Our office will be closed from December 24 until January 4 2010. For any parties wanting to contact one of our sales agents to arrange an inspection during the period that we are closed here are the contact phone numbers.
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Stephen Patrick – 0413 834 848
Richard Simeon – 0411 499 906
Robert Simeon – 0411 856 969
Mark Manners – 0403 032 700
Jacqui Rowland -Smith – 0411 714 442
Marize Bellomo – 0414 972 203
Taylor Fidan – 0423506055
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We wish each and every one of you a very Merry Christmas, a prosperous New Year, health and wealth in 2010 and beyond.

11.12.09Stephen PatrickNo Comments »

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Twelve months ago in our final edition of Virtual Realty News for 2008 I wrote – “The first six months of 2009 will be hard (not necessarily harder) and I believe the next six months will see a mild rebound leading to much stronger property markets!” As it turned out this prediction was one hundred per cent correct and in June 2009 we posted $63,000,000 in sales – the rest (just like that edition) is now history. Despite an avalanche of doomsday prophecies (and there were plenty) the missing link for the prophets was that they simply underestimated the power of the Internet and smart business models.

Every day, we spend an intoxicating amount of time in front of a computer – reading, writing and communicating. Just weeks prior to our final edition in 2008 I wrote – “I have said it before and I stand by my previous comments that in the recession of the early 1990’s there was no Internet and no electronic information highway that today, has played a dominant role in the recovery process.” Once informed, the decision making process is activated – the dominance of online during the global financial crisis is now a legacy that will continue to grow and dominate.

Some would suggest that it was a stimulus package but I would argue that those prophets would not know the difference between ‘Word’ and ‘Outlook’. Politicians make a habit of wording their outlook differently, based (more often) on spamming the minds of the electorate with nonsense.

The hive of activity as the Boxing Day – Sydney to Hobart race is fast approaching

www.timmooneyphotography.com

So what are our predictions for the Mosman property market in 2010? Don’t worry if you blink, as it won’t be moving that fast although we see strong signs of renewed confidence. Housing prices will increase but we see no need to panic because we see upward growth in property values – that is growth (not boom). The Australian Bureau of Statistics (ABS) announced this week that lending for the construction of new homes rose dramatically in October increasing by 5.7 per cent. New home loans have now officially increased in 13 of the last 14 months – population explosion?

Certainly this argument is greatly assisted by the sale of a Perth mansion this week for a new Australian record of $57.500 million dollars. RP Data wrote on its blog this week – “The improvement in equities markets and business conditions has prompted many top end buyers to venture back into the market. For a while there were many bargains to be had – premium housing markets took the biggest value dive of any sector around the country in 2008 and now seeing the biggest jump. Values in the top end are now once again at record levels, having risen 2.4 per cent higher than the previous peak recorded back in February 2008. On an annual basis many of these premium suburbs have recorded some of the largest falls in median house prices however, it is clear with confidence returning many areas are set to bounce back or already doing so.”

Politicians and banks will provide great fodder for Virtual Realty News in 2010.

It has already started with this week’s Westpac “banana debacle” when it stupidly sent customers an email justifying its recent interest rate hike. Its rationale was to compare Westpac as the business selling banana smoothies – too much egg nog I thought, so have a look.

Maybe this graph presents a more accurate positioning from the “Bananas in Pyjamas” who must think all their customers are in a slumber with no Internet access.

Fort Fumble – Federal Government

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Fascinated by spending other people’s money (tax payers) whilst consumed with the belief that Australia still requires its stimulus package, The Emperor (Kevin Rudd) is currently holidaying in northern Europe. His preferred mode of transport has been letting him down – given Air Force One has ongoing mechanical problems – much like our economy.

Co-pilot Wayne Swan needs to masticate more, because his ears keep popping. As was pointed out in Letters to the Editor, this week in The Daily Telegraph. “Treasurer Wayne Swan fools no one with his ongoing bleating about banks raising interest rates much more than the Reserve Bank. What’s he doing to restore the competitive pressures that have collapsed in the financial services sector under his brief watch? While the Government discriminates against smaller financial institutions in its guarantees for wholesale funding, his utterances are simply deceptive posturing.” The co-pilot did approve the acquisition of St George bank to Westpac so have a banana smoothie on the house.

The Mad Monk is waiting in the wings although that too, may be an aborted takeoff with plenty of Liberals in the hanger. Malcolm Turnbull will probably head back to merchant banking where approval ratings will improve considerably.

Fort Crumble – NSW Government

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Where does one start – the most incompetent governing body in Australia’s history – the ‘violent crumble’ of all governments?

Robert Gottliebsen recently wrote on Business Spectator “We’re scaring off housing investors. Governments, whether they be in Canberra or in the states, often pass legislation without ever understanding its consequences.” He is referring to our housing crisis and talking about property investor taxes. “This means that if you hold an average investment property in Sydney and this pushes you over the $376,000 land tax limit, it makes no sense to invest in another. The annual holding cost figures look roughly like this: land tax 1.6 per cent; rates/water 1.0 per cent; mortgage interest 7.00 per cent plus; and maintenance/agent 1.0 per cent. That’s represents total costs of 10.6 per cent of your investment.” Rents will go through the roof over the next twenty four months.

Thoroughly enjoyed reading an article this week in The Daily Telegraph – NSW leads economic rebound. “NSW is leading the national economic recovery with forecasts of a miraculous turnaround in growth figures in the coming year. The State’s Budget is also expected to return to surplus a year earlier than expected, with a $872 million surplus expected in 2010 – 2011.” Technically it was broke well before the global financial crisis although this did not restrict the excitement of newly elected Premier Kristina “doodle dandy” Keneally “who has absolutely no tertiary qualifications” from shrieking (with accent) that the NSW Budget was “back in the black”. Oh dear!

No doubt “doodle dandy” would have been suitably impressed to learn that Nathan “no strings attached” Rees, brilliantly negotiated the sale of our three Manly JetCats that cost NSW taxpayers $3 million – with the purchaser flogging them off shore for more millions. Nathan “no strings” out, and Kristina “doodle dandy” in – so much to look forward to next year.

It has been our absolute pleasure delivering Virtual Realty News to your inbox each week and we are now into our tenth year (never missed an edition). I remain very confident that in 2010 we will be the very first Australian real estate agency to break the magic $1 billion in subscriber sales – currently at $887,154,220.

Special thanks to the aerial photographic gymnast of the sky Tim Mooney for his amazing photographs – a weekly highlight (for us) to explore his vast library of photography.

We thank you for your patronage. Defamation suits have been interesting and engaging (it’s just that I am an advocate for freedom of speech). The audit of our books by The Office of State Revenue was a highlight which re-inforced the fact that Virtual Realty News keeps annoying Forts Fumble and Crumble.

We will return to your inbox in late – January 2010 and go (weekly) all the way through to December 2010. It’s a tough job – but somebody has to do it!

