Welcome to our final edition for 2006 – and what a year it has been! We had to contend with a property market inflicted with three interest rate increases. Many share the opinion that this was excessive given that we had just the one in 2005, none in 2004, two in 2003 and two in 2002 (these were all +0.25 per cent increases). In 2001 the Reserve Bank of Australia delivered six decreases totaling a -2.00 per cent reduction in rates where they finished at a record low of 4.25 per cent. There are many expectations that interest rates in the year 2007, “007” could possibly be a license to thrill. We are of the opinion that interest rates will remain unchanged as long as inflation runs at or about the three per cent level.

Without a shadow of a doubt, the housing market in Mosman well and truly out-performed the apartment market for 2006. Last week we reported that house sales in Mosman for the year were currently sitting on 275 and this week we can advise you that now they sit on 296 which is an increase on the 289 sales in 2005. As predicted, the 2006 selling year for houses should also eclipse the 309 recorded sales of 2004. This turnaround ends a five year cycle of reductions in annual volume and 2006 will, I predict, deliver the highest average median sale price ever recorded in Mosman. The Mosman currency has over-performed in 2006, and I am pleased to say that yes, we called it here. We believe that 2007 will be equal to 2006, although I have a feeling that it may even be better. I also predict that the highest price ever paid for a single house in Mosman (currently $15.500 million) will be eclipsed.

It is interesting to note that houses in Cremorne and Neutral Bay have also performed well with Cremorne thus far, posting 73 sales which also beats the 2005 sales of 66 (again a break in the cycle). Neutral Bay has to date, recorded 62 sales, again up from 2005, when 55 sales were recorded.

Unfortunately apartments have not performed as well as houses with turnover down on 2005 sales volume.

Apartments – Mosman
2001 679 sales Median sale price $410,000
2002 725 sales Median sale price $452,000
2003 569 sales Median sale price $475,000
2004 474 sales Median sale price $473,000
2005 480 sales Median sale price $521,000
2006 378 sales Median sale price $493,500

Apartments – Cremorne
2001 307 sales Median sale price $432,000
2002 380 sales Median sale price $485,000
2003 342 sales Median sale price $510,000
2004 330 sales Median sale price $500,000
2005 306 sales Median sale price $490,000
2006 267 sales Median sale price $530,000

Apartments – Neutral Bay
2001 443 sales Median sale price $405,000
2002 406 sales Median sale price $442,500
2003 384 sales Median sale price $510,000
2004 330 sales Median sale price $495,000
2005 277 sales Median sale price $505,000
2006 246 sales Median sale price $485,000

When you consider that the vast majority of rentals are for apartments, this highlights the rental squeeze given that in 2004 the investors started departing the markets. Also, at the time, the Comedy Company otherwise known as the NSW state government started tinkering with a Vendor Exit Tax and Land Tax which later turned out to be embarrassing stuff – ups. These markets have not recovered since then, despite rapid increases in weekly rents and predictions of annual ten per cent increases in weekly rents to 2010. The future indeed looks very bleak for those in the rental market as wages will not keep up with escalating rents.

It would not be an edition if we were not to have a dig at our infamous state government and “Michael Cost – ya Plenty” who must have been on the eggnog this week. Firstly, he suggested that Peter Costello should intervene if he was not happy with the direction in which the Reserve Bank was heading. “Going forward, he has an opportunity to stop another interest rate increase if it’s proposed.” A great clue on how he runs the NSW economy !! Mr “Costa – ya Plenty“ then said, “ interest rate rises had hurt the property sector (I think he means state revenue is down) and the national economy, and even resource – rich states like Western Australia were beginning to hurt.” Last but not least his clanger for 2006, “Peter Costello can’t run the line that NSW is the problem.” Well “Cost – ya Plenty” you could start by lowering Stamp Duty and Land Tax if you want to re-ignite the NSW economy !!

From each and every one of us here we wish you a Merry Christmas, (go easy on the eggnog as you have just seen what it can do). Thank you, for your continued support and a record year in subscriber sales. At the beginning of the year I would have not have predicted that we would be at $535,204,100.00

Have a fantastic break and we will return with our next edition on January 25, 007 hopefully “shaken not stirred” Merry Christmas with plenty of cheers !! ^__^

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8.12.06Robert SimeonNo Comments »

On many occasions this year, we have reported on the decline in the number of houses that have sold each year in Mosman and whether this would continue in 2006. As we predicted it now looks almost certain that the pattern has finally changed and 2006 has recorded (or will record) more than in 2005.

