish year, their Balmoral abode was sold this week for $4.4 million, which is pretty good considering they purchased it in March 2002 for $3.85 million. One thing about property here, you never hear the shareholders complaining!!

Except when it comes to Bob ‘glass jaw’ Carr and his Treasure, Ebenezer Scrooge, who run the ‘State of Tax’. It now costs more to amuse a child than it once did to educate his father. Which explains why so many play the property game, as the cost of living is climbing as fast as the property market. Given that the State Government collects $14 billion a year in taxes, the tax-eaters are destroying the tax-earners. No wonder the last bastion being the tax free home is such a commodity. It is traded so well because it is the alternative lifestyle for so many and the biggest clue is that the politicians don’t even play it. Now why am I not surprised!! Cheers and clink…^__^

Follow Me on Twitter

27.09.03Robert SimeonNo Comments »

It has been a week of reaching milestones for RWM and for Bob Carr. He appears to have tripped on his fragile tombstone, courtesy of a dazzling uppercut from John Singleton. Never a dull moment in the ‘State of Taxes’, as compared to Queensland where a sale of white-shoes makes the front page news. This week we celebrate the third anniversary of ‘Virtual Realty News’. Some 128 editions later, we have notched up a very respectable 120 Internet sales totalling $199,371,000 from ‘click on a mouse to buy a house’. A special thanks to those agents who said “the Internet is just a faze, the industry is going through”. I can think of nearly two hundred million ideas why it not a “just a faze”!!

Once again all eyes return to the strongest market in Australia – the property market. The economists are telling all that we can expect a rate increase. What they don’t say is how many times they have been proved wrong since June 5, 2002 when the ‘Governor of Moolah’ bumped the cash rate +0.25. If one actually takes the time to look at the Sydney property market growth from December 2001 to December 2002 it is the western suburbs that are really performing beyond expectations. Areas such as Campbelltown, have been leading the way, posting 28% appreciation for houses and 35% appreciation home for units. In comparison, Mosman managed 9% for houses and home units over the very same period. There are very clear market indications that areas such as Bankstown, Liverpool and Blacktown are right up there on the popularity stakes, with the Eastern Suburbs and North Shore suburbs all sitting comfortably at just under ten per cent capital growth.

The Productivity Commission finally issued a media release and the head Pooh Bah, Gary Banks, revealed that “The Commission will be taking a close look at how housing markets operate and the reasons for the recent surge in prices. We will also assess the scope of government action to lead to better outcomes”. Great to see that since they were handed this riveting assignment a few months ago, so much thought has gone into this Commission. Should you wish to read more about this Committee that ‘keeps minutes and wastes hours’, click on www.pc.gov.au No doubt many will be adding this site to their list of favourite websites. This ‘up to the minute’ Committee will be publishing their ‘exposure draft’ in mid-December with the final report being handed to the Govenment on 31 March 2004. No doubt the latest figures released by the Australian Bureau of Statistics will assist them greatly. It shows that the property boom has moved from Sydney and Melbourne, and now Brisbane, Adelaide and Canberra are the favoured areas. Brisbane jumped 26.3 per cent for the year, although Sydney over the same period, still posted a 20 per cent market growth, and a clearance rate of 73 per cent. I wonder if the Committee might stumble on a small fact, that the principal place of residence is tax free!!

In the three months to 31 August in Sydney alone, 581 homes valued in excess of $1,000,000 were auctioned, according to Australian Property Monitors. I am sure that every home posted a very tidy profit, totalling $906,361,200 in overall sales. Yet another windfall in Stamp Duty! What is happening is that the property market is dying, due to natural causes as we are simply running out of properties to sell, and we are seeing sales volume down considerably on previous years. This is now seeing real estate agencies looking closely at their businesses, and how they will grow in years to come.

ACCC Chairman, Graeme Samuel, signed off this week on our latest aquisition, Richardson & Wrench Neutral Bay. We are now Simpatico Realty Pty Limited, trading as Richardson & Wrench Mosman & Neutral Bay which means that we are now trading from the Spit Bridge to the Harbour Bridge. We see the aquisition as a natural progression for the growth of our core business, and we have quite a few innovative ideas in our letter-box ready for implementation. We have five new staff members so welcome to Bernadette, Jayne, Deeann, Pip and Jasmine, Bob ‘glass jaw’ Carr will also be happy as we qualify now for Payroll Tax!!