Merry Christmas and have a brilliant, happy and prosperous New Year.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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11.12.09Robert Simeon10 Comments »

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An extraordinary week in Australian politics that resembled the “Battle of Sydney Harbour” or maybe “Battleships in the Big Bathtub” – where part of all contestants’ boundaries (by coincidence) were the high water marks of Sydney Harbour. The “Mad Monk” won line honours and yet, as with any race (fluid spill motions) there are always protests and on the very same day, the Reserve Bank of Australia (RBA) broke tradition and raised the cash rate (+0.25%) for the third consecutive month – a day of threes!

The cash rate, now at 3.75 per cent, keeps heading north and whilst on north, rumours that “The Emperor” Kevin Rudd is auditioning for Getaway, remain totally unsubstantiated. We can however, be sure that somewhere, he is up – up – and away and if he does call a double dissolution, will have to return to our shores sooner rather than later.

Gerard Henderson wrote an interesting article that appeared in the Sydney Morning Herald – Lodge is a long way off, but the new man will shore up base. “Since its formation in 1944, the Liberal Party has won office from Labor on three occasions, Robert Menzies defeated Ben Chifley in 1949, Malcolm Fraser prevailed over Gough Whitlam in December 1975 and John Howard vanquished Paul Keating in March 1996.” What I did find amazing was this “It is most unlikely that Abbott can lead the Coalition to victory in next year’s election. No government has been defeated in its first election since 1931, when Labor prime minister, James Scullin, faced not only the impact of the Great Depression but also splits within his own party.”

Was the Mad Monk bunkered down at his Mosman headquarters – whilst observing troop movements at the harbour bunkers of Turnbull and Hockey? Loose lips sink ships. We asked Tim Mooney to fly over Tony Abbott’s Mosman bunker.

www.timmooneyphotography.com

Westpac has jumped the starting gun where as quick as a flash it raised its standard variable home loan by 45 basis points to 6.76 per cent which comes into effect today. On November 5, 2009 John Rolfe from The Daily Telegraph wrote Cut Government taxes on savings, says Westpac boss Gail Kelly. It would appear to some, that raising rates has nothing to do with household savings. National Australia Bank (NAB) increased its home loan rates by +0.25 per cent and then attacked Westpac with this announcement “We are determined to be competitive, to offer our customers a better deal and attract new customers to NAB. Today we are sending a message to customers at Westpac, and the other banks, that NAB can offer them a better deal.”

“Westpac CEO Gail Kelly argued yesterday (November 4, 2009) that if we all had more money salted away the country could have ducked the global financial crisis.” So in the aftermath now that the crisis has passed one can only then assume that Westpac is quickly making up for lost opportunities. Business Spectator – THE DISTILLERY: Waving Westpac through John Durie of The Australian concludes that the bank “is acting entirely rationally by extending the duration of its loans, chasing deposits aggressively as evidenced by its present campaign offering 6.8 per cent for 12 – month money and raising the cost of loans to protect profits. Its deposits now offer 130 basis points more than its closest competitors and 145 basis points more than the ANZ. This is a bank demonstrating its market strength emphatically, unworried by the potential for either market or political downside.” Or “roughly in simpatico is Matthew Stevens of The Australian who reasons that “Westpac’s decision to confront its customers with the nasty realities of our national funding dilemma serves to, once again, demonstrate the shaping dislocation of the Australian banking system triggered by the GFC. The latest credit growth numbers, for example, confirm the widening schism of the Four Pillars into a two – and – two – configuration. The data shows that the Commonwealth and Westpac now dominate the system growth like never before, speaking for 80 per cent of loan growth over October.” Wayne Swan approved the acquisition St George Bank by Westpac.

Market share of the big four banks, including BankWest and St George as at September 30 / Source: The Australian

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Macquarie Economics Research wrote Interest Rate Outlook – Gradual gets quicker

• “The RBA lifted the cash rate by 25bps in December. While the RBA’s view of the world has changed little since November, the news over the past month has reinforced their view that the recovery in train is on stable ground. We expect the cash rate to reach 4.50 % by the end of 2010.”

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Reserve Bank Deputy Governor Ric Battellino is indeed very upbeat about the Australian economy in that we can expect and look forward to years of economic growth on the back of booming resources, escalating population growth with rising household incomes. The RBA is predicting a strong escalation of house prices because Australia had entered “a new upswing” that would extend its record 18 years of continuous economic expansion.

RP Data revealed this week that house prices have doubled to an average $600,000 over the past ten years – the average Sydney house price was $300,000 back in 1999. The average price for an apartment in 1999 was $270,000 today it is $457,274.

The latest BIS Shrapnel Residential Property Prospects report identified that residential rent are expected to rise by an average 5.8 per cent a year over the next three years. This compares with a 5.7 per cent increase in 2009 and an average annual rate of 4.4 per cent between 2002 and 2008. Throw in an electricity bill expected to rise by 60 per cent over the next three years (according to an IPART report).

Fort Crumble was at it again and we now have our fourth premier in four years – recruitment companies would be well justified in opening up a sacked premier’s division. Now we have our first female premier – Kristina Keneally (no strings attached)! Can’t wait to see who makes up her front bench? Not that she will have any say in it! The Daily Telegraph is running a petition for an early election (To Sign)

Last edition of Virtual Realty News for 2009 next week – the chaos of this week would be very hard to beat. Thankfully it is controlled – however we all know that elected politicians make great puppeteers.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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4.12.09Robert Simeon1 Comment »

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The Emperor (Kevin Rudd) was back at it again recently when he commented on Australia’s skyrocketing population and quipped “I actually believe in a big Australia. I make no apology for that.” Well, Australia actually does need apologies, because critical infrastructure advice continues to fall on the deaf ears of our elected politicians.

After all, there must be something seriously amiss when past King of Spin, “Bobby Dazzler” Carr starts penning and pontificating on population policies in the Sydney Morning Herald. “Perish the thought that we can handle a bigger population” wrote the Dazzler “Some Australians must have felt similar estrangement when they read federal Finance Minister Lindsay Tanner’s defence of Australia’s runaway immigration targets, playfully comparing our population densities with those of Bangladesh.”

Then the Carr crash (with accompanying air – bag), “That Tanner is one of the best minds in federal politics will only deepen the rift between 90 per cent of Australians and their political and business leadership over population policy, or rather the absence of any policy except “more”.” It would now appear that “Bobby Dazzler” is over the selective hearing condition that plagued him in his reign of the Premier State from 1995 – 2005. The transformation went from Premier State to State of Decay to Fort Crumble and even though it did not happen overnight, it is now a nightmare.

Maybe this vacant plot of land might make a nice residential subdivision with very little chance of flooding?

www.timmooneyphotography.com

Sydney to squeeze in 640,000 new homes by Matthew Moore – Urban Affairs Editor the Sydney Morning Herald identified “A forty per cent increase in Sydney’s population over the next 20 years means the State Government has no option but to open up scores of suburbs for new developments, according to radical proposal for Sydney to build 640,000 new dwellings.”

For this to happen, Fort Crumble would need a plan so I went in search and found that it does not look pretty, as Andrew Clennell of the Sydney Morning Herald revealed. Rees desperate to stand for something “In this respect he hopes to get something on the radar at Macquarie Street that has been lacking for the past 12 months – POLICY.”