2001 445 house sales Median sale price $1,250,000
2002 391 house sales Median sale price $1,700,000
2003 376 house sales Median sale price $1,699,500
2004 309 house sales Median sale price $1,640,000
2005 289 house sales Median sale price $1,850,000
2006 275 house sales Median sale price $1,800,000

Source: www.realtor.com.au

Given that in recent weeks there have been a significant number of off market sales, I would suggest that Mosman has already eclipsed last year’s number of 289 house sales. One of the most frustrating breakdowns in real estate today is the “hopeless” way that property sales are recorded. NSW falls well behind Victoria in sales data because in Victoria the real estate agents provide property data as, “shock horror”, it helps them too!! I think that presently, Mosman would be ahead of the 2005 and 2006 sales volume and the median price for 2006 will be the highest ever recorded. I have no doubt that eventually, an organisation will finally produce sales evidence that is just one month old and yes, it will be data based on sales evidence compiled on exchanges not settlements.

The property market (well ours anyway) continues to drive well into December and it is currently showing no signs of pulling up stumps for Christmas. Even better news is our prediction of a strong start to the market in 2007. Already we have signed a number of properties to hit the market straight after the Australia Day long weekend. This week we managed to negotiate offers on five apartments and two of the purchasers are investors. Although with the recent changes to superannuation regulations, many investors are opting to sell and then invest the proceeds into their personal superannuation funds.

More headaches for the rental market in 2007 as both governments need to address the rental crisis which was brought about by their respective policies. Wait for the pathetic excuses in 2007 when they each start pointing the fingers and the blame game commences. It can’t be remedied overnight and it is pretty obvious that with our immigration (the silly ones coming in), you have enormous pressures on rental properties that continue to decrease in numbers, across Sydney. Obviously, both governments don’t see an increasing population as any great concern – well not at this stage anyway.

www.domain.com.au keeps rolling out new and innovative concepts and this week announced that it will commence trialing a new 1300 telephone number for agents from their property portal to enable them to measure the leads. This really is a fantastic concept! Our business now spends well over a million dollars each year in newspaper advertising, with 2006 being our highest-ever spend on record and we believe that our newspaper spend will be up in 2007. The reason I say this, is that our market share continues to increase and reflects in that thing called “profit”.

Whilst it is fast becoming obvious that the cheaper items (being rentals and the like) have better economies of scale online, the same can’t be said for sales. Yes, marketing strategies continue to produce great results when you combine both online and newspaper campaigns. Imagine for one moment that you are looking at a property online, with the print function removed. It would be nowhere near as popular. I would actually suggest that traffic would decline as old habits die hard and people still like “the paper”. In my opinion, this won’t change for quite some time. The domain.com.au initiative is a first and we will watch with great interest to see the results. What we do know is that an interested party can see a signboard and then go online to look at the pretty pictures. At the end of the day I still do not change my opinion that our electronic business is database driven which is all about bringing together the right people, to the right properties at the right time. Some properties sell very fast with Internet marketing only, whilst others need newspaper advertising to generate interest.

Over time we have learnt that real estate is a long way from being an exact science !! Cheers ^__^

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1.12.06Robert SimeonNo Comments »

In an to attempt to best describe the current rental crisis the best analogy that we can suggest, is to compare it with Warragamba dam with less than ten per cent capacity. 2006 is the year of the landlord – where in some instances rents have been bumped up $50.00 per week. Rental increases for tenants are simply not negotiable, as landlords are happy to go to the marketplace, given the market urgency. Across Sydney, rents have increased up to forty per cent and we now have the lowest vacancy rate in history. NSW Department of Housing figures for new rentals identify that median rents have been increased $20.00 per week ($1,040.00 per annum).

