They say a change is as good as a holiday. Well the market has changed and more than a few vendors are off on holidays. With the school holidays upon us it looks like marketing campaigns will be moved forward as the Mosman niche market enjoys the current run on sales. It may have averaged out (previously) at ninety days to sell a home, however in the current market in many instances, it is more like nine days. Although it should be noted that the apartment market is not as active as the house market at the moment, should the run continue, apartments will follow suit and we anticipate strong investor participation. The reason the housing market is so strong can be attributed to a slow Winter with purchasers now responding positively with a much greater sense of urgency. How long it will last is the burning question and the answer is simple. Whilst demand exceeds supply, the markets should remain positive through to Christmas. Already we are seeing street house records being eclipsed which explains why the property market is now receiving positive spins in the media.

Certainly the move by the banks to lower fixed loans last week, can only help the property market further and should the discounting continue (which in all probability it will), we will experience continued growth across the markets. It is interesting to see that suddenly the banks are taking on the non-banks, although what makes it more interesting is why the non-banks remain much more competitive on variable rates. Begs the question, that if you are a publicly listed institution and this market increases profitability, why the sudden change, considering that they have been somewhat dormant in the past? For the record, Wizard Home Loans offer the lowest variable rate at 5.77 per cent (source www.infochoice.com.au)

If you look at the present property spiels doing the rounds they still relate to the June quarter which bears very little resemblance to the current market results. With houses, the purchasers are hunting (at the moment) in a pack mentality which always leads to vendors’ price expectations been exceeded. Historically, when this happens with houses, it then happens with apartments, which in-turn, draw the investors in. Like the stock market, investors trade at best when the market is on! When the markets do run, the agents are just as surprised as anyone as nobody has ever before identified the exact trigger. Businesses posting healthy profits, results in that little thing called a bonus! Buyers simply need to remember that property is a long term investment and very few have in the past, posted a healthy profit when participating on a short term mind set.

Recently we launched our Semi – Detached Housing Division which is being headed up by Karen Caspersonn. Our research identifies that there are approximately 1500 ‘semis’ in Mosman, Cremorne, Neutral Bay and Cammeray which explains our interest in this market. Given the success that our Housing and Apartment Divisions share, it makes plenty of sense to concentrate on this niche market as well. Currently we have 405 buyers registered for ‘semis’ so now we will be paying this niche market special attention.

If you are out and about this weekend it will be pretty quiet after 2.00 pm given that the Swans are playing in the grand final. “Cheer cheer the red and the white … ” Cheers ^__^

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24.09.05Robert SimeonNo Comments »

Many years ago I was told that you can gauge the strength of the property market in Mosman by counting the for sale boards on Spit Road then see how many have a ‘sold by’ on them. Well I did exactly that yesterday and I counted nine and seven had a ‘sold by’ sign on them. In the Mosman market there is one very noticeable change – that being the large number of properties now selling in week one and two of their respective marketing campaigns. This week we exchanged seven properties with a value of $10,366,000 which clearly identifies that the market is now – game on !! The prices ranged from $260,000 to $4,000,000. Leaving the market after brief stints are 10 Rickard Avenue, 26 Bradleys Head Road, 4/8 Silex Road, 12/23 McLeod Street, 1/26 Somerset Street, 14/180 Spit Road (no signboard) and 2/11 Macpherson Street. It is not just the sales team that is igniting the market, our rentals team posted a record week with $13,050.00 in letting fees. These properties ranged from a home at $3,250.00 per week to an apartment at $430.00 per week, with five of the properties exceeding $1,000.00 per week. We monitor where the parties come from and six came from the Internet (three from domain.com.au and the other three could not remember which portal). Two from advertisements in The Sydney Morning Herald, one from a relocator and the other, a ‘walk in’.

The battle for the advertising dollar goes on and Fairfax continues to be the most aggressive as they roll out new Domain brands. Last week they rolled out their Domain Inner West which now joins the successful launches of Domain North and Domain East which have seriously impacted the property markets. This week they launch Domain Rentals which will be strategically positioned in Saturday Domain. This is great news as previously, for some unknown reason, it has been hidden behind the Sport and Business sections. I have said for a long time now that the rental advertising market has long been ignored. This does not make any sense as that too, is a lucrative market also. The battle will be won by packaging up the advertising simply by offering a one-stop shop for the consumers. It is becoming increasingly obvious that there needs to be a combination of online and offline to consumers and at the moment Fairfax is the only one that can offer this.