They obviously can’t hear but thankfully they can read. “Number one on his list is transport. The transport blueprint that Rees promises to hand down sometime over the next three weeks is likely to be treated with some scepticism.” I guess he means this is like a homeless person entering Star City and requesting a seat at the High Rollers Table – after all Fort Crumble is broke. Back to Andrew “This is because of the large number of projects that Labor has promised, and then not delivered, in 14 years in power.”

Oops “Bobby Dazzler” was at the helm for ten of those years – although Fort Crumble would win a wood chopping event as they sure know how to wield that political axe.

• North West Rail link (promised in 1998 and axed)
• North West Metro (announced and axed)
• Bondi Beach rail link (promised then axed)
• Parramatta to Epping rail link (halved to Epping to Chatswood rail link)
• CBD/second Harbour crossing rail link (promised and axed)
• F6 through southern Sydney, (on again, off again)
• M5 duplication (long delayed)
• M4 East extension (long delayed)

Last month’s parliamentary pay increases and the fact that our Fort Crumble premier should be (and is) the highest “paid premier” in Australia have been vindicated. Alex Gooding had this interesting analogy on transport in the Sydney Morning Herald – Three times denied: western Sydney misses out on transport, again (great read) which really adds a poignant perspective on the political decision making processes.
Ongoing calamities when “ Paid Premier” Nathan Rees overturned an earlier decision to contribute $45.000 million for the newly anointed AFL’s western Sydney franchise to build a new home ground – again out came that axe (perish the thought of constituents contemplating the axing our “Paid Premier”)

Macquarie Equities Research – this week released this compelling graph in its Australian economics report. Sketching the outlook for housing “this note examines the recent trends in the housing sector and looks ahead to key factors to watch in 2010.” Looks like a tsunami to me.

Macquarie Equities Research – “In our view, the key factors to consider are the favourable fundamental determinants – strong population growth and constrained supply – alongside the deteriorating level of affordability. With these factors working in opposite directions, it suggests that the more extreme forecasts of a house price bubble or a price collapse will continue to prove wide of the mark.” More of this report in next week’s edition.

Back to Andrew Clennell’s report “Sydney is experiencing transport gridlock. Public transport services in the CBD are overcrowded, even though train services are inadequate and in many suburbs non-existent. In response, transport plans are announced and then re-announced. New rail lines are proposed but then abandoned and governments blame increasing costs and global financial problems.” He did forget to mention that over the last fourteen years the NSW government also collected the highest amount of taxes in Australia’s history. In real estate terms it would be “dilapidated home – run down, neglected, yet with plenty of potential”.

So let’s look at what is happening locally. I went to Wayne Swan’s Nation Building website to see what is happening in Mosman and North Sydney municipalities. Indeed Nation Building personified – bicycle paths, perimeter fencing, a shade structure, and a few water bubblers -no wonder our economy has rebounded with such exhilarating speed. All that it takes is a plan!

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Our councils are doing it tough mentally and physically although they are making plenty out of parking fines as Vikki Campion reported in The Daily Telegraph. Where you’ll cop a parking fine. North Sydney Council collected $7,000,000 which was up 48 per cent from $4,700,000 and Mosman Council $1,700,000 up 89 per cent from $910,000. It should also be noted that Mosman Council has been aggressively investing in new parking meters so one could expect a significant revenue increase with this return on investment.

In retrospect, if our population continues to explode it would then not be unreasonable to draw a conclusion that our water supplies face significant declines too (it did happen well before the proposed population explosion). Now when you renovate or build a new home, you must provide water tanks in accordance with local Council building regulations.

So why, in any Mosman or North Sydney parks, ovals or reserves, have the respective Councils not installed water tanks? After all they have only to connect to their very own street storm water. Look at the number of parks, ovals and reserves located below street level. Balmoral Oval, Rosherville Reserve, Forsyth Park, Tunks Park, Primrose Park, Cremorne Point Reserve, Sirius Cove Reserve, Allan Border Oval, Rawson Park, Spit Reserve and Reid Park. These are but a few that are all entirely dam- dependent and coincidentally, always have their sprinklers on when it is raining.

Warragamba Dam is presently at 55 per cent capacity and declining – although the Kurnell desalination plant is soon to be completed and that will supply up to 15 per cent of Sydney’s water. Of course we can’t leave out evaporation as this coincides with policy that has also evaporated.

Then again I have never been one to water down an edition.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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27.11.09Robert Simeon1 Comment »

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We all love it when a plan comes together, so spare a thought for those at Fort Crumble (NSW government) who still fail to understand a plan that actually works. We all know what happens next (as you will see) and it does not look pretty for this once proud state. A decade later those horrific and planned bureaucratic bungles are now taking a major toll – (one Fort Crumble can’t collect either). Ongoing bungles at Fort Crumble are considered to be “having a real hard go”.

Just as ironic is that in NSW, infrastructure has moved into economic decline and as with all declines, they have a habit of gaining momentum that ends in a huge crash. On the other hand, when a government drives constituents to other states, it could be construed as its very own plan to fight housing affordability – better known as reducing demand. In a nutshell, no plan works when you apply the supply v demand economic theory, without applying the basic principles of meeting supply first. Housing in Australia is facing an interesting twist, because when the tools to meet supply are down, prices will keep rising – more a result of failed government forces.

Pulpit Point, Hunters Hill (a planned estate to meet supply) photographed by Tim Mooney. The vacant marina berths may well be a result of the global financial crisis. Or was this photo taken on a weekend when the residents were out relaxing on picturesque Sydney Harbour ? (Sounds like a smart plan).

www.timmooneyphotography.com

In past editions I have referred to the ‘thirty something factor’ in Australian housing – one third rent, the other third own with a mortgage and the final third own without a mortgage. RP Data published its Weekly Property Pulse. “Housing finance data released by the Australian Bureau of Statistics (ABS) this week showed that finance commitments surged during September. In particularly there was a strong bounce back in first home buyer loans which was not surprising given that it was the last month in which the First Home Buyers Grant Boost was available in full.” Bear in mind that interest rates are also increasing so here is Household Estimates 2007 – 2008 graph which makes one wonder what it will resemble after the impact of the first home buyers grants in 2009.

This is how it looked (prior to First Home Buyers Grant Boost) when the Reserve Bank of Australia (RBA) was sitting around 7.25 per cent (RBA rates) and in September the cash rate was at 3.00 per cent. Currently, the cash rate is 3.50 per cent. Are the property debutantes who grabbed the grant, aware that post – global financial crisis, we are headed back to the future market? In 2010 – 11 the economy will pick up by 2.75 per cent rather than the suggested 2.25 per cent.

Whilst yet to be evaluated, rental property vacancy rates remain at record lows which in all probability forced many in rental markets to purchase property – the Sydney vacancy rate in October remained at 1.3 per cent. It is supposed to be 2.50 per cent to 3.00 per cent. According to RP Data, over the twelve month period, the weekly rents for houses (nationally) increased by 3.4 per cent (that was in a downturn). So why is The Emperor (Kevin Rudd) wasting money on renovating school halls when there is an obvious need to increase housing? (I will get to that shortly). However, this rental graph is simply scary.

