This is our final edition for 2008 and what a rollercoaster year it has been. For many an initiation and for others, a ‘here we go again’! The overriding consensus from most that we have spoken with, (and it is a wide circle of influence) is that the first six months of 2009 will be tough – but there is light at the end of the tunnel. The spruikers who said that the banks were about to release an abundance of mortgagee-in-possession sales to our Mosman, Cremorne and Neutral Bay markets in 2008, were wrong. It never happened! They would be better served and suffer much less embarrassment if they kept their Chardonnay commentaries to themselves and concentrated on the 2009 Melbourne Cup winner (same odds).
Like this week’s Mosman real estate story where (supposedly) a vendor walked into an agency wanting to list his home (quietly). He told the agent where he lived and the agent responded “ so you are number 16? I now have in your street 14, 12 and 10, so that is a development site.” Of course, this never happened!
Newspapers accentuate these stories yet on the other hand they expect advertisers to invest in their organisations. This is why I predict that on an economies of scale basis, ‘online’ will outplay print in 2009 – an all time first. Why? Because real estate agents are tired of defending print campaigns when journalists (based on short term opinions) keep talking property markets down.
Let me say once again, that Richardson & Wrench Mosman & Neutral Bay has not been asked by any major lender to provide submissions to market properties in 2009 where the vendors are financially distressed. This speculation is a complete nonsense and with our dominant Mosman market share (where they always call in three or more agents), we would certainly know!
For obvious reasons we will all experience certain elements attempting to talk values down because of a vested interest. Cashed up buyers – yet in Keating’s recession where unemployment was at 11 + per cent and interest rates at 18 per cent, today’s landscape is entirely different. Today all markets correspond succinctly and correctly and (collectively), we are in a much better position to take a more educated market positioning.
The Mortgage Choice /REIA Real Estate Market Facts has reported that the Australian weighted average median house price decreased from $459,795 in the June quarter 2008 to reach $447,659 in the September quarter 2008 – a decrease of 2.6 per cent over the quarter, and an increase of 0.7 per cent over the year. The report acknowledged that while house prices fell in the September quarter, tight vacancy rates and high demand for rental properties identified that rents continued to rise in most capital cities. It should also be noted that over Christmas and the New Year we will see many expats return to our shores which means that if they don’t already own they will be market participants in sales or rentals.
For example: a Burran Avenue sale was recorded two weeks ago for reportedly $19.7(something) million. This sale was for two adjoining properties which last sold in June 2005, one for $14,000,000 and the other for $6,500,000. Total $20.500 million. On that basis these property values have dropped by just over three per cent (combined) since the June 2005 transactions.
Unemployment is rising and this week it climbed to 4.4 per cent (the highest in twelve months) when 15,600 jobs were cut in November. Such an increase obviously adds to the gloomy economic outlook which is only natural since we have just come out of an unprecedented seventeen years of economic growth. It must also be noted that Australia is still well above the 1990/91 recessionary levels which is obviously assisted by decreasing interest rates and greater fiscal stimulus which will play dominant roles in 2009 and beyond. Already, some schools of thought are that the Wall Street stock market bottomed two weeks ago. If correct, will see significant cash reserves (namely idle superannuation monies) head back into our financial markets. It should also be remembered that Australia still remains the fourth highest player in the World economy given our compulsory superannuation contributions.
The Australian Bureau of Statistics (ABS) reported this week that home loan approvals actually rose in October 2008 ending eight months of consecutive falls – an obvious legacy of aggressive interest rate cuts by the Reserve Bank of Australia (RBA). The number of home loans seasonally adjusted, rose by 1.3 per cent compared to September 2008. October 2008 totalled $12.3 billion which represents a 2.4 per cent increase from September, investment housing increased 0.7 per cent and loans for existing homes rose 1.6 per cent which reversed the 1.3 per cent decline in September 2008.
We predict that in February the RBA will drop interest rates by a further 50 basis points which will see the cash rate sit at 3.75 per cent and by June 2009 we can see a strong argument for property players to start giving strong consideration to fixing interest rates. In 2009 we predict that the property canary will sing to the Reserve Bank Governor – cheap cheap!
Virtual Realty News (VRN) is now into its ninth year and next year in September, we celebrate our tenth anniversary and we remain confident that we will have posted one billion dollars in online subscriber sales. Our online models are certainly well positioned to meet these expectations. After all, VRN is Australia’s largest and oldest weekly real estate property E-zine.
In 2009 we expect to see some major re-distribution of advertising monies until such time as our property markets justify such expenditure. So what was previously a mandatory spend could very easily become a secondary spend as property owners (given the economic circumstances) become much more conservative with their money. 2009 will very much be a MoM (month on month) proposition as against ‘what a difference a day makes’.
So there you have our predictions – we would love to read yours? Scroll down and post in our blog.
On behalf of Steve, Richard, Marize, Mark, Jacqui, Eleanor, Gillian, Pip, Belinda, Judith, Lynn, Yana, Sharon, Rebecca, Bernadette, Alesha and Deeann we want to take this opportunity to thank you for your ongoing patronage. We wish each and every one of you a very Merry Christmas, a prosperous New Year, health and wealth in 2009 and beyond.
Cheers ^__^
Our next edition will be on 23 January 2009 when again we will go weekly until December 11 2009. Then we start all over again in 2010!
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12.12.08Robert Simeon