This explains why News Ltd is actively pursuing realestate.com.au. They already own 43.7 per cent, so strategically they need to acquire the remaining 56.3 per cent to bolster their offline operation Cumberland Newspaper Group. Their current offer of $2.00 per share is set to expire on October 14. Realestate.com.au closed yesterday at $2.38, so it looks that News Ltd won’t be off buying extension cords in the very near future. Whilst on the property portals (like any business) they need reviewing as they are fast becoming too big with longer and longer navigation time. For domain.com.au and realestate.com.au the online inquiries are RWM – 60 per cent rentals, 30 per cent apartments and approx 10 per cent houses. The reason the rentals and apartments have greater traffic is because of the much younger age demographic. We speak to nearly everyone who inspects a property and monitor our online activity each week. Here are last week’s statistics Houses and apartments.

We hear that google.com.au is eyeing the Australian property market too, which makes plenty of sense because of its huge revenue. What more than a few vendors and purchasers told us recently is that when they find a property they then look it up on www.google.com.au as for them it is much quicker. It also gives a street history in sales. There really is plenty to do when running an e-business and it not just posting properties on websites. Another obsession I have is making sure that we too, catch the enquiries such as google which explains why we spend a fair bit of money on RWM keywords to optimise our site. If you look at a property that we are marketing and search it in google you will see that in the majority of cases we are the dominant Agency (try Rickard Avenue Mosman). It is all about capturing then closing every possible search engine enquiry which at the end of the day is simply offering our clients the best possible service.

The market is the strongest we have seen in quite some time, based on current sales evidence. How long will it last ? I will tell you in next weeks edition !! What we can tell you, is that we have signed up some great properties for the October run into Christmas. We have no idea what caused the renewed confidence in the markets as it is strange that both rentals and sales are a dominant force at the moment. As for those who said the market was weak, congratulations on being consistent !! Cheers ^__^

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17.09.05Robert SimeonNo Comments »

The property markets can often be compared to a window in a motor vehicle as nobody can ever agree which window should be open, and by how much. I always have a chuckle when I read the weekly edition of Home Price Guide Week in Review, by Louis Christopher. I would suggest that the name be changed to Auction Price Guide because all it does is count the weekly auctions which we all know are not a true reflection of the niche markets. This week Mr Christopher said “As we enter into Spring, the one reading we are already picking up is that the number of auction listings is down, compared to previous years”. He then went on to say ” No doubt this is an ongoing symptom of a weak market and I suspect we will see this continue right through to Christmas”. Well the only thing that I see as being weak is the inaccuracy of this report. Agents across Sydney are crying out for more property to meet demand. Mosman has just 4,900 homes and over the last ten years 4,000 have sold which explains why we have a reduced number of properties for sale. Transaction costs are high and home owners are simply staying put !!

A home just sold in Wolseley Road for $5,700,000 which well and truly exceeded the vendor’s expectations. Last Saturday, Chris Dale (long time subscriber) of Focus Real Estate auctioned a home at 98 Avenue Road, which exceeded the reserve by a staggering $400,000. We launched a home at 14 Rickard Avenue and sold it sixty minutes later for around $2,000,000. The house next door at 10 Rickard Avenue has had two open for inspections with a total of fifty six inspections and four contracts have been issued to interested parties. Geoff Grist this week sold the home we were marketing in Upper Spit Road for $1.7m. Marize Bellomo has had offer and acceptance this week on apartments to a value of $2.8m, so I would not call our market as weak. Rather a great week !! Oh, for the record, the number of properties that were submitted to Public Auction last weekend was 178 which is down from the 230 that were submitted at the same time last year.

The only difference between accurate property reports is how much effort is necessary when researching the subject. Saturday Domain last week in The Sydney Morning Herald was the best read of the year when they published The Spring Property Guide. Congratulations to Jonathan Chancellor who wrote a great article ” When only the best will do.” which painted an accurate positioning of the overall property market. We will continue to see properties sell for less than the purchase price especially if the contract has a 2003 acquisition date. It would be fair to assume that those properties well and truly exceeded the vendors’ expectations and the reserve price for that matter. Hormones have a habit of producing sales results where a home can sell for much more than true market value. Residential property acquisitions are an emotional decision and it is well documented that all property acquisitions should be viewed as a long term investment. The home that we are currently marketing was purchased in 1998 for $1,700,000 and we have interest at $3,500,000. The only real improvements to the property since it was acquired was a Development Application that has been lodged (and approved) to carry out a major renovation. The burning question that still remains in the real estate industry is, when will the authorities get serious and start compiling accurate data that is based on the exchange of property, not the settlement? It remains ironic that so many have an opinion about the state of play, yet are far from aware of the actual sales evidence. With just twenty one days remaining before the current quarter becomes a statistic, we have sold twenty six properties all by private treaty. More than fifty per cent of those sales will not be included in the quarterly report. As they say “never let the facts get in the way of a good story.” No matter what the repercussions !!