To many that is a large amount, especially as these increases will become an annual event – certainly not in line with wage increases. The median rent for a four bedroom house in Mosman increased by twenty per cent ($300.00 per week) to $1,500.00 per week. This week our rental list fell to just three properties and today we can offer just eight. To put this into perspective, with a management of five hundred properties, the usual rule of thumb is that between five and ten per cent would be vacant. Today, it is less than one per cent and the advantage is certainly to the landlord.

Investors today are not the least bit interested in investing in residential real estate, simply because they have no faith or trust in the State Government. Year after year, it has introduced hairbrained new taxes such as the now removed Vendor Exit Tax. The government bungled Land Tax when in one year, it removed the threshold which brought a voter backlash, only to introduce it the next year (so much for sound economic policy). In 2007 it will now be averaged out based on previous years.

Land tax threshold – 2007 tax year
The way the land tax threshold is calculated has changed. For 2007 and future land tax years, the land tax threshold will be averaged. The threshold will be the average of the ‘indexed amount’ for the new tax year and the previous two land tax years, as calculated annually by the Valuer General.
The threshold cannot fall below that of the previous year and where the average threshold is less than the previous year’s threshold, the previous year’s threshold will continue to apply.
The average threshold for the last three years is calculated as follows:

As the average threshold ($350,000) is below the land tax threshold for 2006 ($352,000), the previous year’s threshold of $352,000 will continue to apply for the 2007 land tax year.

A recent article in The Daily Telegraph “Extra $100 each in tax” revealed “The average tax burden for every man, woman and child in NSW will rise by $100 this year with new increases in taxes, levies, or charges imposed at a rate of more than one a week”. Now spare a thought for those renting who will be hit with annual increases. The tax burden today, places NSW as the most expensive state in which to reside in and according to budget papers, the annual tax paid to the government each year now stands at $2447.00 per head. “The Government’s own forward estimates predict the tax take to top $16.719 billion this year – a $700 million rise on 2005/2006. The increases over the past year include 24 new taxes or increases on those existing, hikes in 53 different types of administration charges or Government imposed fees and nine increases in services like transport and energy.

Today, landlords can mirror the State Government and drive rents to record highs. We predict the first quarter of 2007 to be a rental nightmare. No wonder NSW is witnessing record departures to other states and today, when you refer to the lucky country, most would agree that NSW is the one state left out !! Cheers ^__^

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24.11.06Robert SimeonNo Comments »

I have always liked the saying “success leaves clues” although it is difficult to fathom how many clues need to be left to entice investors back into the residential property market. As we have reported recently, the rental market is peaking at levels that we have never experienced before with weekly rents in escalation mode.

Not that long ago we reported that the apartment market had bottomed and we are still of that opinion. Just this week, industry watch dogs predicted a further five per cent increase this year and as much as forty per cent, over the next five years. With much debate about housing affordability who would have thought that now we have rental affordability. The decreasing number of new dwellings, combined with migration, has mixed a volatile cocktail for the rental market. Just this week, one agency suggested auctioning rental properties as they become available! This weekend we will be offering nine new rental properties and are expecting applications on more than fifty per cent by close of business tomorrow.

This graph published by the NSW Real Estate Institute identifies the present vacancy rate as the lowest since the first recorded data.

Interest rates overall, are causing the property market plenty of grief and it will be interesting to see the results of next Tuesday’s meeting at the Reserve Bank. For the fifth time in six months, new home sales across Australia have continued to fall. Housing Industry Association’s executive director of economics and housing, Simon Tenant, said “housing affordability is at critically low levels everywhere across Australia and has suffered an additional hit in 2006 because of higher interest rates.”

For those looking to purchase a property, you have five weeks left as the markets prepare themselves for the final run home – it will be an interesting ride. At this point, our last public auctions will be December 12 – quite different to last year, when the market started to lose momentum in November.

We expect a significant participation from expats and again, especially from the United Kingdom. According to the Centre for Economics and Business Research (CEBR) the value of bonuses paid to London’s financial elite, will rise 18 per cent this year. In its latest quarterly business forecast, the CEBR said it expected about 4,200 staff at banks, law firms and other professional service businesses, to pocket seven-figure bonuses this year. We certainly believe that the Sydney market will attract some of those home sick, yet very wealthy expats. Cheers to that ^__^

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20.11.06Robert SimeonNo Comments »

It is that time of the year where it is either game on or game off with the property market. We believe that the next thirty days will see strong market results in Mosman and this time it is the buyers talking the market up.