Should be some great advertising campaigns on the box this weekend, with ‘glass jaw’ still down on an eight count, maybe he will find solace with his beloved gropers on Clovelly Beach. Great to see ‘Singo’ the modern day advocate of the biffo!! I just hope that ‘Singo’ ups the anti and lands a few more on Land Tax also. Have a great week, for some it was a week that they would prefer to forget, cheers ^__^

Follow Me on Twitter

20.09.03Robert SimeonNo Comments »

As our usual resident writer is on a management course in Sunny Queensland, the reigns have been handed over to me to fill you in on the last week’s activities. So please understand that the usual zip and cut and thrust of the great Roberto will return next week.

So, I’ll talk of local issues only – not the big picture.

For those interested, the local market has remained strong. Our fabulous home at 71 Wyong Road sold the first week on the market for a fantastic price. This proves that homes that have it all i.e. views, quality, level land, and practical floor plans, really do pull top dollar. Elsewhere (No. 7 St Elmo) sold prior to auction. It has approved plans for a big renovation, views, large level land and in a quiet street, also keenly sought after features. Well done to both owners for great results.

There seem to be more big homes on the market over the $4M plus, than I have seen for a long time. Some see this as the first sign of softening in the market i.e. the big end of town cashing up before the “fall”.

However the owners I know from this group are all selling for various reasons, none I know of are doing it as a precaution any more. Many are trading up!

The most frequently asked question we get is, “when is the market going to fall?”. Well, how do we know? People sold before the Olympics because all believed the market would crash. Those buyers have now missed out altogether and have basically left the area to buy back in.

We as agents are paid to get top prices, paid to be positive and have a great belief in the products we sell, so we are usually the last to see it coming anyway!

Most agents in the late 80′s who also became developers, went “broke” because they didn’t see it coming – they had two hats on as developers and agents. The only way to be successful at either, is to concentrate on one only.

Investment units are still going strong and “Marize, the unit guru”, exchanged three more this week. All at great prices. The smart money still invests in real estate but no doubt our stock-broking friends will be ringing us soon with tempting offers. Soon we’ll see who has the long memories.

So while Robert, our resident writer suns himself at Versace Palazo under the guise of a management seminar (4 days at ten hours a day – ha ha!), the team at R & W have been flat out keeping their heads down and tails up. On the home front a big well done to our own Lynn Forrester (Marketing Division) who I believe produced the best double page advertisement and brochure on 71 Wyong Road, that I have seen this year. The amount of positive feedback from the viewing public has been enormous.

The Governor of Moolah, Bob Carr and many other Government officials are all no doubt relaxed that Rob is away and not beating their drums, or ruffling their feathers. There is no truth to the rumour that Wayne Bennett has called Rob up into camp to get the Broncos back on the winning trail. However, watch our for Queensland rugby league players buying investments in Mosman, if he is!! Hmm those new white shoes he’s no doubt buying while up there, should look good with his new mustard suit!! Stay tuned and wear your sunglasses to the next open, if he’s there!

As Spring and soon summer approach, we’ll see you down at Balmoral, Clifton Gardens and Chinamans Beach, (3 of our many local jewels) walking the dogs, playing with the kids and admiring the local real estate that is constantly changing.

Rob will be back next week. Good hunting and thanks for reading a little lighter column this week.

13.09.03Stephen PatrickNo Comments »

Welcome to the first week of agent house-trap. With the new legislation coming to the fore, the most obvious thing is the number of agencies that have been caught with their clothes lines down? When you don’t dummy-bid, the first thing you note is that auctions take much longer, hence the reason why we only auction a maximum of eight properties on the night. Makes you seriously wonder what so many have been doing, given that some found their auction nights this week closing in on the stroke of midnight. Guess who turned into the pumpkin? Another casualty of the new legislation will be the demise of the on-site auctions with the end of an era for many. They can’t dummy bid!! What will happen now is that the auctions will head back to auction rooms, which means larger numbers and longer nights. It will certainly cost the agencies much more as now they will have to split the auction room numbers which (boo hoo) means a bare minimum fortnightly, as against monthly. There will be plenty of vendors asking this week how many on the list, and what number will I be!! On the other hand watch the number of “sold prior to auction” signs treble as the culling begins. Very few auctions started on time this week due to delays in registrations which only exacerbated the situation.