From our perspective we have moved into a much more positive real estate market and the results that we are posting confirm this. That is not to say that all the other niche markets across Sydney are sharing the same view. We have signed up (sadly) a mortgagee-in-possession sale which is our first since June 1993. We don’t set the markets we just participate in them and from that perspective we like what we are seeing at the moment. That does not mean that it won’t change as we know that property markets change on a daily basis. Take the apartment market for example, investors are now taking more than a cursory glance at price levels and returns. The rental markets are as strong as we have seen for some considerable time and rental properties accurately priced, find a new tenant within two weeks.

There will always be an abundance of spins on the property markets. We are more concerned at this point in time on the spin that Warney is extracting at The Oval. Oh and go the Swans too !! Cheers ^__^

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10.09.05Robert SimeonNo Comments »

Plenty of interesting feedback to last week’s edition which all but identifies that unless the powers that be initiate a system where exchanged properties are recorded, we will never have an accurate market positioning at any given time. As we entered the Spring selling season this week, a look at the available properties will show that stock levels are at a record low. If you take apartments and houses that are currently up for Public Auction there is a choice of just 21 properties. Given that Mosman would in all probability have the worst clearance rates across Sydney, the preferred method of Expressions of Interest can only manage 14 properties which indicates that prices will climb. You only see prices decline when the market has an over supply (otherwise referred to as a dump). The October market (which starts after the school holidays) will be even more intriguing although it would be accurate to suggest that we will see the same pattern for the remainder of the year. Despite the economists’ predictions that we are in a housing downturn that threatens the economy, it is difficult to agree with their rationale given that stock levels continue to decline. We are currently experiencing very strong off-shore interest from expats which identifies that some large off-market sales will be recorded over Summer. It will be interesting to see the numbers at this week’s open for inspections. If the numbers are up, the market will be in for a run.

It is so much easier to get a feel for the financial markets over the property markets. With the financial markets you can get a daily positioning on the Aussie dollar, gold, All Ordinaries and the ASX 200. However, with property, the only weekly indicator is clearance rates at Public Auction. Expressions of Interest results are not really provided as vendors prefer to keep their sale price confidential. The Sydney clearance rates last week were the second highest for 2005 (which again leaves a clue) with a 52 per cent clearance, and 57 per cent post auction clearance which again highlights that property prices are firming. This could see a faster transition move by investors back into the market as they have a ‘pack mentality’ which usually leads to frenzied acquisitions which drive prices up. There is anecdotal evidence that apartment prices have bottomed, but are now moving up a slight incline. It will be interesting to watch in coming weeks as currently we are carrying twenty three apartments and will be launching another ten in the next week which is a significant increase by any standard. Property is a numbers game and if you look closely, it is pretty easy to understand. All you do is look at the number of properties available, then look at the numbers at the open for inspections.

Whilst on numbers it was the Richardson & Wrench Annual Awards last Saturday night and we came in with number one office NSW and number two office nationally. Congratulations to Noosa office who took out number one. Richard Simeon was number one selling principal which is an awesome effort. Last year’s number one, Stephen Patrick, (Mr Consistent) came in at number three. Marize Bellomo continues to climb up the ladder and achieved her highest ever position in the sales category by coming in at number four in NSW. What makes this result even more amazing is that Marize only sells apartments. With an average of one sale per week, it is little wonder she is a top performer. We would also like to take this opportunity to thank John Fairfax Publications Pty Ltd who were the major sponsors for the evening.

As most would know the financial year for 1 July 2003 – 30 June 2004 was our best ever and this quarter we remain on track to beat last year’s July quarter. You can read plenty of negative comments out there regarding the property markets. I must say, all this does, is strengthen our resolve. Cheers ^__^

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3.09.05Robert SimeonNo Comments »

Plenty of heated debate this week when the Real Estate Institute of NSW published its quarterly Property Focus for the June quarter 2005 and Mosman copped a shellacking. The question was did Mosman prices for homes really drop by – 9.65 per cent in the June quarter ? The answer is yes and no !! Yes, the figures compiled identify that in that period the number of sales recorded was 44, however what they did not say was that many many more sales have not been recorded as the figures are compiled on settlements, not exchanges. In that period we recorded twelve home sales in Mosman and many of those sales (approximately $12,000,000) still have not settled so they were not included in the 44 sales. You can also throw in the $20,000,000+ Burran Avenue sale that has not settled and you can now see that – 9.65% in no way represents the Mosman market. The system still remains flawed. If one was to revisit these statistics in another six months, these figures (Biggest Falls Mosman) would not make the front page of The Sydney Morning Herald as was the case this week.