Last week, the Mosman market posted two $10,000,000 + sales and if you look carefully, you will notice on our property menu that a few homes have now been moved to dessert.

This week’s announcement by the Australian Bureau of Statistics (ABS) proved to be great news for some niche markets and a complete disaster for the outer Sydney market. This week’s edition of Home Price Guide reported, “At the risk of sounding alarmist, existing mortgage holders in those areas (south and south – west) are going to the wall and local market experts say that it is only going to get worse”.

“Mortgagee in possession sales are mostly conducted by auction. Analysis of the auction market can provide valuable clues in determining how forced sales are affecting the market”.

“In Sydney’s south – west for the 6 months to-date, there have been 614 auctions. This is a staggering 139 per cent increase in volumes from the corresponding period in 2005. The median price for properties auctioned (in Sydney’s south – west) in the last 6 months is $315K compared to $415K in 2003”.

“Similarly, in Sydney’s west there have been 602 auctions for the 6 months to-date, a 97 % increase in auction volume compared to the corresponding period in the previous year.”

The ABS announced this week that overall, established house prices grew by 2.2 per cent in the September Quarter and 9.5 per cent annually. Economists had predicted that quarterly growth would be 0.09 per cent (better luck next time). To put this into perspective, Perth jumped 45.9 per cent and Darwin 17.3 per cent, whilst Sydney managed just an 0.2 per cent increase.

Macquarie Bank recently carried out an in – depth analysis (trying to get a copy) of Sydney house prices from 1996 to 2006. The study found that median house prices of homes in suburbs close to the CBD, i.e. Mosman, Vaucluse, Point Piper etc. have increased their respective median prices five times, compared to western Sydney. We would expect this figure to grow. There is plenty of carnage left in these markets as families continue to relocate to the western state and territory (not to be confused with the western suburbs).

Macquarie bank, Australia’s largest investment bank, this week posted a 51 per cent (in first half) net profit of $730 million. We do know that aside from being our largest VRN subscribers in banking terms, they also love the Mosman currency.

Without a shadow of a doubt one of the greatest success stories of recent years has been the $80 million a year (and growing) online property market. Presently, there are just two property portals (domain.com.au and realestate.com.au) that charge consumers, the news is that PBL has high hopes of being the third “pay for” property portal. Well I have said for quite some time that our property market will only justify two paid portals. So when PBL launches soon, it will have to be something pretty special or it could resemble the Just Missed – it oops, I mean Just Listed. Apparently, PBL will upload properties from our head office website (you can’t enter the market naked) then once it has reached its target, will come to see us and charge $175.00 per month. We have had no dialogue with PBL which is where its plans could seriously come unstuck. If you ask any of the newspaper groups that run both online and offline businesses to reveal one of its greatest mistakes in recent times, it would easily be the treatment of agents and taking them for granted.

Today, they go to great lengths to work much closer with agents and collect their feedback. In the past it was assumed that the directions came from the respective head offices which is not the case. The individually owned and operated businesses direct their advertising spends. This year, our total newspaper spend is the highest ever, which identifies that broadsheet advertising has plenty of life left in it. Yes, cheaper products are no longer cost effective – rentals have now moved to the Internet. The same can’t be said for properties for sale. Today, we are seeing larger advertisements that are simply bigger and bolder.

This week, we secured a few stunning waterfronts around the $15 million mark and a few other excellent properties that won’t be advertised just yet. So if you are in the market, not a property journalist, and you would like to record your interest, please send us an email with your buying criteria to topend@rwm.com.au

Just in time for Christmas !! Cheers ^__^

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17.11.06Robert SimeonNo Comments »

Mixed messages this week in the market place when the official cash rate (OCR) climbed another +0.25 to now sit on 6.25 per cent. The Reserve Bank of Australia has launched (historically) one of its most aggressive rate attacks on the economy with three increases in the one year. It’s a familiar pattern. In 2000, it inflicted four increases on the economy taking the OCR from 5.50 per cent to 6.25 per cent (the same as today). If the pattern continues we can expect relief in the OCR because in 2001, it reduced rates six times, taking the OCR from 6.25 per cent to the lowest recorded rate of 4.25 per cent. However, since the last reduction in December 2001, the OCR has had eight +0.25 increases. What we are aware of, is that there will be a considerable amount of distressed sales in the struggling property market in the West/South-West, despite the Federal government’s announcement yesterday, that we are now experiencing a thirty year low in unemployment. So you get to keep your job – but some won’t have anywhere to live, when they bundy off. Again, additional pressures on an already fragile rental market where investors are now, almost an extinct species.

