2008 housing values have moved and in 2009 we expect them to……?

2008 housing values have moved and in 2009 we expect them to……?

Despite the ongoing economic rumblings Mosman real estate sales, Cremorne real estate sales, Neutral Bay real estate sales and Cammeray real estate sales in 2008 have been mixed results thus far. It has become most increasingly difficult to call these unique markets given sentiments change based on an overload of data which more often than not remains strangely in the negative zone. Better known today as the Mosman myths and the real estate mysteries where facts never get in the way of a good story.

Better still the 2008 property “twilight” zones where (aside from media) the only thing that I see knocking is opportunity. Given the current propensity of living in the past like casting similarities to The Great Depression what many forget is that in 1995 our lives were then programmed for the greatest (not depression) change ever seen before – that being the Internet (exactly where you are now).

I invited my fellow directors, both highly respected and successful Mosman real estate agents Stephen Patrick and Richard Simeon to share their thoughts on where they believe our property markets are headed and this is what they (independently) had to say. We are the only Mosman real estate agency to offer live market commentaries to our clients with our weekly and now daily blogs – where we invite your participation. Given what is happening this is nothing more than “moving with the times”. Just that someone has to lead our property market which is exactly what our latest online platform is designed for – that being you, our property clientele.

Stephen Patrick – “Every day I’m asked to predict our future real estate market, both short term and long term”. For the last 25 years I have taken the challenge, and being a conservative realist, reckon I came pretty close to reading the cycles. However, this time around there are so many varying factors in our now global economy that I really am struggling to come up with a confident prediction?

The way I see it, the “smart people” got us into this trouble and can’t get us out, so I have given up listening to them and instead, I’m listening to the majority of people, with real jobs and normal lives. They give us a true sentiment of what is going on out there.

Most are feeling the strain, and even though still comfortably off and in steady employment or solid businesses, they are keeping their pennies close for a rainy day. It has now been raining for some time and more showers are forecast.

My forecast, after seeing the last 4 to 5 years of growth in the stock market go down the gurgler so quickly, is that people will go back to bricks and mortar safety. Why? Because they can drive past it every day and see something of substance and security. They can rent it or live in it. The secret now, is when to buy. I think that would probably be about now and into early next year.

We have seen the market come off around 10% recently to get a sale over the line. The prime property will hold up better than the rest and that has always been the case. The one thing different this time around is that there are plenty of buyers with money, waiting for an opportunity. They are just being more careful with it, unlike the early 90’s when very few people were cashed up and interest rates were at 18 per cent.

Word around is that the biggest bank has taken an approximate 100 billion in cash deposits in the last few months and the super funds are also sitting on a bundle of cash. Don’t forget that each small and large business pays in 9% every month, which would also be sitting there in cash…So when they hit the equity market they will hit it hard. Property should then follow hard as well, but the ‘Crazy Ones’ will already be in! Then again “fortune does favour the brave”. Thanks Steve.

Richard Simeon – “The Mosman market is off 10 to 15 per cent so is it better to sell and buy now compared to 2007? Yes and here’s why. Today’s market-savvy vendors are happy to (potentially) take 10 to 15 percent less than their property’s 2007 base value, as they then intend to re-purchase at the same rate, or even better. Make sure you consider the lower buying price when you sell.

Remember that purchasers are “gold” in the current marketplace. In 2007, buyers sold for more, but particularly if they traded up. They then paid a premium for buying in a stronger market further inflated by considerably more buyers at that time. In direct comparison, you may be ahead financially, by selling and re-buying now.

My other tip is to realise that the reason for the increased volume of stock is that smart purchasers are (understandably) refusing to buy compromised properties at unrealistic prices. Buyers, you should be choosy but when you find a good property, grab it, as it generally takes a year or longer to find a worthy replacement. Take a longer term view and buy quality property, which is realistically priced. In years to come it will quickly appreciate, year on year, versus chasing today’s perceived bargain buy’ which will always be just that. Don’t be “penny wise and pound foolish”. Thanks Richard.

Always interesting to get market perspectives from others who actually work the daily real estate coal face, with this edition we are endeavouring to offer advice and clarity to what’s actually happening in our property markets. The market perception that there is a tsunami of houses currently on the market is not a correct presumption given that on www.domain.com.au there are currently 170 houses in Mosman on the market and the other 4,730 houses are simply not cutting key’s for real estate agents to take buyers through.

It will be riveting to see how the federal Government (Fort Fumble) roll out their industrial relations (IR) legislation given that unemployment rates will significantly increase. In all probability by April 2009 we can expect an announcement that Australia is also in recession. Simply put: we need to acknowledge then get on with it. What has happened is not indelible, collectively and constructively the onus is now on us all to transform markets and lead by example.

The Westpac – Melbourne Institute index of economic activity announced this week that our economic growth fell to 1.1 per cent in September which was significantly down from the 3.5 per cent posted in August. The definition of a recession is two successive quarters of negative gross domestic product (GDP), where the October figures (when announced) in all probability will be below 1.1 per cent.
As a result the Reserve Bank of Australia (RBA) will continue to cut the cash rate aggressively well into 2009 as they need to fast improve consumer and business sentiment.

It should be noted that with this graph Macquarie Research noted “It is important to note that whilst businesses became extremely pessimistic in the month (October) actual conditions (down 10 points to -11) remained well above the 1990/91 recessionary levels of around -40 index points. This suggests that while firms are becoming exceedingly cautious about the economic outlook, actual conditions remain far stronger than recessionary levels.”