Allow me to refresh a few memories about an article published in the Fairfax newspapers by Alan Kohler on June 15, 2004 headed “Real estate data in urgent need of a major overhaul.” Twelve months on, the system still remains the same for collecting data. Mr Kohler wrote “The Australian Bureau of Statistics and the nation’s real estate institutes are each looking at ways of fixing Australia’s “hopeless” system of real estate sales data. That is the word Reserve Bank governor Ian Macfarlane used a week ago in his parliamentary testimony. Property is having the biggest influence on monetary policy, yet the central bank admits it does not know what is going on.” At this point in time nobody has contacted the real estate agents asking for assistance on the correct procedure of registering the sale details at the date of exchange. Why would agents be so keen to participate ? Because then they would not have to spend as much time re-assuring vendors that the present system does not convey a true reflection of property prices. In December 2003 we sold a brand new home in Clifton Gardens for $5,000,000. It was sold again in the June quarter 2005 for $4,975,000 which makes a mockery out of the – 9.65 per cent drop in house prices (for the record it has a December 2005 settlement). The question that begs, is that if most are aware that this system is flawed and inaccurate, why run a story (oops stories) bashing niche markets, which is open to ridicule. Freedom of speech is fine and should be respected, however abusing that privilege should not be condoned nor tolerated. Given that most are aware that these figures are always inaccurate, the Real Estate Institute of NSW would serve members and the public, by delaying the release of these statistics until they have compiled a much more accurate market positioning.

It was only a matter of time and better late than never, however we can now factually report that investors are back looking at and researching the apartment markets.We have not sold to any yet, however it is a positive sign to have them back at the open for inspections. More interesting is the housing market that is broken down into six vendor demographics and here they are. One, those vendors looking to sell to trade up. Two, those vendors looking to trade down, cash up, or empty nesters. Three, those vendors that are selling because they are moving elsewhere ie overseas. Four, those getting divorced. Five, mortgagee sales and six, deceased estates. The general rule of thumb is that demographics one and two generally make up seventy five to eighty per cent of our market. Today, they account for half of that, which explains the shortage of property on the Lower North Shore.

Transaction costs are the killer and stamp duty is the major hurdle for property buyers and Morrie “I’m sorry”, could well look at visiting a fairer formula for home buyers. On April 6, 2004 Stamp Duty payable by purchasers of residential property exceeding $3,000,000 was increased from 5.5 per cent to 7 per cent. Prior to that, the same mathematical formula applied to stamp duty had been in place since December 1986, with property prices being much higher (like a multiple of eight factor) and nineteen years later it is time for reform.

You can’t always get what you want, however, if you don’t ask you never receive. The Real Estate Institute of NSW certainly did not do their Mosman members any favours by releasing incomplete market figures. Our point is, that when the ‘Governor of Moolah’ says it is “hopeless” (and nothing has changed) the Real Estate Institute of NSW needs to fix the problem and a few journalists need to read Alan Kohler’s article. Cheers ^__^

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27.08.05Robert SimeonNo Comments »

When it comes to describing the Sydney property market today, most are left scratching their heads as they try to understand it. The property market today is confusing! Is it over-priced or just too expensive ? The ‘Governor of Moolah’ was spot on when he opted for the latter and described it as being “too expensive”, and “has even priced itself out of the market”. Transaction costs are the killer and this explains why so many are staying put, property punting has become too expensive and this explains why stock levels are on the decline. The upcoming Summer sell-out for houses will be the quietest in ten years and prices will remain steady with marginal increases. Sydneysiders have basically lost interest and trust in the property market, due entirely to the introduction of weird taxes. The trust factor has been decimated by a State government that has made a mockery out of taxing our industry. Today, most have little faith in the powers that be. The vendor tax was eliminated because the Premier had concerns that the government would not be re-elected in March 2007, but we all know that when one tax goes, a new one arrives. The threshold on land tax was abolished, then came back because the constituents (otherwise known as investors) complained to their local members. The share market today remains much more attractive to investors and one can hardly blame them for placing real estate on ignore. (Imagine if an exit tax was introduced to the share market !!) To make matters worse for the first home buyers, rental markets are unseasonably strong, with rents very much on the increase. This again was highlighted when the ‘Governor of Moolah’ commented last week “Sydney property is too expensive and young buyers would be better served by going somewhere more affordable”. The words “Queensland – beautiful one day, perfect the next” are ringing very loud to real estate agents across greater Sydney.

We still managed to post seven sold-by stickers across signboards this week, with Marize getting a gold star for five exchanges totalling $3,291,000. No longer available are 1/30 Eaton Street Neutral Bay, 14/180 Spit Road Mosman, 10/41 Sutherland Street Neutral Bay, 1/26 Somerset Street, Mosman and 3/93 Shadforth Street Mosman. Not one property was sold to an investor all were owner occupiers. We also sold two houses, 68 Kareela Road Cremore Point for $1,835,000 and 22 Sirius Cove Road Mosman for $1,300,000 and our Rental Department was very busy with ten leases signed. The apartment market remains very strong and will not follow the path of the housing market. We are of the opinion that stock levels for apartments will remain buoyant for quite some time.