One of the most fascinating revelations is the rise and rise and rise, of the Perth property market.

Perth has experienced a staggering 39 per cent surge in property prices over the last twelve months thanks to a resources boom, and a strong migration of disgruntled NSW residents. (It will be interesting to watch their property market when the resources boom shows signs of decline).

Today, the only boom in NSW is from the elected state government that goes from one blunder to another whilst delivering a budget deficit. It is no wonder that young families continue to sell up and relocate in search of a better lifestyle for their families. We won’t see all the damage just yet although there is anecdotal evidence in some property markets where prices are recording forty per cent drops from the peak in 2003.

We (NSW) will see an enormous skills shortage as the good old chippies and sparkies go West. One of the reasons that this move is made easier, is through the Internet where families can go online and research areas of interest on the property portals from home. Previously, one had to board a plane or travel by car, to explore new lifestyle opportunities. It’s getting easier, thanks to much improved online developments where www.domain.com.au this week raised the bar even higher when they released their innovative Property Reports to their portal. Congratulations to their team who have introduced more improved changes to the portal in the past six months than since it’s intial launch. Our feedback from clients has been most refreshing. It will be interesting to watch the reported and/or delayed PBL launch. I have long said that the property markets can only sustain two pay property portals as the free ones in our case, are simply a waste of space. We are yet to receive a single online enquiry, which I find quite amazing as there are constant reports of increased activities in their market place.

At the end of the day it is all about a serious and successful business plan and in real estate it is all about balancing offline and online to deliver the best results for the business and clients.

This week we received our September quarter results and we were up 25.44 per cent on September 2005 exchanges and up 61.42 per cent on September 2005 settlements. We are in markets that constantly change and the key is, to keep a couple of steps ahead. It is not easy, but as they say “results speak for themselves” !! Cheers ^__^

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10.11.06Robert SimeonNo Comments »

It certainly is a “tale of two cities” as the economy continues to grow along with the affluent suburbs.

Almost the reverse in Sydney’s west and south/west where property prices continue to free fall. Whilst some are of the belief that interest rates are odds on to be increased on Melbourne Cup day when the Reserve Bank meets for cucumber sandwiches and lemonade, there is another school of thought that a further increase will cause carnage. In the case of the ANZ bank which just announced a record $3.690 billion profit, mortgage arrears among NSW customers were quadruple the bank’s national average. Another interest rate increase will certainly cause more hardship in the marketplace leading to additional mortgagee sales. Furthermore, it would almost certainly be the final nail in the coffin for the farming fraternity who continue to battle the drought.

With housing affordability now reaching a three year low, the prospects for new buyers trying to enter the market, is not looking good. Already, the current market is drawing parallels with the hardest market in living memory, that being in the early 1990’s when rates were at a crippling 17 per cent.

On the other hand, if property values continue their decline in the South and South/western markets, affordability for some, may become a possibility.

Certainly, the next six months will be challenging for all markets with mounting speculation of two, or possibly three, interest rises in the very near future. Interesting times ahead, especially with a new “Governor of Moolah” at the helm who can single handedly control market sensitivity.

The Housing Industry Association Executive Director Simon Tenant said “ First – home buyers entering the market would have to commit 29 per cent of their income towards mortgage payments, the highest ratio in nearly three years and a ratio knocking on the door of the ‘no-go zone’.”

The hot topic doing the rounds in Mosman at the moment is the threat by the NSW Maritime, that they could remove 5000 private jetties, boatsheds, pontoons, berthing and mooring pens around Sydney Harbour. Even more interesting is that this threat appears to apply only to Sydney Harbour and not Pittwater or Sylvania Waters.