The weight was right in this week’s edition of The Mosman Daily, with the number of available properties increasing significantly from previous editions. The strength of our market will now be tested, thanks to the new ‘you beaut’ legislation. One agent was reminded that he should be quoting within ten per cent of the reserve, he then reached for the calculator and started pressing buttons. Never to be the ‘sharpest tool in the shed’, he forgot that south facing homes and solar-powered calculators don’t exactly mix!! I have been saying all year that property numbers are on the decrease, and Australian Property Monitors released this week that between June and August around 4,610 homes were listed as compared to 5,500 at the same time last year. I must be “north facing” as the number of homes in Mosman fell from 125 to 95, which no matter which way you look at it is a significant drop.

With the ‘Governor of Moolah’ posting his 15th consecutive ‘dead rubber’ on interest rate movements, it is great to see that the domestic economy is performing so well. It was a pleasant change to see that the focus this time was on motor vehicle sales and the strong retail sector grabbing the limelight. A nice attempt by some who tried to ignite the debate about ‘special’ reduced interest rate schemes offered to employees of the Reserve Bank. If it upsets them that much and it has to be documented under the ‘Freedom of Information’ then get a job there!!

Outrage on Mosman Bay this week with the NSW Government introducing a 1000% rent increase on the premises leased by Mosman Rowing Club. The new rental value has been determined at $72,000 per annum, and the Club posts a net operating profit of $45,000 per year. With Bob (leave my beloved Gropers alone) Carr, into his fourth term as Premier one must ask the question why are they so behind when it comes to administering their own backyard. Great to see that the Spit Bridge fiasco was not just an isolated apparition, watch for a Channel 7 promo on “Funniest Home Premiers”. John Brogden is yet to comment. I guess he could be excused as he is in a traffic hold-up on Spit Hill.

The one thing you can say about the Carr Government, is that you can hand it to them, literally!! This will be a very interesting month in terms of property. New legislation and once again the State Government should have issued a demonstrational video to the agents about the new changes, because it still looks that for a few, the words have escaped them. Cheers and clink…^__^

Follow Me on Twitter

6.09.03Robert SimeonNo Comments »

Each week another opinion about our strong housing market evolves, and any comparisons with the US property market simply don’t stack up. The United States has a population of around 290,000,000 compared to our 19,500,000, their housing prices have risen in real terms by 38 per cent in the past seven years, and in the same time ours have more than doubled. Our local market is just getting tighter. If you look at this week’s edition of The Mosman Daily, the peak selling month for September, fewer than thirty homes will be available for acquisition.

This is without a doubt the lowest in memory, and don’t expect a rush in October as the first two weeks are school holidays. The clearance rates are sitting at around seventy-five per cent, and at this time last year they were on their way to a record low of thirty percent in Mosman. Now if you are thinking that October will be a big month, you can think again. The school holidays occupy the first two weeks and the Rugby World Cup starts straight after and concludes in late November. Our property market is so very different to what it was in 1988. Then the weekly auction rooms at or about the same time were offering around 250 properties on the one-day. The first auctions would kick of at 10.00am in the morning and we would still be auctioning at 10.30pm that night, I have to laugh when I remember that I once listed a home and it was number 205 on the order of sale. Back then, we did our open for inspections on a Wed/Sat and Thur/Sun, and we would on average, be handling around eight auctions each a month. Today it is usually three properties.

