2009 – The recession we had to have?…………or keep reading about!

2009 – The recession we had to have?…………or keep reading about!

Already media outlet www.crikey.com.au is referring to newspaper reporting as “recession p-rn” (add an o in the missing space) as it is everywhere. It appears that every “recession p-rn” article appearing on Fairfax Media, News Ltd papers and websites, has resulted in prospective sellers cancelling their 2009 print marketing campaigns and opting for online marketing (the cheaper alternative).

Fairfax Media and News Ltd real estate print revenues will be smashed in 2009 when these (previously) “rivers of gold” will become dry creek beds. Smarter print initiatives need to evolve which, with respect, should have already been released for the 2009 real estate markets. This simply explains why vendors are presently reluctant to engage in costly campaigns – preferring to opt for the high tech online agencies. Our point of difference in this market is our online investment in technology.

Here are the exclusive facts based on sales evidence provided by Australian Property Monitors. The Mosman house market consisting of 4,900 houses would, in strong markets, trade at ten per cent of volume. 2008 was the worst ever recorded year in terms of Mosman house sales where just 219 sales were recorded as compared to 384 in 2007.

Mosman House Sales In 2008

Total sales – 219

Total Value Sold – $580,558,112.00

Private Treaty – 156

Auction – 63

Median Price – $2,376,000

Average Price – $2,870,373

Mosman House Sales in 2007

Total sales – 384

Total Value Sold – $1,153,329,720

Private Treaty – 270

Auction – 114

Median Price – $2,360,000

Average Price – $3,003,462

Mosman, for quite some time, has identified itself as a difficult auction market as anecdotal sales evidence proves.

If you look at the monthly Mosman house sales evidence, the story unfolds in 2008.

January 2008 – 8 home sales

February 2008 – 24 house sales

March 2008 – 24 house sales

April 2008 – 25 house sales

May 2008 – 30 house sales

June 2008 – 20 house sales

July 2008 – 17 house sales

August 2008 – 22 house sales

September 2008 – 13 house sales

October 2008 – 14 house sales

November 2008 – 12 house sales

December 2008 – 9 House sales

These figures will increase somewhat however it is clear that sales volume for Mosman houses in 2009 is obviously well down on previous years. The sales volume decrease in recorded Mosman house sales is 43 per cent down from 2007 to 2008 and 55 per cent down from recorded sales in 2006 compared to 2008. The percentage decreases over the same periods for average and median prices are nowhere as severe. What is blatantly obvious is the fact that Mosman is very much a private treaty suburb and not a public auction suburb which was further evidenced late last year when some clearance rates fell below ten per cent.

Again we are not valuing any mortgagee in possession properties for banking institutions so the ongoing rumours that half the suburb is on the market, is clearly incorrect. Yes – values are down by approximately ten to fifteen per cent however confidence levels are down by over 50 per cent which is an exact reflection of the market.

Another first in 2009 will in all probability see the tightest property volumes offered to the market place in years. What many fail to understand is that house volumes keep reducing not increasing and we know what that does to values. The tug – a – house battle in 2009 will be just as intriguing as probably every other thing that we will observe in the coming year.

We are now into our ninth year of Virtual Realty News and this year will be compelling. Welcome back and cheers! Next week we will look at how Mosman apartments performed. ^__^

5 Responses to “2009 – The recession we had to have?…………or keep reading about!”

  • Dave B says:

    The argument that there is a chronic undersupply of housing seems implausible in this environment. What happens in a period of downturn is that the ratio of inhabitants per dwelling increases – young people move home, the spare room is rented out etc. and bunk bed sales go through the roof.

    Evidence of this is the abundant oversupply of new, medium density housing sitting on the Pacific Highway. We were lead to believe this would fill overnight. It clearly has not happened and the ratio of inhabitants:dwellings will continue to decline. I don’t see families camping on the street either.

    Liquid assets required to fund a deposit were typically invested in the share market, so I don’t envision too many people sitting on an idle $600,000 of cash to fund a 20% deposit on a $3M property. Bonus pools have disappeared, as have the profligate wages of bankers. Tighter bank servicing ratios mean lesser debt available. Forget about bridging finance to finance the mass of Mosman properties on the market.

    The result is a gaping hole in the very thin bid (expecting a deflationary spiral) and an increasingly restless offer (gasping for cash, starting to lose jobs, pull kids out of private schools etc).

    The result, in my humble opinion, is a likely massive write down in property values. 20 million Britons are living with negative equity. Australia’s turn now. Could be worse…Mosman could be WA.

  • Gordon Frend says:

    Thanks to the fearless NSW government, we look like having a smaller fall in 2009/10 than any of the other states.

    Sadly, that’s because the standard of government services and infrastructure here has been going down the gurgler for years, so we were nearer the bottom to start with. . .

  • The intricacies of a market are critical in determining what, where and how. Or should I say value and the ability to transact.

    Your overview clearly does this .

    The year ahead will be tough with the smart money seeking opportunities .

    Dyson Austen Valuers

  • gavin says:

    I think the times that we are in are a simple reflection of market cycles. On a macro and micro level. While bankers, speculators and event humble (??) agents like myself wonder what the hell is going on, the long term picture is all the same. Upon recently being asked about how BAD he thought the recent crises was Warren Buffett was quoted as saying “….. I just hope that I get to live through another few cycles like this……” – his major point being that he would live long enough to see them. No other point was he trying to make than this.

    The BIGGEST problem (that may be the biggest pressure on people) is that they did OR didn’t build up their WAR CHEST when the good times did occur, and hence should be in a great environment right now. These are cleansing times, and not worth worrying about unless you are buying or selling. If you are simply owning a property – get on with it and get over it. If you are buying, good luck to you – if you are selling – good luck to you to because you are probably also buying UP. I don’t see a downside frankly – except for the prescious few who take more pride in the equity balance sheet than the actual effort required to get there.

    My rant for the day. Good points above though, bar the doomsday thoughts. What is doomsday to one is another ones heaven.

    Cheers

    Gavin

  • Robbie Mac says:

    The figures are even worse – by my maths on the numbers provided, the 2008 average is $2.651m.

    However, the “Recession p$&n” view is worthy. What our press like to report and what is really happening is not necessarily the same thing. The car market is a similar barometer to property, and despite all and sundry in the press telling us now is the best ever time to buy a new car, the dealers disagree, as they don’t have any stock. For example, trying to buy a new Holden V8 is something that will be very difficult to do before March. A Holden yes, but also a V8 – hardly a sign that people are concerned about their cash. Therefore, very much mixed messages, which suggests, despite the lessons of history, we have a range of conflicting economic indicators. And that in turn suggests no-one really knows what is happening, let alone our fearless (???!!!??) political leaders.

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