When asked about the possibility of this happening it is difficult to keep a straight face. We all know that the NSW government is bankrupt so why would it remove any source of income(s)? And even if this did become a reality, all the waterfront owners would refuse to remove the facilities, given that they are not short of a buck – unlike the government! Cheers ^__^

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27.10.06Robert SimeonNo Comments »

Across the country, property markets are facing dilemmas in some shape or form. Whether it be falling prices or rising prices, the biggest problem for us and our niche market, has been the decline in the volume of property available for sale on an annual basis. However, Mosman in 2006 can, in all probability, eclipse the 2005 volume which would be the first upward swing since 2001 (according to figures provided by www.realtor.com). In 2006, Mosman is now just 56 sales away from equalling the 289 sales recorded in 2005.

Houses – Mosman
2001 445 sales Median $1,250,000
2002 391 sales Median $1,700,000
2003 376 sales Median $1,699,500
2004 309 sales Median $1,640,000
2005 289 sales Median $1,850,000
2006 233 sales Median $1,765,000

Apartments – Mosman
2001 679 sales Median $410,000
2002 725 sales Median $452,000
2003 569 sales Median $475,000
2004 474 sales Median $473,500
2005 478 sales Median $520,500
2006 285 sales Median $496,000

These figures indicate that while the house market is improving, the apartment sector is struggling. The simple reason behind this is that merchant bankers and expats buy houses. It is possible that this year, sales of houses in Mosman could creep back to around 300, which reinforces the strength of the house market.

Of course the apartment market would improve dramatically, if the state government announced a moratorium on new taxes which previously have been aimed directly at investors. Hence the decline of investor interest, as thanks to the state government, they have been used and abused. What is pleasing to see is that in some areas, apartment median prices are increasing which indicates that prices have well and truly bottomed.

It is not just Mosman that is enjoying an increased tempo. The volume of sales in Cremorne and Neutral Bay has also increased.

Houses – Cremorne
2001 117 sales Median $847,500
2002 105 sales Median $1,167,500
2003 89 sales Median $1,252,000
2004 80 sales Median $1,210,000
2005 64 sales Median $1,310,000
2006 58 sales Median $1,155,000

Apartments – Cremorne
2001 307 sales Median $432,000
2002 380 sales Median $485,000
2003 342 sales Median $510,000
2004 330 sales Median $500,000
2005 306 sales Median $490,000
2006 231 sales Median $523,000

Houses – Neutral Bay
2001 82 sales Median $968,500
2002 80 sales Median $934,250
2003 69 sales Median $1,195,000
2004 60 sales Median $1,312,500
2005 55 sales Median $1,070,000
2006 59 sales Median $950,000

Apartments – Neutral Bay
2001 443 sales Median $405,000
2002 406 sales Median $442,500
2003 384 sales Median $510,000
2004 330 sales Median $495,000
2005 274 sales Median $502,500
2006 191 sales Median $485,000

It is very clear that when individuals do well in the workplace, the property market prospers. So in a somewhat different edition, the compelling argument is that sometimes numbers make much more sense than words. For the better part of this year, I believed we would achieve a sub-200 house sales volume. In this case, I am more than happy to eat humble pie!

From humble pie to caviar, if you are looking to rent the best and largest apartment on Balmoral, please look at our Rental of the Week. The perfect indulgence .. cheers ^__^

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13.10.06Robert SimeonNo Comments »

Recent reports of a collapsing property market in Sydney’s west and south/west, prompted the Reserve Bank to publish a report offering its slant on the reasons for the current carnage. Naturally, its “rose coloured” glasses put the main blame on a glut of new investors who entered the market at the worst possible time – just before the peak. In an article that appeared this week in www.smh.com.au “How the housing bust went west”, it draws some interesting conclusions. However in my opinion, the graph published below provides a more telling tale.

Source: Reserve Bank of Australia

Until recently, television stations bombarded viewers with property reality auction stories which today, appear to have been ‘boned’. In 2001 the Reserve Bank started reducing interest rates with five rate reductions that allowed home owners to “keep up with the Joneses”. At a rate of 4.25 per cent it made great sense to buy a piece of Australia as television stations attempted to brainwash the viewers on a weekly basis.