It will be interesting to see how the property markets respond. Now that the multiple choice facility has been removed, we may even see public auction being introduced again. Over the last ten years the break down of private treaty sales to public auction has been on a fifty fifty basis. However this year we have sold eighty one properties and just six have been by public auction. This is amazing, given that the Eastern Suburbs still remains a dominant auction market. Mosman for some inexplicable reason went completely anti-auction with Expressions of Interest being the preferred option for house sellers. Even this week one agency submitted six properties and reported a none from six auction result.

All this does is confirm that Sydney property is made up of many niche markets that all demonstrate a multitude of personalities. Mosman is now demonstrating that ‘home sweet home’ is exactly that, and the excitement of playing in a market that simply is holding its own offers no challenges to the would-be participants. Cheers ^__^

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Never before has the entire property industry been under as much scrutiny. So many now have a microscope and continually offer their opinions and ongoing property commentaries. Today we are reading much more consistent themes on analysis however, it would not be a balanced debate if all were in agreement. Today, the ‘Governor of Moolah’ explained in his ‘Opening Statement to the House of Representatives Standing Committee on Economics, Finance and Public Administration’ in Melbourne just how he is reading the economy. In a nutshell, not much has changed he said ” In fact, what I have to say is also similar to a speech I gave on 14 June”. Last week in VRN, we announced that interest rates would still be the same when you sit down for Christmas Day lunch. The Governor came out this week and hinted that they will remain the same well beyond the end of 2005 into 2006. He said today in his address “Over the past eighteen months, during which Australian house prices on average have not risen, this process seems to have stopped, and so consumption and borrowing have slowed noticeably.” Unlike those who predicted that we would see carnage with property prices this has certainly not been the case. Our markets peaked in 2003 and since then one could safely argue that the markets have actually been quite orderly. It is obvious that should the markets get over excited (which can’t be ruled out) the ‘Governor of Moolah’ will issue another speeding fine in the form of a rate increase. One only has to pick up a newspaper this week to see that many companies continue on the path of record profits. With so little happening in the property market the reports are getting shorter.

One week in, since that nasty exit tax was abolished and we can report that yet again nothing has changed. We have not seen an increase in investors joining the market, although we can report that we have experienced an interesting surge in apartment enquiry. Many are of the opinion that apartment prices have bottomed, although this week Marize had offer and acceptance on five apartments. None of the sales were to investors, all were to owner occupiers, which means that this niche market is jumping ahead of the perception that the investors return is not that far away. Investors generally only jump into markets when they see the traction resulting in positive market action. It will be interesting to see if the increased interest in apartments continues, as this will all but certainly see the investors back in the market place. We did place a ‘buy’ recommendation on apartments some weeks back.

The holding pattern on the property market was further evidenced this week when the Australian Bureau of Statistics announced that 54,436 housing loans were issued in June 2005, just down a bit from the previous month. Loans for the construction of new homes fell by just 1.5 per cent , loans for a newly built home again just down to 2,222 while loans for established homes fell by 0.9 per cent to 47,669. Again, the holding pattern is consistent across the entire property landscape. Any noticeable increase in these market indicators would be entirely due to greater investor participation in the market place.

There is more action at Old Trafford than in the current property market, and the only thing falling there are Aussie expectations of holding a catch and the Ashes for that matter. We won’t get a true market indication of where the housing market lies for another month yet, but don’t be surprised if you hear those words, ‘same, same’. We can predict that we won’t see an over supply of property which has been the case in recent times, we can however expect much of the same !! Cheers ^__^

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Bobby ‘Dazzler’ makes his stage exit from the ‘State of Decay’ and says “thanks for the memories”, content with his Guiness Book of Records’ nomination for collecting the largest amount of taxes during his reign. Now a further nomination for the ‘Houdini Award’ given that the ‘State of Decay’ is now looking at a few years of budget deficits (meaning that the status quo of everything broken will remain consistent). Enter Morrie (‘I’m sorry’) our new Premier, who immediately abolishes the hated vendor tax and in the process, out goes Andy ‘Re-assure me’ and Craig, ‘I’m off to have a beer with Duncan’ Knowles. Morrie ‘I’m sorry’ has also decided to become Treasurer too. The ‘Fudgeit’ 2006 gets more interesting as each day goes by. ‘Agent’ Scully appears to be in between gigs, however he still keeps his handcuffs and siren with the police portfolio. Quote of the week goes to Bobby ‘Dazzler’ who said, ” I think it’s an awesome thing in a democracy that there’s a peaceful change of government.” No doubt Morrie ‘I’m sorry’, will now be focussing heavily on the $3 billion in GST that Canberra has up its sleeve.