In pursuit of answers, I found that the culprit (surprise – surprise) was our very own Fort Crumble when I read in the Sydney Morning Herald – “NSW not a developer’s nirvana … it’s planning hell” by Aaron Gadiel. “if you were to accept everything that has been said about development in NSW, you might think it was open slather; a developer’s heaven – that planning was out of control or that, development was running rampant.”

“Nothing could be further from the truth.”

“It is time for a reality check.”

“Developers are not fond of NSW. Not at all.” Based on the graph above I would suggest that those in rental accommodation would feel the same, given that when it comes to ‘bricks and mortar’ Fort Crumble is ‘as thick as a brick’ with absolutely no intellectual mortar between the layers.

“In development terms, NSW is neither one, nor even number two. After decades of more building activity than any other state in Australia, we lost our first place ranking to Victoria in 2008. To compound the indignity, in the same year we also fell behind Queensland.” What a plan!

“Victoria and Queensland have stolen a disproportionate share of Australia’s building investment. In the financial year ending in June, NSW accounted for only 23 per cent of Australia’s building activity, while we made up 32 per cent of Australia’s population. The Australian Bureau of Statistics only records one other occasion where NSW was anything but first – and that was in 1977.”

So let’s look at our esteemed Premier Nathan Rees who (as he keeps telling us) is “having a real hard go.” Not sure exactly what is going in NSW aside from the government. “The economic damage to NSW from its poor performance is dramatic. The construction activity made possible by developers contributes $78 billion to the national economy each year. For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy. When we lose development dollars to other states, we’re losing income and jobs that rightfully belong to NSW residents.”

I refer you again to the above graph, “Sydneysiders have already been feeling the pinch of housing shortage. Rents in outer suburban Sydney have gone up by more than 20 per cent in the past two years. In the middle ring suburbs rents have jumped near to 30 per cent “. What a business plan.

For our Mosman residents I jumped over to Australian Property Monitors to access the Mosman occupancy data.

Fort Crumble is in total decay and Fort Fumble has absolutely NFI (No Financial Idea) as to exactly what is happening in the Australian property demographic markets. And my mantra is not to castigate – abuse or criticise our elected politicians on the astounding execution of their Nation Building expertise.

Clip of the Week

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In search, I went to YouTube – where I discovered one of the most amazing clips that signifies achievement. Unlike elected politicians, he is a man of few words yet his actions speak much louder than his few words. Backed by Delta Goodrem singing “Together We Are One” this clip should be re-played at every household and sales meeting.

Inspiration personified – Gavin’s Bridge Climb

Cheers

^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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20.11.09Robert Simeon4 Comments »

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Politicians are an interesting breed where on one side we have a government that finishes nothing and on the other side, an opposition that says nothing. Would it then be fair to assume that we are expected to know nothing as that way, when we see nothing, assume that something is actually happening?

These days, The Emperor (Kevin Rudd) is better credentialled to be sales manager of Flight Centre given his vastly accruing frequent flyer points.

With respect to The Emperor, we are spending billions on schools yet the last time I looked, nobody is living in them. So why renovate at this point? (plaques aside). It is very clear that as a matter of national urgency, Australia needs to be building housing accommodation to meet demand – our elected politicians (under the stress/threat of having to make a decision) forget that the property industry is the largest employer in Australia. Maybe they should read this article written by Stephen Lunn from The Australian – Housing stress getting worse – experts.

Tim Mooney Photography – Greenwich Point, Greenwich

www.timmooneyphotography.com

No better example when The Australian and the Melbourne Institute jointly hosted a Road to Recovery conference this week. Enter Wayne Swan who said, “We’ve got to really get going when it comes to building a supply of housing or we’ll hit capacity constraints that will hurt us in the very near future.”

Wayne, we are already there as Australian Council of Social Service chief executive officer Clare Martin pointed out. “Some 850,000 Australians are now in housing stress, with rental costs gobbling up a high proportion of their income.”

On top of that, the OECD announced this week that food prices in Australia have increased 41.3 per cent since the start of 2000, which then prompted a Government minister to call “for greater competition” (no solution offered) just a comment. For the record, Coles and Woolworths account for approximately 80 per cent of the Australian market.

Back to Clare Martin “A third are low – income households. Add to that the 105,000 Australians who are homeless and you start to get a real idea of how big the problem is.” Remember that Wayne told us “we’ve got to get going” Clare Martin announced the Government’s $6.4 billion commitment to social and community housing (recently wound back by $750 million). Wayne, that is actually going backwards, “Nation Building was going to build 20,000 new dwellings (but) the outstanding need right now is 250,000 affordable homes.” The Australian reported just 73 homes so far had been completed under the Government’s spending plan. This end of the property market needs to be wound up, not back, as the top end is doing very well (Lachlan and Sarah Murdoch purchased ‘Le Manoir’ for $23 million this week).

La Manoir – Lachlan and Sarah Murdoch’s new Eastern Suburbs home

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Economist Saul Eslake told the Road to Recovery conference, “One lingering effect of the financial crisis which is likely to exacerbate the housing shortage for some time yet to come is the difficulty which proponents of multi – unit housing developments are continuing to encounter in gaining access to finance.” So the banks lend to purchasers, yet won’t lend to developers which explains why, in Australia, multi – unit housing developments remain at historically low levels.

Alas, a Road to Recovery where Fort Fumble (Federal government) has turned the vehicle around and is attempting to drive backwards along the recovery road (with hazard lights beaming).

The Future Fund has around $60 billion in funds so why should it not enter the Australian property markets given the major banks’ reluctance to fund this emergency infrastructure market. It was built on selling government assets (Commonwealth and Telstra) so about time these funds were injected back into Australia.

Why does The Emperor still allow the Foreign Investment Review Board (FIRB) to relax regulations so that foreigners can purchase “new properties”. When “Finish Nothing” government spokesman for Assistant Treasurer Nick Sherry (he must be away too) said, despite the rule changes, the FIRB rules were designed to spur the creation of additional housing supply rather than add to affordability problems. Remember “Hogan’s Heroes”, Sgt Schultz – I know nothing!

The Australian Bureau of Statistics (ABS) smashed this “dumber and dumber” market assessment when it revealed this week, that fewer Australians own their homes outright and a greater number now rent (official data reflects worsening housing affordability). The Sydney Morning Herald journalist Chris Zappone wrote Home ownership down, renting up: ABS

“The proportion of people who owned outright by their occupants has dropped from 42 per cent in 1994 – 95 to 33 per cent in 2007 – 08. Over this same period the proportion of households renting rose to 30 per cent in 2007 – 08, from 26 per cent in 1994 -95.” Bear in mind that these figures will change significantly because First Home Buyers accepted the governments (collective) bribes to enter the property markets (casualties are yet to be determined).

Fort Fumble has wound back its boost for new and established dwellings to $3,500 from $7,000 (established) and $7,000 from $14,000 for new. At Fort Crumble (NSW government) you can collect $10,500 until the end of the year for established which then drops to $7,000 in the first half of 2010 and (steak knives) new dwellings $17,000 till the end of the year dropping to $10,000 first half of 2010.