“But this Sydney property story began a decade ago in a very different part of town. The Reserve Bank’s figures show that between 1996 and 1998 the most expensive fifth of Sydney houses – mostly in the north and east – rocketed 50 per cent in value while the cheapest fifth hardly moved. But as the boom matured, more and more suburbs were swept up in the frenzy.

Between 2001 and 2003 (please refer to the graph that I guess I was not supposed to show) the cost of Sydney’s cheapest housing was rising as quickly as that of waterfront mansions. In those heady years, the lowest fifth of Sydney properties doubled in value. Even as prices for homes near the harbour and on the northern beaches started to come off the boil, prices in the least expensive suburbs kept rising”.

Many would suggest that 2001 was a year that fuelled the property markets with low interest rates as the markets continued to gain momentum. More and more started to play a game of real life monopoly with the dream of ending up on Park Lane or Mayfair. It seems that the Reserve Bank may, quite simply, have forgotten that they were the ones actually rolling the dice.

“In 2003 nearly half of all housing loans went to investors and the Reserve Bank’s figures show a big proportion of them lived in western and south/western Sydney”. What a coincidence! Michael Caton spent most of his time in these very same areas!

It seems for the moment, that the days of Mosman’s seventy five to eighty per cent auction clearance rates have disappeared. This is due mainly, to agents who (to get listings) over-value properties as the competition intensifies, due to acute shortages. Whatever the market, purchasers are well-educated, hence the drop in clearance rates this week, by nearly fifty per cent.

It will be a very interesting Summer, and it won’t just be property prices that everyone will be watching. Fairfax launch its much awaited renovated Saturday Domain this weekend to be followed by some very smart online initiatives. What remains to be seen is will it become a best seller and change the path of real estate advertising expenditure? Nothing ventured – nothing gained !! Cheers ^__^

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6.10.06Robert SimeonNo Comments »

Currently, one of the most interesting topics, is that of the changes to the Government’s media laws with fierce debate on the subject of the proposed new digital licences. For the real estate industry especially, this will be the next medium for advertising properties as the Internet world becomes increasingly engrossed in online videos. This week Google launched its Australian version “Google Video” and for all parties concerned this is now recognised as the huge growth area of the Internet. This fascination in online videos is largely driven by the younger generation so this all but guarantees that it will become the way of the future. Yahoo this week, purchased Jumpcut which is a site that provides online video editing tools. The most popular is www.youtube.com, followed by www.myspace.com, then Google. A recent study found that almost forty per cent of Internet users around the world are today indulging in videos online. If you take YouTube for example, it has approximately 100 million videos downloaded each day. An online article that appeared on www.smh.com.au this week “Online video watching goes mainstream” by Lisa Hearn, stated “Accenture said that research into the habits of 10,000 consumers across nine countries found the PC to be the “prevalent alternative distribution mechanism today” with 38 per cent downloading and watching videos on the Internet compared with only 15 per cent doing so via their television and 8 per cent for mobile phones.” The article went on to say “Change will only accelerate over the next 10 years as today’s youth gain purchasing power.” MySpace, was acquired by News Corporation for $US580 million just under twelve months ago and this week an analyst predicted it could be worth $US15 billion within three years time.

The most significant change to the real estate industry over recent years has been the move into electronic database and web developments. At the beginning of this year our subscriber sales were $420,096,000 and nine months on we are currently at $531,964,000 which equates to $111,868,000 in sales and we still have the December quarter to go. The hi – tech real estate agencies today are now lapping their competitors who continue to struggle with the new electronic landscape. With the September quarter now complete if we compare our turnover in the September quarter 2004 to September quarter 2005 we were up 12.63 per cent. Then when we compare September quarter 2005 to September quarter 2006 we were up another 15.45 per cent and that is in a market with declining house volumes. It would be fair to suggest that the Internet is leaving plenty of clues with certain business models.