Next Monday, 1 September 2003 will see the introduction of the new legislation Property, Stock and Business Agents Act, and these are the most sweeping changes that our industry has seen since before World War II. Already in force in Victoria, one very well known agent is facing eleven charges and a fine of $240,000 for using dummy bidding. Watch the inspectors nail a few profile agents early in the piece to show that they now mean business. I think that on-site auctions will now become less popular and we will see a move back to rooms again. I am reliably informed that already quite a few agents are still under-quoting, and with September auctions listed, the Department of Fair Trading will have some immediate investigations. Agents now have to quote you a price within ten per cent of the reserve, although this week I had an auction go $130,000 over reserve. This doesn’t count, as the property had been called on the market. This new legislation is absolutely awesome and we certainly welcome it with open arms (registered of course).

I can’t see why so many were shocked to see that the value of building work fell in the June quarter, due mainly to a lack in confidence for new investment housing under construction by developers. This figure really means very little as there continues to be ongoing strength in the home alterations/additions market which is what drives our housing market. Many investors are looking outside the CBD and focusing more on areas up and down the coastline, where house prices rose 20.8 per cent in the year to June 2003. Home units did even better, recording a 22.6 per cent increase over the same period.

The Internet has certainly been of great assistance as purchasers can see what is happening in all these country areas without even leaving the comfort of their homes. Then if the agent is really smart and he provides a service that keeps prospective purchasers advised on what is happening in that particular area, he/she makes a prospective purchasers job that much easier and keeps them better informed. I was just looking at a unit for sale with Richardson & Wrench Forster. It is sixty metres to the beach without views and two bedrooms and it is for sale asking $297,000. Four years ago in the same block there were sales of $97,000 and twelve months ago they were selling at $138,000. Annual rental returns for these units are around $8,000 per annum. I found all this information without leaving my office. No wonder the property industry is so easy these days!!

Unless we see a lot more houses hitting the market in the next week, home prices in Mosman will yet again exceed all expectations, although with fewer houses the trend will be a huge culling of agents as there are just too many. The new legislation will inevitably lead to fewer agents with quality finally taking over quantity, and don’t be surprised to see quite a few agents appearing on that 6.30 pm time slot on television. It will be very interesting to see who has the final laugh. Quite a few agents in Mosman have only days to finally get their act together. The new legislation no longer suffers fools!!…cheers and clink ^__^

Follow Me on Twitter

30.08.03Robert SimeonNo Comments »

With this week’s gathering of the ‘brains trust’ it was over to the ‘Governor of Moolah’, and his merry collection of leading economists from all over the world to try and understand the property boom. The rise and rise of the property dollar can simply be attributed to a well managed economy, and the fact that Ausralians love the property industry. Macca has thus far had a very impressive six years as head teller of the Reserve Bank. Inflation has averaged 2.4 per cent a year, and the cash rate has averaged out at a highly respectable 5.18 per cent. Economic growth sits around 3.7 per cent a year and the market destroyer, unemployment, has fallen by 2.5 percentage points. The Governor’s, greatest concern is the ratio of household debt to household income as in his opinion, we have exceeded our borrowing capacity, with household debt to household income having increased from 56 to 125 per cent over the past decade. One must not forget that home prices over the same period have more than doubled, so the increased borrowings by householders have been hedged against the owner-occupied homes. Since the financial deregulation which in turn led to lower interest rates, money has never been cheaper to borrow and as long as banks’ prudential regulations remain the same, the property market will continue on the same path. What is alarming is that we are now starting to experience an entirely new property phenomena, i.e. the owner-occupier property market is drying up. Over the last seven years we have experienced unprecedented property trades, and now home renovation borrowings are at an all time high. It is highly unlikely that once the renovations have been completed, these properties will be sold. Yet again, supply still fails to get anywhere near demand!

As I see it, the main problem is that the Reserve Bank has lost touch with the people and the property market, because the entire structure of the economy has changed. The collection of data for most, is outdated and incorrect. The Home Price Guide for Mosman being the twelve months to July 31, 2003 shows the average price for a home in Mosman hit a record $1,802,375. This figure is actually much higher, as it does not include private treaty and expressions of interest sales. Just in the last week we have exchanged $18,253,000 worth of property and $15,000,000 will be excluded from the average price statistic because the prices are confidential. Congratulations to my brother Richard, as he sold 16 Milson Road, Cremorne Point. Just subtract a bit from $7,000,000. This is the highest sale price ever recorded for a home in Cremorne and Richard has also posted the highest price this year in Mosman, which happens to be the second highest ever recorded in Mosman. It is no wonder that Richard became a Director here from 1 July 2003.