Over to Business Spectator (free subscription) – Housing hopes which is always a fantastic daily read.

• The number of Australian home loans rose by 5.1 per cent in September, after a downward revised fall in August of 1.9 per cent and July -1.6 per cent. Annually, loans are 8.1 per cent higher. This is the highest number of loans since January 2008.
• Growth was driven by loans for construction (+8.1 per cent) and loans for established dwellings (+5.0 per cent, 85 per cent of total loans). Loans for new construction are at their highest since December 1994.
• Loans were strong across states: NSW up 7 per cent, Victoria up 3.1 per cent, QLD up 1.2 per cent, SA up 1.1 per cent and WA up 14.4 per cent.
• First home-buyers accounted for 26.1 per cent of new loans from 24.7 per cent in but still down from the May peak of 28.5 per cent. The size of a first home-buyer loan rose to $274,600 from $270,800 in August and $260,900 in September last year.
• Loans to investors (by value) fell 0.1 per cent after an 8.3 per cent gain in August and are 18.4 per cent higher annually.

Source: Crikey – Lending figures vindicate RBA’s interest rate strategy.

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Interesting to note that the Reserve Bank of Australia (RBA) increased the cash rate in October +0.25 per cent and +0.25 per cent November 2009. Consumer sentiment dropped 2.5 per cent in November (Movember) following consecutive interest rate rises. The Westpac – Melbourne Institute consumer sentiment index eased to 118.3 in November, from 121.4 in October, although it remained 38.3 per cent higher than last year’s level. The October rate increase saw the mortgage market contract for the first time in nineteen months from $2.9 billion in September to $2.6 billion.

Banking prediction of the week?

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NAB’s chief economist Alan Oster said growing consumer confidence and an improvement in business conditions had increased the likelihood of another 25 basis point increase before Christmas.

Interesting comment. Never before has the RBA increased cash rates beyond two months in a row. Over to Big Al at the NAB “This is a pleasing result and as such, we expect there to be a 25 basis point increase in every RBA meeting till March.”

Clip of the week?

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That would be “see nothing” – when applied to border security, housing and our road to recovery at Fort Fumble. Happy 40th Sesame Street and yes, history does repeat itself as do political episodes.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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14.11.09Robert Simeon4 Comments »

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Forget the spin and electoral rhetoric – Australia had just one quarter of negative growth yet in the wash – up many businesses did very well from the (apparently) worst global financial crisis (GFC) since the Great Depression. Danny John from the Sydney Morning Herald wrote “What crisis? Westpac gains ground from the GFC “A close study of Westpac’s annual financial result shows just how much the country’s second – biggest bank has benefited from the gains in revenue – and therefore market share – which all four of the majors have enjoyed in the wake of the global financial crisis.” No doubt shareholders will be happy with this most taxing banking stimulus!

That other stimulus paints an entirely new picture IMF praises handling of financial crisis when Peter Martin from the Sydney Morning Herald wrote “The International Monetary Fund has singled out Australia as one of the best managed economies, declaring that only Denmark, Korea, Norway, Australia and Sweden among advanced economies will require little or no medium – term adjustment to keep government debt at safe levels”. Now that may be fine however, Fort Fumble (Federal government) has some amazing housekeeping to balance both past and present where it will require some pretty amazing creative accountancy to balance its books. You can read Fort Fumble’s very own accountancy plan MYOB – (May You Obey Bureaucrats) here.

Tim Mooney Photography captures Cammeray, Tunks Park and Northbridge Golf Course

www.timmooneyphotography.com

Still on creative accounting, the award would have to go to our very own Nathan Rees who presides over Fort Crumble. This week he approved a three per cent pay rise for all NSW MP’s making himself the highest paid in Australia after The Emperor – Kevin Rudd. Now before we jump to conclusions both are battling enormous budget deficits so that in itself highlights the pressure they currently find themselves in.

The Sunday Telegraph revealed “Nathan Rees’ master plan to convince NSW to give him one more term. “Nathan Rees needs cash – and plenty of it – to convince fed – up voters to give Labor one more chance. Linda Silimalis reported “Embattled NSW Premier Nathan Rees is pleading with Kevin Rudd to help fund a $10 billion – plus pre – election spending spree to save his government.” Reads more like a last rites request although many would agree that from a business growth analogy, NSW passed away a few years ago and remains the highest taxing state with the least to show in terms of infrastructure.

As we all know, everything requires a plan although it would appear that a few requiring that stimulus are looking rather sick after construction on a Fort Fumble rail project was shut down in Sydney due to a financial blow–out, allegedly caused by poor planning. Our very own Minister for Infrastructure and Transport, Anthony Albanese, said earlier this year, that this project to take freight trains off the Sydney passenger rail network would be completed by early 2010 (now on hold indefinitely). Note this is a Fort Fumble initiative as against another Fort Crumble ongoing malfunction.

For me, another great read of the week was the transcript from Stateline NSW – when Quentin Dempster quizzed Kevin Rudd and Nathan Rees – Discredited

Later in the week, The Daily Telegraph ran the story – Developer lobbies for Della Bosca (Bonka) to become premier. The country’s biggest property developer Harry Triguboff is privately lobbying Labor Party officials to support John Della Bosca’s bid to become NSW premier. You can draw your own conclusions on that although it is interesting to see a property developer interested in re-building Fort Crumble – (I will get to that shortly) as trigger – happy. Makes plenty of sense when the NSW government has next to no idea about building infrastructure. After all it is actually broke!

The Melbourne Cup rate increase (whilst widely tipped) had little effect on the punters and a record $95.600 million was bet on race day. The Emperor keeps telling us that we need his stimulus yet Australia is the only country raising its cash rate so who is actually punting?

Macquarie Economics Research – How high will rates go? They lead the tipping competition on our interest rate predictions? “The similarity between the October and November statements suggests that the Reserve Bank of Australia (RBA) game plan remains unchanged. This means that the first stage of tightening will be out to get interest rates back towards a neutral level – which we think this is now 4 1/2 %“. That means another 100 basis point increases although it should be noted that the RBA has never before increased the cash rate three months in a row.

Robert Gottliebsen wrote on Business Spectator  Rate rises may backfire “Tomorrow’s Melbourne Cup deliberations by the Reserve Bank board present issues far more complex than most commentators are canvassing.” Enter Harry Triguboff again backed by the Macquarie Bank graph (above). “The Reserve Bank, its hidden agenda is that it is deeply concerned that the recent sharp rise in dwelling prices and the bank fears that a new bout of housing affordability issues and an eventual price bubble is looming as Australia’s housing prices move outside world trends. The rising prices move outside world trends. The rising dwelling prices are pushing the central bank towards lifting interest rates more sharply, despite Treasury caution.”

“Then enter Harry Triguboff – the largest owner and builder of apartments in Sydney and a major force in Queensland.”