With such diversity and just in time for the school holidays, here is an offer too good to refuse. For those who enjoy the RM Williams look, this is the perfect getaway. Tumbulgum. “Tumbulgum” is a spectacular country estate with an immaculate homestead set amidst award-winning gardens, enjoying excellent indoor and outdoor entertaining areas, pool, great privacy and dramatic views. The ultimate resort-style country property that is fully established and meticulously maintained, offering an enviable lifestyle. The property offers approximately 303.5 hectares (750 acres) of prime grazing land that has potential for sub-division and is just two and a half hours drive from the Sydney CBD. Located in the Lower Hunter, it’s one of the area’s finest properties. This will no doubt have those Mosman tractors roaring up the F2.

Given the current market conditions and the demand for houses, we are predicting a strong Summer trade. We are now just two weeks away from our peak selling market. There are currently twenty three apartments on the market in Cremorne and Neutral Bay under $300,000 so this market is completely different. These markets still share the hangover from the failed Vendor Exit Tax. That is certainly something that nobody would want to watch on video !! Cheers ^__^

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29.09.06Robert SimeonNo Comments »

With our “Governor of Moolah” realising his use–by date this week, there was plenty of back slapping as he headed to the elevator (which resembles the property markets with some up and plenty down). An article appeared last Sunday in The Sun-Herald, “2003: Bought for $262,500 LAST WEEK: Sold for $95,000. Prices plummet in west as more lenders repossess homes.” This anecdotal market information would have been totally lost to the central bank had in not appeared in a newspaper, which further demonstrates how broken the system is when recording current market data.

The market can be described in many fashionable ways however, when there is consistent evidence that home prices in some areas are thirty to forty per cent down, those markets are in recession. What we don’t hear is the central bank commenting on these property markets where the recent increases in rates, combined with high petrol prices, have led to market collapses. Certainly a case of Hear no Evil, See no Evil and Speak no Evil. Although, I did find it interesting that an article in the Financial Review last Friday, “HOW THE TRICK WAS DONE” – John Edwards asks Ian Macfarlane to account for 15 years of uninterrupted economic growth. I loved this piece “Of the RBA’s six governors only Macfarlane has not had a recession on his watch. In his 10 years as governor the economic expansion which began in 1991 has extended through 15 years and will in a few weeks begin its 16th year. Over that time income per head for Australians has increased by substantially more than Canadians, Americans, Britons or New Zealanders. Unemployment has fallen to the lowest rate in 30 years, output has increased by two fifths, and household wealth has nearly doubled.” Looks to me (like the other residents that live out West) as very much a case of not in my backyard. I guess the fact that the Australian Prudential Regulation Authority figures identify an increase in the number of loans across Sydney in default, is simply a phase that the markets are going through.

It is always interesting to read the releases by the Commercial Economic Advisory Service of Australia (this is the Company that tracks media ad spending). In the six months to June 2006 the total advertising market grew 3.8 per cent to $4.9 billion (yes billion). The Internet ad revenue shot up 60.1 per cent to $421 million. Newspapers recorded an overall loss in ad income of 2.4 per cent ($1.8 billion). This to me comes as little surprise, as when you compare the two, they are in distinct contrast. The online businesses are in a constant state of renovation, developing initiatives to further improve the relationships with consumers. Take Google Maps, RWM, this week www.realestate.com.au launched its Google Maps. These roll–outs cost money which is why most agencies won’t offer this new search facility. They simply can’t afford it, or they are not sufficiently advanced technically, to appreciate the value of this facility. Whilst the online ad spend is up substantially, so are production costs, which take some time to recover. This sudden move would explain why Fairfax is just weeks away from launching its new and aggressive, renovated Saturday Domain, which by all accounts will see a significant shift in advertising. This in turn will lead to increased revenues. With the landscape of online evolving/changing, the newspapers are fast realizing that they too must be proactive, to ensure their very own viability and like everything today, it comes at a cost. This explains why, for some considerable time, we have argued that the cost of advertising would come down and that is exactly what we are now seeing.

September has again proved to be a strong month in sales and we will report on that next week. Yes, the apartment market is holding its own and the house market is going from strength to strength. The October market will see an increase in stock levels and it will be interesting to see where and how the agents decide to advertise them. This then comes back to expenditure, which explains why Fairfax is somewhat confident and some in the real estate industry are placing bets that the renovated Saturday Domain book, will be broken with demand. Very interesting times with offline and online – the heat is certainly on !! Cheers ^__^

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22.09.06Robert SimeonNo Comments »