So that the ‘Governor of Moolah’ can get a better idea on what is actually happening to the property market in Australia might I suggest a national property questionnaire, to prevent hostilities at any rate rises. There are so many differentials in the property market today, that only those who play it daily, fully understand it(or think they do). Only a questionnaire will explain exactly what is happening, as every owner-occupier has a different portfolio and you may find that they are better managed than first thought. It is interesting to note that post-recession in 1993, I handled the most “mortagee-in-possesions” in Mosman. It is now ten years since, and for the record we have not had one since!!

It would be very easy to instigate a sharp increase in the short term rates which no doubt would stop the asset price bubble, and introduce a recession. That happened ten years ago and many still bare the scars! One would genuinely hope that more intelligent measures are appropriate in this day and age. Whilst they are still searching for answers, rates should remain where they are. ‘Interest rate terrorism’ is just not the answer. Get out there and talk to the people, you might be amazed at what you learn!! Cheers and clink ^__^

Follow Me on Twitter

23.08.03Robert SimeonNo Comments »

All eyes will be focussed on ‘The Block’ this weekend to see just how strong the Sydney real estate market is, when the four apartments hit the market, after the very public renovations. General opinion is that they will sell between $675,000 and $725,000 and no doubt the Productivity Committee will be showing more than an interested eye. The intrigue of renovation was rubbing off at our auctions this week as an un-renovated apartment at 3/10 Raglan Street sold for $690,000 which was $100,000 above the reserve. The strength of the renovation market is such that we issued twenty-eight contracts to interested parties and Marize the “Queen of Apartments” sold four from four on the night and all up we did five from five. What we are seeing with the renovation market, is that you don’t have to be “the sharpest tool in the shed” to make a tidy profit, and it has become very contagious.

For the month of June alone, loans to buy investment properties were up 8.3 per cent to post a new record of $6.88 billion, which coincides with household debt climbing 20 per cent per year. With the Reserve Bank courageously suggesting that “this is simply unsustainable”, one must never forget that the borrowings are asset-backed. What they really should be saying is that the real reason Australia is engaged in an unprecedented housing boom, is directly attributed to the deregulation of the banking industry, and this is why money is cheap. It should also be remembered that Sydney was the very first Olympic city that did not go into recession after the completion of the games. In simple terms the Australian economy is performing well against the weaker overseas economies. What also needs to be taken into consideration is that in the majority of areas we are not really seeing any new developments, so the renovation market has taken the place of the new off the plan market. Who would have thought a television show with four couples living in a derelict block of apartments, would exceed all rating expectations and rate ‘number one’ for the year. As for a follow up series, I doubt it, as ‘Big Brother’ owns their house and after this weekend there will be no more of ‘The Block’. As for finding a suitable replacement, good luck. They don’t make them any more!! Which then explains why the property industry is where it is!! When it comes to renovating, Aussies have made an art form of ‘rip off and duplicate’, so we can expect to see many cloned properties, courtesy of ‘The Block’.

With the Bureau of Statistics coming out this week with figures that identify that lending to investors for housing is up by 36 per cent on the previous year, some will show concern. Many would be giving a nod of approval. In the majority of cases the borrowings are set against the family home. As the value of the family home continues to climb, due mainly to the fact that the number of homes coming on the market continues to diminish, because home owners are now in renovation mood. The vast majority of these borrowings are for the specific purpose of negative gearing. Many young home buyers are still living at home, so they are taking advantage of their position by using the Australian Tax Office to deduct their losses from their assessable income. No wonder the Productivity Committee has yet to furnish its ‘terms of reference’. I honestly believe that it has no idea where to start!! Memo to: Productivity Committee (if you do exist). “Housing affordability has nothing to do with GST, Stamp Duty, or first-home owners grant. The problem is that the leading suburbs of Sydney are too popular and nobody wants to leave”. Maybe we might see the introduction of the American system, where all the costs are tax deductible including the mortgage. At least that way when someone does some home improvements, that question, “what about cash”, will no longer exist!! You do however pay tax on the capital gain.