“Understandably many discount Triguboff’s conclusions because he clearly has an axe to grind. But over the years I have found that the base trends that Triguboff isolates are right nine times out of 10, but his remedies are uncomfortable. When Sydney was booming he said the city was dying, but then declared it would not die because eventually the politicians and local councils would start making sensible decisions. It’s taken eight years but they are now listening to him.”

“Triguboff points out that for the last five years the construction of Australian housing has been half the demand created by rising population, so a huge backlog has developed.”

“Triguboff now says: “If the Reserve Bank insists on raising interest rates in the hope of suppressing prices then they must understand that they will in turn suppress construction.”

“Banks are still very cautious and will insist on decent margins of profit, otherwise they will not advance loans to developers. I know that the Reserve Bank does not want to do it, but they have to make up their minds. Interest rates should not rise until building activity increase significantly. That is the true reasons for raising interest rates – stop oversupply. But all the evidence and rents and prices point to undersupply for the foreseeable future.”

“What Triguboff is highlighting is that the dramatic rises in Australia’s population complicate the interest rate argument. The Reserve Bank will not halt interest rates because of the Triguboff warning, but they need to understand that their current decision making process may create the opposite of what they expect in long – term dwelling prices.”

This should be a cornerstone point with the Ken Henry Review into Australia’s taxation report which is due on Christmas Eve.

On a lighter note – towel surfing was introduced to Australia last Friday when over 200 people on Bondi Beach joined in a synchronous dance to the music of local resident Ben Lee. I wonder when it will come to Balmoral Beach or possibly an open for inspection. (Turn up the volume).

Our property markets need to start dancing to the right tune – the RBA is obviously playing the wrong music as the dance floor is empty.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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6.11.09Robert Simeon2 Comments »

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Twelve months ago all we were looking for were “green shoots”. Our economic gardeners are now embarking on a crash – course of selective pruning (and I’m not talking ‘whipper snippers’). Australia appears to have bloomed too early and the economic chainsaws are sharpening their jaws. Now it is not the “buck”, rather the bulbs, that are firmly placed in the economic gardening gloves of The Emperor (Kevin Rudd) – let’s hope he has a green thumb!

Yes, the last twelve months have been a roller coaster ride that continues to gain momentum and what remains to be seen is whether as an economy, we can stay on the tracks – the alternative is not pretty if one is reliant on the cash rate remaining low. Many borrowers will find out first hand, that fortune does not always favour the brave when it comes to bricks and mortar.

The Australian Bureau of Statistics (ABS) announced this week, that consumer prices increased by one per cent during the September quarter which was a direct result of higher prices from electricity, petrol and utility prices. Fort Fumble treasurer, Wayne Swan, was quick to emphasise that the economy was continuing to operate below capacity. Capacity is this week’s economic measure of confusion – too much stimulus, too much debt, too much immigration and possibly too much spin. Each and every cash rate increase by the Reserve Bank of Australia (RBA) is a further burden to consumers and property prices have eclipsed recent records (we all know this is defined by capacity).

Is this Sydney’s coldest beach? Competitors in the World Masters Games thought so as the water was too cold – now they are demanding a refund. Photo: Tim Mooney Photography

www.timmooneyphotography.com

So Wayne Swan thinks our economy is operating below capacity? Australian Property Monitors (APM) yesterday released its September House Price Series Report and here are the key statistics.

• Nationally, house prices jumped +3.7 per cent and unit prices + 3.4 per cent in September quarter
• Strongest quarterly growth in house prices since 2003
• National house prices up 7.1 per cent in 2009
• Melbourne experienced strongest house price growth, up 12.3 per cent in last six months
• House and unit prices rise in every capital city in September quarter

Wow – if this is an economy running under capacity, just imagine what happens when it grows with confidence. The Housing Industry Association (HIA) announced this week, that new home sales fell in September and nationwide sales dropped 4.5 per cent which is in direct contrast to a 11.4 per cent increase in August.

Source: Australian Property Monitors

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Source: Australian Property Monitors

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This week Taylor Fidan and I extrapolated all house, semi, apartment, and townhouse sales in Mosman from January 1, 2006 to October 19, 2009 – in total 3,054 sales. Here are our findings (houses this week and apartments next week). I wish the property data aggregators would offer this data as it is very time consuming to compile but, then again, such information has never before been presented on a public domain. We present another Richardson & Wrench Mosman & Neutral Bay (RWM) first.

Source: DomainPropertyData
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MOSMAN HOUSES/SEMIS SOLD – I JANUARY 2006 TO 31 DECEMBER 2006

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0 – $1,000,000

44 sales

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$1,000,000 – $2,000,000

177 sales

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$2,000,000 – $3,000,000

97 sales

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$3,000,000 – $4,000,000

49 sales

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$4,000,000 – $5,000,000

27 sales

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$5,000,000 – $6,000,000

9 sales

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$6,000,000 – $7,000,000

10 sales

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$7,000,000 – $8,000,000

3 sales

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$8,000,000 – $9,000,000

1 sale

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$9,000,000 – $10,000,000

1 sale

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Above $10,000,000

5 sales

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Total

423 sales

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Undisclosed

22 sales

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MOSMAN HOUSES/SEMIS SOLD – 1 JANUARY 2007 TO 31 DECEMBER 2007

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0 – $1,000,000

30 sales

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$1,000,000 – $2,000,000

144

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$2,000,000 – $3,000,000

115 sales

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$3,000,000 – $4,000,000

53 sales

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$4,000,000 – $5,000,000

39 sales

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$5,000,000 – $6,000,000

13 sales

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$6,000,000 – $7,000,000

10 sales

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$7,000,000 – $8,000,000

9 sales

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$8,000,000 – $9,000,000

1 sale

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$9,000,000 – $10,000,000

2 sales

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Above $10,000,000

10 sales

.

Total

426 sales

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Undisclosed

30 sales

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MOSMAN HOUSES/SEMIS SOLD – 1 JANUARY 2008 TO 31 DECEMBER 2008

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0 – $1,000,000

26 sales

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$1,000,000 – $2,000,000

110 sales

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$2,000,000 – $3,000,000

78 sales

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$3,000,000 – $4,000,000

37 sales

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$4,000,000 – $5,000,000

27 sales

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$5,000,000 – $6,000,000

14 sales

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$6,000,000 – $7,000,000

2 sales

.

$7,000,000 – $8,000,000

5 sales

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$8,000,000 – $9,000,000

3 sales

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$9,000,000 – $10,000,000

3 sales

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Above $10,000,000

3 sales

.

Total

308 sales

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Undisclosed

52 sales

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MOSMAN HOUSES/SEMIS SOLD – 1 JANUARY 2009 TO 19 OCTOBER 2009

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0 – $1,000,000

19 sales

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$1,000,000 – $2,000,000

77 sales

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$2,000,000 – $3,000,000

38 sales

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$3,000,000 – $4,000,000

20 sales

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$4,000,000 – $5,000,000

9 sales

.

$5,000,000 – $6,000,000

2 sales

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$6,000,000 – $7,000,000

1 sale

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$7,000,000 – $8,000,000

1 sale

.