On a house keeping note – Fort Fumble have asked us to advise subscribers that over the Christmas period the Navy has shut down due to the ABC Learning debacle. “Defence, like most of the public service, relies on ABC Learning for child -care services for its workers.” All those holidaying between Avalon and Palm Beach are asked to text 1800 – Attack should they witness any naval activities from their sun beds. Illegal fishing is not of primary (no pun intended) concern given these unforseen and unprecedented circumstances are unique in our first year of gilding the Aussie lily. Fort Fumble will abbreviate its call sign to F – troop over the Christmas break.

I’m thinking Yes Minister! We would love to hear your thoughts? Steve, Richard and myself, are happy to blog with you should you like to challenge our respective market outlooks and forecasts.

Please make sure you complete the required fields before you hit |> send.

Cheers ^__^

6 Responses to “2008 housing values have moved and in 2009 we expect them to……?”

  • It would be very difficult to make any call or comment on current market conditions, things could go either way, but in any event many, many people have, are or will be severely affected.
    Below for aficionados of the Stock Market is a overview of the S&P (it’s a waste of time talking about what the DOW does or does not do)
    As your readers will see from the information below each is an each way bet. (As an aside some $760 Billion has been lost in the Australian Share Market so far, $US30 Trillion World Wide)
    The S&P 500 Index began in 1950. Many journalists refer to the recent performance by the S&P 500 Index as the worst performance since the Great Depression. It is the worst calendar year performance of the USA stock market since the Great Depression, but the journalists and so-called experts are mixing up their indices.

    In any case there are only two calendar year periods since 1950 where the S&P 500 index has fallen for more than one year in a row.
    The two periods are 1973-1974 and 2000-2002.
    Other than for these two periods the S&P 500 Index has only fallen for one year, with the single worst performance being a fall of 14.31% in 1957.

    The market falls in 1973-1974 and 2000-2002 periods were as follows:

    Period 1 1973 -17.37% 1974 -29.72% Total -47.09% Oil quadrupled from about USD 3.00 to USD 12.00.

    Period 2 2000 -10.14% 2001 -13.04% 2002 -23.37% Total -46.55% Dotcom crash.

    The S&P 500 Index was 1468.36 as at 31/12/07, and closed last night at 752.44. Thus the calendar year decline to date is 45.07%.

    For interest the S&P 500 Index reached an all-time high of 1565 in 2007. Thus the decline to date from the all-time high is 48.46%.

    Who knows where the S&P 500 Index will actually bottom, but if the last 60 years or so mean anything, maybe the bottom is not far away.

    In the Great Depression, from the stock market peak in October 1929, as measured by the Dow Jones Industrial Average Index, to when the same index bottomed on July 8, 1932, the USA stock market fell 89%. I hope that history is not going to repeat itself.

    But here is my point, with the amount of money Governments are throwing at the World economies, we will either see the biggest share and asset run in history in the next 6-9 months,
    Or alternatively most of us will be wiped out financially. The 50/50 each way bet will make dining out stories for the next 10 years, either way!

    Cheers Steve

  • Good to see a well researched comment on the general mosman market if you listen to the typical blonde Mosman coffee set the WHOLE OF MOSMAN IS A WASH WITH PROPERTY !! and nothing is selling. My view is of a similar nature to the R and W boys with one exception and that is thanks to the NSW governments forward planning and their new higher property tax we see VERY FEW NEW DEVELOPMENTS IN THE NEXT 18 MONTHS. This will result in a further shortage of apartments and housing. What ever properties are being developed in Mosman now there will be none in the future so its a good time to take stock and see what can be purchased.

  • Gordon says:

    It is clear we really need governments to show their hand and provide a stimulus to developers to get into it! The Mosman and Neutral Bay Property Market (well, the whole Sydney Real Estate Market) needs to get a top down involvement, property prices declining is not the problem.

    It is what Richard and Stephen allude to in their statements that we all must be realistic in our market assumptions. We all need to be leaders, we cannot simply sit back and see what happens, we need leadership from agents, developers, investors, and all sectors of government.

    I for one as an investor am waiting for someone to put their hand up. Yes, I have made some and lost some over the years, but I always turn to property, especially in tumultuous times. It has what has made me a long term investor and known locally for this.

    It is just now I want to see what all levels are prepared to do now, instead of watching from the sidelines.

    PS: Love the fact I can contribute on your site now Stephen !!!

  • MIchael Noonan says:

    Stephen, how right can a man be! It seems the ‘top end’ of town have been telling us how it is and will be for too long.

    How the tide has turned. We in the market, know that respect is hard earned. I would prefer 100 x over to trust my instincts rather than some analyst that has never been at the coalface.

    Yes, times will improve, but this is a new world order, we invest (my wife and I) in good times and bad, but we invest for returns long term.

    Just about every ‘advisor’ gets their returns short term and so I listen to my inner ‘voice’, that talks to me from over 30 years of market experience.

    I have not seen a market like this in my lifetime, but I do know one thing, that is to never panic, invest securely, take my time and listen to everyone and trust only the ones that do not profit from their advice…..oh….and take snippets of that advice….that will help me long term.

    Love the new format 🙂

  • Steve,

    Thanks for sharing your thoughts and stats – some scary data there. As each day goes by we are one day closer to climbing out of this disaster.

    Best regards to both you and Victoria, your website looks great 🙂

  • Thanks to Michael,Stephen and Gordon for their comments, we learn a lot from your feedback ,and appreciate the time you put in. Excellet feed back on those down cycles!
    I look forward to future ideas and corresspondance.

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