Well we have been very busy expanding the business of late and we can announce that we have just purchased Richardson & Wrench Cremorne and Richardson & Wrench Neutral Bay. We will officially take ownership on September 1 this year, and we are very excited about our new business plan. We have added another feature to Virtual Realty News, which now includes our rentals section. We have had plenty of requests to include this feature in our weekly e-zine. From September 1, our new Company will be Simpatico Realty Pty Ltd, trading as Richardson & Wrench Mosman / Cremorne / Neutral Bay.

Well it will interesting to see who comes home with the money from ‘The Block’. It just goes to show that ‘The Toaster’ is not the be all and end all of desirable residential locations, although ‘The Toaster’ does come with parking, and given the recent goings-on in that car park, some may prefer not to have parking!! Cheers and clink ^__^

Follow Me on Twitter

16.08.03Robert SimeonNo Comments »

Well it will be all eyes and ears on the newly formed Productivity Commission, as the Federal Government tries in vain to turn the beat down on the rhythm of property prices. Already the State and Federal Ministers have started the mud-slinging and so far neither has proved that they have one iota about the cause. That fellow Costello, took aim with his property stun gun and suggested that states should lower stamp duty on new housing thus removing the pressures on housing affordability. Well ‘Peter Perfect’ that will ignite it further!! Then in perfect unity, the states responded by blaming the $7000 first home owner’s grant.

The truth of the matter is that it is the top-end of the market which is driving the market, not the bottom-end. As each day passes, the property market is playing the perfect game and the participants have the perfect match plan. The ultimate cause as to why the property market has escalated to all time record highs is because the blue-chip areas have out-performed and will continue to do so for quite some time to come. I mentioned a few weeks back, that Mosman has just 5860 homes, and on average since 1996 some 3500 have changed hands. In simple terms (just so that the Productivity Committee can fathom this) property numbers being offered for sale are diminishing. Just in the last three months we have posted the all time second and third highest home sales in Mosman. Then if you look at some recent home sales, we have just posted five new street records with the sale of homes. This then drives up the prices of semis which are now jumping over the magic million mark, so no wonder the prices of home units are showing an all time average high of $595,857.

We have prima-facie evidence, and the motive is supplied by a definite amount of money. With the Governor of Moolah once again refusing to make a rate adjustment, for the 14th consecutive month, it could be argued that Souths will win a premiership before we see a rate adjustment. The standing record is 19 months which was set from December 1994 to July 1996. My tip is July 2004 before the next adjustment. So it will be quite some time before we see any changes on the earth’s surface with regard to bricks and mortar.

The Productivity Commission needs to consider the movement of property prices, by taking into account the volume of future production, combined with anticipated market conditions. Or can one be so bold as to suggest an equilibrium of supply and demand, which can’t possibly eventuate due to the current character of the property market. If there was a World Cup in property in a few month’s time, Australia would be the odds on favourites to win. The fact that interest rates appear to be set for a considerable time to come, identifies that the current market will show no sign of change and if anything, prices will grow further, due to limited properties becoming available for sale. We have no property market complexities that can illustrate any projected disturbances, so prices will continue to remain consistent with further capital growth. After all, Mosman is an island surrounded by waterways, so for that very reason, it is a unique municipality, which further explains why it remains Australia’s most expensive postcode.

It will be very interesting to see if the Productivity Commission releases any findings on the way, or will we have to wait until they furnish their findings on March 31 next year. I think possibly the latter, as after all, life is very simple. We ourselves create the circumstances that complicate it. What remains to be seen is who will say I am sorry!! We just need to be confident that those presiding on the Commission are not relying on the ‘hope factor’. Cheers ^__^

Follow Me on Twitter

9.08.03Robert SimeonNo Comments »

With the Governor of Moolah announcing that he has accepted a further three year term, the property market is all but guaranteed to reach ten years of continued growth. Never before has the property industry experienced such a long period of prosperity and Macca has identified himself as the all time super coach of the economy with his ten year reign. Whilst building approvals climbed 6.2% for June thanks to a 13.6% jump in approvals for private housing, apartment approvals fell 10%, so watch for a huge turnaround in new apartment approvals following the announcement.