Whilst the news of the axing of the vendor tax is great news for the property market, we don’t expect to see investors running back to the property markets in droves. Content with the high performing share market, the property market is not offering any bargains and any acquisitions would be for the long term only. We did put a ‘buy’ recommendation on apartments some weeks ago, however at this point in time it appears to have fallen on deaf ears. Further good news was the announcement from the ‘Governor of Moolah’ that interest rates remained at 5.50 per cent, and they will still be at 5.50 per cent when you sit down for Christmas lunch.

The most interesting point will be if the strong market in Spring runs through to Christmas (and we are predicting a strong market). Following the forced Winter lay-off, prospective purchasers are somewhat toey at the moment and anxious to secure a home given the positive announcements that the markets keep receiving. With the average price for a home in Mosman sitting currently at $1,915,000, it will break the $2,000,000 barrier before the end of the year. Just as interesting is that the current figure of $1,915,000 has shown zero gain for the twelve months to 1 July 2005. Apartments in Mosman have an average price of $592,000 and again, zero gains over the last twelve months which identifies a stable and responsive market place.

In July, we rotate the staff and give the sales team a well earned rest. Even so, we still managed twelve exchanges with a value of $24,855,000. An even split with the Housing Division and Apartment Division sharing the honors at six exchanges each. This was our best July in years which explains our positive spin on the upcoming Spring market. Internet/subscriber sales from ‘Virtual Realty News’ stand at 190 sales to a value of $340,112,000 and we have not ruled out cracking the $400,000,000 before our Christmas party. It is interesting to note that many agencies have now moved their business into the electronic era over Winter as they now recognise that our business model is the future, if they are to exist. It only took them five years to acknowledge technology !!

Over the next few weeks we will be launching some great properties, together with some new technology. So from our perspective, we are in exciting times. Thanks to Geoff Grist for filling in while I was relaxing on Bo Phut Beach, Koh Samui which is the most amazing destination (have a look at this place www.anantara.com). Whilst Bobby ‘Dazzler’ and Andy ‘Re- Assure me’ have now been retired from the weekly editions of ‘Virtual Realty News’ I am quite sure that Morrie ‘I’m sorry’ and his new team will give us plenty of enjoyment as Australia’s very own version of ‘Yes Minister’ goes into full swing. As for Bobby ‘Dazzler’, your greatest achievement whilst on the throne would have to be saving and protecting the gropers on Clovelly Beach, from those spear fishing enthusiasts. Plenty will argue that your legacy has left the ‘State of Decay’ – hook line and sinker !! Cheers ^__^

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It’s no secret that Robert Simeon has enjoyed commenting on the government in this column, so you can imagine how incensed he was to hear that Bob Carr has quit while he is on holiday and he isn’t here to make light of the occasion.

As a tribute to Rob (not Bob) I have compiled some recent VRN gems that bear repeating. Hardly a week goes by without some colourful comment from Robert but I believe this is not so much the end of the Bobby Dazzler era, as the start of a whole new episode for VRN!

9 July 05
While Bobby ‘Dazzler’ and Andy (Re-assure me) claim that they are in discussions with Canberra about reducing taxes so they can get a larger chunk of the GST hand-outs, word is that they were going to abolish the vendor duty anyway. The property industry is the largest employer in the country and introducing taxes that restrict natural growth, makes little sense at all. The most interesting point is that with Western Australia now announcing this week a wide range of tax reviews, NSW remains the only state that has refused to implement tax relief. The property markets seriously need the investors back, otherwise the rents will continue to escalate. (This is the case at the moment.)

2 July 05
Our close mate Bobby ‘Dazzler’ was at it again today with a massive 450 state taxes getting a touch-up. You name it and it is up, and if you are in for a spot of recreational fishing this week end your licence too, went from $25.00 to $30.00 a year. Andy Re-assure me (Dazzler’s treasurer) said this week that the biggest factor affecting the property market was the increase in interest rates and further speculation of future rises. Most are of the opinion that given the cost of petrol, interest rates will remain untouched for the next twelve months !! Nice one Andy, obviously he still subscribes to No Idea !!

25 June 2005
Finally, there is some method to the madness in the way Bobby Dazzler runs his ‘State of Decay’ with his decision that NSW is to remain Australia’s most heavily taxed state. By adopting an economic strategy that is forcing more companies to re-locate to other states, the ‘Dazzler’ obviously believes this could be the very answer to solving the problem of falling water levels. By severely reducing the population of NSW, water consumption levels will not reduce as rapidly which, in turn, puts a positive spin on our water supply problems. Whilst standing on a platform (where the train is also running late) the NSW government still believes that stimulating the economy with tax-reform, is not the way of the future. One can only guess that other states, where investment and economic growth is encouraged, are becoming too much of a magnet for many companies.