$8,000,000 – $9,000,000

1 sale

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$9,000,000 – $10,000,000

0 sales

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Above $10,000

2 sales

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Total

170 sales

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Undisclosed

73 sales

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2009 is still a work in progress – however it should be noted that the volume of sales remains on the conservative side. We would be lying (not our style) to suggest that the Mosman market is also in boom with houses.

UPDATE

– last week we reported 2009 Mosman house/semi sales were at 243 sales with a value of $483,925,627. We can advise that this week, sales increased to 258 with a value of $512,781,127 (still $321,596,485 in deficit from last year’s total house/semi sales). The 73 undisclosed sales (thus far) may reveal a few secrets.

Which leads me back to capacity – where it is abundantly clear that the cost of living is on the rise and it would come as little surprise to see the inflation genie touch five per cent again.

The capacity to understand as against the capacity to compete beyond ones means is clearly evidenced by sales volume in Mosman – arguably the strongest property municipality market in Australia.

In summation – I draw your attention to this recent commentary by Alan Jones at radio 2GB.
“… a note that was sent to me which explains to me that six leading members of the Government from Mr. Rudd down, the top six have a collective work experience of 181 years, but only 13 in the private sector.

If you take out those 13 years the number that were spent as trade union lawyers that total 11, of the 181 years only two years were spent in the private sector.

So the people, who will rack up a net Federal debt of a minimum of $188 billion, the highest in our history, have virtually no experience in business.

So out of the 181 years:

- No years spent running their own business – no years spent starting their own business – no years spent as a director of a family business or company – no years as a director of a public company – no years in a senior position in a public company – no years in a senior company in a private company – no years working in corporate finance – no years in corporate or business restructuring – no years in or with a bank – no years of experience in capital markets – no years in a stock – broking firm – no years in negotiating debt facilities with banks – no years running a small business – no years at the World Bank or IMF or OECD – no years in Treasury or Finance.”

Not sure if the Opposition could improve much on these statistics either.

The Emperor promised at the last election campaign, that he would personally deliver one million computers to all year 9 to 12 students within Australia. Currently, just 150,000 computers have been delivered – must be another capacity problem with too much |Ctrl – Alt – Delete|. Maybe he should have focussed on the school band – if bulls@&% was music, you would be a brass band. Alas, I guess The Emperor is too busy taking over our health system – oops! that also appears to be on |Ctrl – Alt – Delete| too.

Cheers and best of luck at the Melbourne Cup – although the odds are stronger on another RBA rate increase. Plenty of capacity growth there – although if the RBA has rates at emergency levels, when does it then become a capacity emergency for borrowers? That would be found on the perceived green (and greener) grass of home. A home is not exactly sweet as it could be gone tomorrow for some. That too, is known in modern media as |Ctrl – Alt – Delete |.

In times of “green shoots” for new housing opportunities, does fortune favour the brave? After all, it was a first, when elected governments started teasing first home buyers with cash hand – outs.

^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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30.10.09Robert Simeon1 Comment »

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Conspiracy theories, myths and madness where property markets were maligned and/or aligned to the meltdown from global financial crisis (GFC) – so where to now? From an agency perspective, it became patently obvious that in the modern era (new media) a very strong online platform is essential and this is why Richardson & Wrench Mosman & Neutral Bay (RWM) has been the Mosman market sales leader in 2009. Our marketing and technology strategies are different to other agencies – our point of difference.

Each week we monitor our online positioning on Google where we have organically positioned our business to be number one on its keyword search criteria for our demographic market such as Mosman real estate. For example, last week’s Google Analytics for RWM identified that direct traffic to RWM is 40.80 per cent, traffic from search engines is 39.91 per cent and referring sites is 19.30 per cent – so our very own website is beating the search engines (just) which is exactly how an online business should operate.

This week we have extrapolated the house and apartment sales data from www.domainpropertydata.com.au for all Mosman real estate sales from 1 January 2006 to 19 October 2009 – which we believe endorses our ‘buy’ recommendation. If you don’t agree, our blog is there for your opinion – otherwise known as freedom of speech.

Photo – Tim Mooney Photography

www.timmooneyphotography.com

No houseboat sales from the GFC either – Mosman battened down the hatches.

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MOSMAN HOUSE & SEMI SALES 1 JANUARY 2009 – 19 OCTOBER 2009

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Part Year
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Total Sales – 243*
Total Value Sold – $483,925,627
Median Price – $1,950,000
Average Price – $2,372,184
Highest Price – $13,200,000 (RWM)
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*This figure is incomplete as some completed sales are yet to be recorded so factor in an additional 10 – 20 % sales growth.
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MOSMAN HOUSE & SEMI SALES 1 JANUARY 2008 – 31 DECEMBER 2008

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Full Year – all sales completed and recorded
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Total Sales – 360
Total Value Sold – $834,377,612
Median Price – $2,220,000
Average Price – $2,709,018
Highest Price – $14,700,000 (RWM)
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MOSMAN HOUSE & SEMI SALES 1 JANUARY 2007 – 31 DECEMBER 2007

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Total Sales – 456
Total Value Sold – $1,230,497,720
Median Price – $2,305,000
Average Price – $2,874,994
Highest Price – $22,500,000
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MOSMAN HOUSE & SEMI SALES 1 JANUARY 2006 – 31 DECEMBER 2006

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Total Sales – 445
Total Value Sold – $1,037,244,630
Median Price – $1,971,000
Average Price – $2,469,630
Highest Price – $15,000,000
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HOUSING MARKET SUMMARY

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Minimal risk – to any outside economic factors which was evidenced by volume contractions over the GFC (manic panic) yet negligible forced sales. Expats have been busy selling currencies where despite the rise in the Australian dollar they still remain well positioned.House sales peaked in 2007 with 456 transactions and dropped in 2008 to 360 sales (96 homes). The value sold, tells an interesting story where in 2007 transactions totalled $1,230,497,720 and fell to $834,337,612 in 2008 (a direct result of a significant slowing of the multi – million dollar properties which we will address next week). The first six months of 2009 were very slow (total sales) but sales quickly escalated when RWM posted $63,000,000 in June (the Mosman recovery?)It will be interesting to see if 2009 house sales (currently $483,925,627) can match the 2008 sales of $834,377,612 and we will update weekly throughout the remainder of 2009. Such are the benefits of subscribing to Mosman’s only online real estate E-Zine.
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MOSMAN APARTMENT & TOWNHOUSE SALES 1 JANUARY 2009 – 19 OCTOBER 2009

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Total Sales – 383*
Total Value Sold – $262,101,227
Median Price – $510,000
Average Price – $722,041
Highest Price – $5,200,000
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*Incomplete data
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MOSMAN APARTMENT & TOWNHOUSE SALES 1 JANUARY 2008 – 31 DECEMBER 2008

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Total Sales – 477
Total Value Sold – $340,078,676
Median Price – $525,000
Average Price – $750,725
Highest Price – $7,500,000
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MOSMAN APARTMENT & TOWNHOUSE SALES 1 JANUARY 2007 – 31 DECEMBER 2007