From the super coach to the mini bus, (and I am not referring to Eddie Jones), enter the shadow treasurer Mark Latham who announced that he is examining prudential guidelines and the potential to smooth out property cycles. Well, history has shown that all that is needed to send the property industry into a tail-spin, is to elect the Federal Labor party, who apply a monetary policy of balance your budget – rotate your creditors!! Australia has 122 home loan providers, so it really is the responsibility of the Australian Prudential Regulation Authority to ensure that the respective lenders can survive a downturn. I am somewhat amazed how they continually refer to the 1991-92 recession, considering that in 1991-92 the cash rate started at 12% and finished up at 5.75%. All up, we saw eight reductions over the period. Today the rate is 4.75%, and the super coach has not touched it since 5 June 2002. With the word ‘bubble’ seemingly removed and the word ‘cycle’ inserted, the major concern for the property industry is the investment market, which is not to be construed as the family home. From our perspective, the local home unit market has never been stronger which is understandable as Mosman does not have an abundance of home units. With so many new apartments being built, all they need to do is tighten up the lending requirements, although a research paper released this week, identified that even though debt has more than doubled in relation to disposable income in the past twelve years, the households still remain comfortable with their financial commitments.

The fact that the average price for first homebuyers in June 2002 was $368,900, and has now jumped in June 2003 to $467,600, clearly identifies, that for the younger generation, owning property is a greater priority than ever before. What we are already starting to see is the first homebuyers heading west in the search for affordable home acquisitions, so overall the property market has a greater balance. This in turn will see the State Governments having to reduce Stamp Duty, which is great news for the property industry although ‘Cranky Franky’ Egan would not agree. Since the introduction of the $7000 first home owner’s scheme the Government has now assisted 480,000 home owners. The one fact that many failed to recognise is that so many people were such strong participants in the property market. This now suggests that property was under-valued ten years ago.

The Mosman market continues to contract with the number of houses available showing no sign of improving. This all but guarantees that the prices will continue to climb. Overall we are witnessing the most intriguing market that I have ever encountered, and it continues to defy all who question it. We could be facing the a Spring market that offers next to nothing in terms of volume, and this once again, will be an all time first. Understandably we had slim pickings in the recessions, yet it is quite extraordinary that we have very little property in a bull market. As we said last week, with nearly seventy per cent of the housing market having traded over the last seven years, there had to come a time when the Mosman market exhausted itself. Just goes to show that when it comes to property, it has a mind of its own!! Take a look at the “property of the week”. Now that is a hot property!! Cheers and clink ^__^

Follow Me on Twitter

2.08.03Robert SimeonNo Comments »

Just because the flowers are starting to blossom, there is no indication that they will be picked for the property funeral. Some would be better advised to stop and smell the roses, as I can tell you now that the market will be in full bloom again, although the property numbers will be down decidedly on previous years. Seven year property price spins went out with the Chicko Roll. Suburbs now stand alone as market entities in their own right, and the property casserole is simmering.

With the average price for a Mosman home climbing to a record high of $1,796,049 for the twelve months to June 30, 2003, one could hardly say that the market is ailing. The average unit price for the same period climbed to $595,857, which in all probability is also a gold medal. Once and for all I will dismiss the property pessimists and tell you why our market will continue to ‘shake rattle n roll’. You see the numbers stack up, and after all, property is a numbers game. Take a look at the Municipality of Mosman. My research identifies that give or take a few letter boxes, we have approximately 5860 houses in total. The general rule of thumb is that around 500 homes change hands every year, say eight per cent on average. Now given that we are in the seventh year of ‘property play’, this means that approximately 3500 houses have changed ownership since 1996. So it would be fair to say that now we will see the market continue with healthy appreciation, because supply simply can’t keep up with demand. We will possibly see the volume of houses sold, drop to around five per cent, as fewer and fewer houses will be available. Most will go into a ten year hold pattern. Hmm, bet I have you thinking now!!