18 June 2005
Whilst most would agree that we are in a slow-down mode, one needs to look at the major cause for the slow-down. Does the name ‘Bobby Dazzler’ sound familiar ? Transaction costs otherwise known as NSW Government fines for property participation are the major cause for the decline in available property in Mosman. Given that the formula applied to determine the duty payable, turns twenty next year (property prices are much higher in 2006, than 1986) most would agree that the time has arrived to set a Stamp Duty that encourages and not discourages purchasers. I guess the ‘Governor of Moolah’ has to remain politically correct by not commenting on the effect that this duty has on the property market.

11 June 2005

Memo: Bobby Dazzler
Subject: Tax Reforms

Ten years ago, on average, a Mosman house sold every seven years. Today, we are seeing anecdotal evidence that these houses sell every twelve to fourteen years due to the high costs of acquisition taxes (Stamp Duty over $3,000,000 is now seven per cent of the purchase price). The Australian Bureau of Statistics has identified that house sales in Mosman are on a rapid decline.

4 June 2005
The property market always leaves clues and if you look hard enough, the clues lead to answers. ‘Bobby Dazzler’ has created a major problem for the rental markets as rents are now going in the opposite direction to our evaporating water supply. We have reached 98.88 per cent occupancy with our rent roll, and that is scary, if you are currently looking to rent, but very encouraging if you are an investor looking to enter the market again! The future for tenants who are endeavouring to save a deposit is bleak, as the rents are now being increased to pay for Land Tax, and demand far exceeds supply. It is too early to calculate what the new rental increases will be, however a ten per cent hike is a very strong possibility. This rental position is a direct response to government policy, and once again identifies just how far out of touch ‘Bobby Dazzler’ is, with the ‘State of Decay’.

….and all this in the last few weeks, no wonder Bob’s doing a runner!

Property Council NSW executive director Ken Morrison must read this column too, as the Australian Financial Review reports he has called for a complete review of the tax burden on NSW businesses, particularly the removal of the “inefficient and investment-sapping vendor tax”.

The same paper also points out that “surging Sydney house prices helped cut economic growth in recent years by encouraging a greater exodus of residents to cheaper states” which Robert brought to our attention years ago.

Further, the latest Business Outlook from Access Economics states NSW “is on the wrong side of a housing bubble, the wrong side of an over-valued Australian dollar and an historic swing in the nation’s comparative advantage”. Clearly, over the past decade, the NSW people have been getting on with things despite the government rather than because of it. So with nowhere else to go but further down, it’s little wonder Bob has decided to call it a day.

Of course Bob has his own ideas about the legacy he has left us all, best summed up in his resignation press conference when he said “I find it hard to believe in heaven because Australia in 2005 is so near perfect.”

Don’t worry though, Robert will be back next week and I have a feeling he just won’t be able to stop himself from having the last word (or three).

So take time to enjoy Bob’s weather (“there’s a lot of life to be lived”) and I will see you at one of my open homes this weekend!

30.07.05Richard SimeonNo Comments »

Statistics always make great reading and as we all know, can be used to support almost any line of argument, particularly broad Australia-wide statistics which continue to return grim findings in the residential sales market.

On the other hand as Robert mentioned last week, our local market from bridge to bridge is niche market driven and the statistics that reflect the entire market in general terms are not a true reflection of our many and varied local niche markets.

You only have to talk to buyers as we do, to know how specific these niche markets are. For instance, a buyer told me this week that she only wants to purchase “south side of Military Road, within a level walk to the Mosman Village shops with Balmoral water views”. Another told me that he only wants to buy “Beauty Point with a minimum land size of 750sqm”. Fortunately, our managed database allows us to work with buyers to identify suitable properties in their niche buying area. This is a contributing factor as to why we have sold over $130 million of property so far this year.

Further evidence of our niche market behaviour not falling into line with general Sydney wide statistical data, is our sale of a top end property in Iluka Road Clifton Gardens. Richard Simeon sold it near the top of the market in 2003 and again resold this month within $25,000 of the 2003 sale price. Evidence that quality properties are holding their own in our niche markets.

Our office has recorded a $3 million + sale every nine business days since January and this has contributed to our overall office growth of 40% in the past 12 months. Importantly, our commitment to technology has allowed us to set ourselves apart by best understanding our own changing market, not accepting an overall market decline which is media driven. The writing is still on the wall. Lead, follow or get out of the way!

Now that school holidays are over, we have already experienced an increase in requests for market appraisals as our niche market begins to gear up for the busiest selling season of the year in the lead up to Summer. Buyers have complained about a lack of properties on the market over past weeks however while we have several new listings scheduled for August/September release, we believe that demand will continue to outstrip supply for the rest of the year. This means that buyers with their finance in place who are actively negotiating, will be buying well, while the rest will simply be spectators.