The major decision that many households face at the moment is when to ‘lock and load’. With many surfing the variable interest rates (and it has been an awesome ride), lenders are now lifting the fixed rates for the first time since December 2001. Those who secured a 5.99 per cent fixed rate have done very well for the next five years anyway, as the banks start to move the fixed-rates back over the six per cent mark. So it is with anticipation that we yet again turn to the ‘Governor of Moolah’ who could massage the rates when they meet for croissants and cucumber sandwiches in two week’s time. Just a shame that I could not attend a dinner at Manly Golf Club last Wednesday night, where the Governor was guest speaker. His first comments were, “Greetings, I am not here to discuss Fiscal Policy”. Well anyone who saw him swing a golf club would have realised that they were not there to discuss how he reads the greens!! My moles in the bunkers were not prepared to ask the questions that I sent via SMS. Given that the Governor is probably eyeing a few gold watches as his term is up in two months time, there will be a status quo with interest rates.

As for the so called property bubble, there is no such thing!! What happens to investment units in Surry Hills (or Melbourne for that matter), has no bearing whatsoever on the Mosman market. They are riding different horses for different courses, although it could be argued that some are at the wrong track! There is something very special about Sydney, which would explain why once again it has been voted “world’s best city”. Sydney has won this award, presented by influential US magazine Travel and Leisure, six times in the last eight years. No wonder the property casserole is doing so well, it has all the right ingredients!! Cheers and clink… ^__^ P.S. Thanks Rich for the last two editions, great job!!

Follow Me on Twitter

26.07.03Robert SimeonNo Comments »

Do I sell now or rebuild or renovate – then sell? This is one of the most frequently asked questions by potential sellers. The answer is complex and it will vary with every property. The answer may be multiple choice. The first realisation these days, is that buying and selling property in the local Mosman area has become an industry. On the back of a bull property market, which appears to be bullet-proof, families have traded houses as quickly as possible to make the next leap-up in price bracket. For many, the process has been a rewarding one, but beware. Do your homework first and do not rely on history as your barometer for future success.

General advice – Playing the local property market means you’re effectively becoming a ‘mini developer.’ However, there are no guarantees looking ahead. For the inexperienced, the risks are considerable. For example, consider potential downsides first: zoning issues, increasing architect and building fees, lengthy council approvals, holding costs, potential drop in current market growth and then add marketing and agency selling fees. These are just a few issues which can turn a profit into a disaster. In any event, you should consider every option and a good agent should be able to guide you.

Note: developers generally do not touch a property unless they expect to achieve above a 25% or 30% margin, and they’re professionals. Maybe the inexperienced, should factor in 40%.

Here are a few tips to consider:

Conduct a ‘SWOT’ analysis to access your property’s value and financial upside.

Strengths – What are the WOW factors? – Large land size, water views, northerly aspect in living areas, privacy, ideal zoning, not a cent to spend, great location, under-capitalised or renovator’s dream etc.

Weaknesses – Small land size (under 500sqm), overlooked, noisy location, poor access, dark or cold aspect in living areas, undesirable zoning and already over-capitalised.

Opportunities – Rebuild or renovate and you will move up into a new market with major financial upside. Sell unrenovated and potential buyers will pay a premium to develop the property as it represents huge potential and of course, you get the money faster.

Threats – You are given an over-inflated dollar figure of your property’s value, which may lead to over capitalisation if re-developed. Given that the rebuilding process can typically take up to 18 months (architect plans, council approvals and building) you must be conservative with projected rates of market growth. Project building costs at a minimum of $2,500 per sqm and up to $4,000 per sqm for the top-end and ensure they do not get out of control. In addition, factor in minimal market growth to protect the downside. Finally, on completion of building allow at least three months to sell your property, for if you are forced to sell quickly you will limit your financial upside.

There are other more basic questions relating to whether you should buy or sell first and if so, when is the most ideal time to sell your property, based on current market projections? If you need advice, top agents should have the answers and of course, feel free to call any of our team.

Here ends two weeks of school holidays when the Mosman market has been particularly quiet. From all reports, the Spring market will be strong with an abundance of new properties hitting the market. Welcome back to brother Rob who returns as ‘Editor in Chief in time for next week’s Virtual Realty News!

Follow Me on Twitter

19.07.03Robert SimeonNo Comments »