In our quest for the continuing use of good technology (and “the paperless” office ) we have discovered ‘stickies’ – the electronic version of the Post It note, and we love them. If your LCD screen is ever covered in little pieces of yellow paper then you might like to try ‘stickies’ too. http://www.zhornsoftware.co.uk/stickies/

While Robert will always win on word count statistics, I will leave it there until next week and I hope to see you at one of our open homes in the meantime, Geoff

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23.07.05Robert SimeonNo Comments »

Finally, the Mosman niche market received that much awaited “buy” recommendation which is better late than never given that we have been stating the obvious for many many months. Louis Christopher, research director of Australian Property Monitors declared in The Sydney Morning Herald on July 9, 2005 ” About six weeks ago we noticed that the market in the upper-cost segments [such as] Mosman, Neutral Bay and all those areas, was moving forward,” he said. “It’s quite clear that we’ve passed the bottom of the market and we are into a new cycle.” Personally, we are of the opinion that this “new cycle” requires further definition as it is highly likely that it could lead to a misrepresentation of our property market. One month ago I wrote, that in 1995, a Mosman home sold on average every seven years. Today, we are seeing anecdotal evidence that houses are now selling every twelve to fourteen years, largely due to the high transaction costs. According to the Bureau of Statistics, in 1995, 434 houses were sold in Mosman. In 2004, just 278 houses were sold (these numbers have continually declined since 1995). In 2005 we expect the number of sales to be closer to 200 so we are not sure what this “new cycle” entails. We do expect the investors to venture back into the apartment market (we put a “buy” recommendation on apartments three weeks ago). This will ease the pressure on the rental markets which is a positive spin for those renting. With investors remaining in the share market, the rental market vacancy rates still continue to decline, which identified the market rents continuing on a upward spiral. All in all, this is nothing new as we have been stating the obvious (and calling the market correctly) all year. Over the past ten years, one thing has remained unchanged – the demand for quality properties has continued to outweigh supply.

The good news continued when figures released this week from the Australian Bureau of Statistics identified that 55,732 housing loans where issued in May. Figures released this week from the Australian Bureau of Statistics show that 55,732 housing loans were issued in May. The loans for the construction of a new home reached 4,658 which represents an increase of 2.3 per cent. Loans for the purchase of a newly built home edged up by 1.7 per cent to 2,270. Given the negative press that the property industry has faced this year, these figures simply prove that the property markets are more than holding their own. This provides a positive spin on the economy.

As we near the next “market on” call with Summer looming, we expect it to be positive and responsive. What will be interesting is to see if the Mosman market will be more receptive to Public Auction again, given that in recent times the Expressions of Interest has gained greater popularity. If we do see a sudden impact of high clearance rates and a greater movement to auction, some vendors (given the reduced stock levels) could well exceed price expectations. Another benefit will be that those vendors who are highly geared can now exit the market knowing that they will not be savaged on price, as we have a much more confident market. One of the most interesting conclusions that we have drawn from these recent comments in the press, is the recognition of niche markets (which is exactly what we have been saying for years). No longer are we reading the entire market in general terms which are not a true reflection of the many niche markets. It just takes some a bit longer to understand the idiosyncrasies of the Sydney property market. Oh well !! Better late than never.

One should give credit where credit is due, and our very own “Governor of Moolah” would be pretty proud of his tactical calls on interest rates. With so many predicting a blood bath with property prices, the flight and landing has been smooth, although those who over-paid have been severely punished. Even more interesting is that elusive bubble (which we claimed never existed) that was not pricked, rather it went on to prove that it too, was nothing more than a modern day myth. There are many economists eating humble pie at the moment, whilst being force-fed so one can only hope that this entire exercise will prove to be a valuable lesson. As we said all along you can’t compare the current property market to that of 1991-1993 as the one big difference was that then, interest rates were regulated which is not the case today. Shock horror !! Today, we are being told that we can expect a rate decrease in 2006.

We do not envisage rapid price increases in the near future, rather a balanced and a more up-beat response from prospective purchasers. In the past, the Summer selling season experienced an over-supply, however this year we are of the opinion that this will not happen (a first in a very long time). Rather, our niche markets will take another twist based on previous sales evidence that volume for houses will continue to decline. It will be interesting to monitor the ratios of investors who buy back into the apartment market. Given that we run the largest Apartment Division north of the bridge you will read it here first.

Well I am off for a few weeks to thaw out, so the highly talented Geoff Grist will be reporting to you on our market movements. It has been a very interesting six months, and the next will be even more absorbing. Cheers ^__^

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16.07.05Robert SimeonNo Comments »