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Total Sales – 500
Total Value Sold – $389,450,862
Median Price – $530,000
Average Price – $807,989
Highest Price – $4,750,000
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MOSMAN APARTMENT & TOWNHOUSE SALES 1 JANUARY 2006 – 31 DECEMBER 2006

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Total sales – 482
Total Value Sold – $320,918,542
Median Price – $500,000
Average Price – $703,768
Highest Price – $4,000,000
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APARTMENT MARKET SUMMARY

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The figures clearly identify no upward swing as a direct result of the First Home Buyers Grant – so minimal risk to values here also, once the cash rate starts moving upwards. Supply is the key with 482 sales in 2006, 500 sales in 2007, 477 sales in 2008 and 383 (and growing) in 2009. Mosman is a controlled market where it is interesting to observe the annual house and apartment patterns.
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2009 House and Apartment Total Sales

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Houses – 243
Apartments – 383
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2008 House and Apartment Sales

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Houses – 360
Apartments – 482
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2007 House and Apartment Sales

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Houses – 456
Apartments – 500
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2006 House and Apartment Sales

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Houses – 445
Apartments – 482
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Last week, I wrote about the movement of the Global Financial Crisis to a Government Financial Crisis so I thought you would enjoy this article by Peter Spearritt, Trouble in the City, which went online this week. “Australia’s big cities are in trouble. It’s true that they’ve survived the threatened recession courtesy of a vast amount of infrastructure spending, especially on roads, bridges, tunnels and continuing house and apartment construction. Booming real estate markets have hardly eased up, much to the regret of sensible economists.”

“Despite, or perhaps because of, all this growth, big – city dwellers are unhappy. Peak – hour traffic gets worse and worse; the cost of water and electricity keeps going up; and local councils provide fewer and fewer services – yet the rates still rise – and have outsourced almost all new building and renovation approvals, so ratepayers have to cough up for those as well. Some state governments seem so incompetent – New South Wales heads the list – that Armageddon appears nigh.” Yes – that would be our very own Fort Crumble – although I promised myself this week to give our politicians a rest as it appears they have gone to water.

A reason why RWM performs so strongly online was revealed recently when HubSpot (a leading American technology business) revealed that “from 1,531 HubSpot customers (mostly small – and medium – sized businesses) 795 of the businesses blogged and 736 didn’t.

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The data was crystal clear: Companies that blog have far better marketing results (RWM, is the only Mosman real estate agency that actually blogs).
55 per cent more visitors – providing more potential leads and sales
97 per cent more inbound links – increasing search engine rankings
434 per cent more indexed pages – creating a better chance of being found on search engines

Time and time again it has been said that – success leaves clues!

Congratulations to Peter FitzSimons and the over – 45’s Mosman rugby side who won their tournament. Not only were they undefeated, but kept all opposition sides scoreless in the World Masters Games.

The open water swim was a different story. It was called off because the water was too cold when it was measured at 13C (International swimming body’s open swim regulation level is 18C). Fort Crumble pocketed the $220 entrance fees (no refunds) when it was called off at Chowder Bay, Clifton Gardens (Mosman) last Saturday.

It has been brought to my attention that a very well known, respected and highly competitive Balmoral property developer was seen removing a thermometer from his personal esky and observed (reportedly by Brendan Warner from Raine & Horne Mosman) substituting it with the official thermometer. I am not one to start rumours – I write about them.

Another masterstroke to further improve our blog rankings as I’m sure the “Eskimo Pete” will have plenty to say on that! Happy tenth birthday www.domain.com.au

RIP – Don Lane

 

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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23.10.09Robert Simeon5 Comments »

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Much has been written and spoken about the Global Financial Crisis (GFC) where it now appears that the ‘Global’ has been superseded by Governments in crisis. In Australia it is a calamity at both Federal and State levels – (all will be explained later). In modern day speak, our elected governments are now on margin calls where debt ratios have fast exceeded income streams – political policies without pertinent planning? Rolling back budget deficits will inevitably lead to increased new taxes – but then again The Emperor (Kevin Rudd) told us that after all, he is an “economic conservative”.

At the very heart, we have the much publicised economic stoush between the Reserve Bank of Australia (RBA) and Treasury. It should also be noted that the major banks will now override RBA economic policy and collectively set their cash rates. This fundamentally diminishes the once integral role of our central bank. Watch the argy bargy in coming months although it has become blatantly obvious that the banks will outpace RBA cash rate increases – our political piggies will go screaming all the way to the (electoral) markets.

Mosman’s maritime marina captured by Tim Mooney Photography

www.timmooneyphotography.com

The Emperor – our economic Master Chef was at odds with his Apprentice Chef (Wayne Swan) – not to be confused with The Apprentice (different television stations). The Apprentice Chef was busily watering down suggestions that the RBA was at odds with Treasury over the correct economic recipe for Australia. Highlighting a nutritious recipe of economic ingredients, the Apprentice Chef described the tensions as “healthy debate”. The Emperor weighed in and advised that his fiscal stimulus was actually on Auto Chef, as it has an in-built accelerator and a decelerator to cope with shifts in the economy. Whilst nobody on the planet has ever heard of such ingenious economic rationale – one can only hope that this is not a recipe for disaster – as we all know who then foots the bill!

Our real estate markets are now Fort Fumble’s (Federal Government) other recipe for disaster as the 7.30 Report pointed out this week “Australia’s population rising steeply”. Australia’s population is up 2.1 per cent in the year to March, the greatest growth in almost 40 years. To meet demand, we have to build a minimum of 200,000 houses by Christmas next year – and that won’t happen (especially if Fort Fumble increases taxes). Although I did have a chuckle when I read yesterday that Treasury Secretary, Ken Henry, said that reduced budget surpluses due to the global financial crisis could limit the implementation of some reforms to the tax structure. No doubt the growing interest payments on his stimulus (now deficit) are now a major concern. So the Head Teller at the RBA is at loggerheads with the Head Spender over at Treasury. This was always going to happen with the stimulus progressively moving into an upwardly spiralling budget deficit.

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Macquarie Economics Research market notes this week “Understating undersupply” breaks down the mechanics of our housing market. “To understand why there is such a chronic undersupply of housing, we first consider the market for homes from the perspective of first – home buyers. As shown in the chart above, in the short term, the supply of homes is fixed. Thus, when interest rates fall and affordability improves, the demand curve shifts to the right. In our terminology, the level of actual demand rises to the level of underlying demand. In fact, as pent-up demand is unleashed, the actual demand may considerably exceed the underlying demand for a period. But with the supply fixed, in the short term, this would simply be reflected in higher house prices.”

Australia was indeed a different participant in the GFC simply because, unlike other advanced economies, we continued to ‘under – supply’ housing while other comparable countries were in over supply mode.

No better example than this week, when rental prices recorded their slowest growth rate in four years. No reason why, was offered. I believe the reason was the First Home Buyers Grant (money for honey) – now the participants face the banks and probable increased taxes to wind back Fort Fumble’s budget deficit.

 

These are the graphs that explain it all, and forecast double digit house price growth from June 2009 to June 2012. Sydney with 21 per cent growth, according to mortgage insurer QBE’s Housing Outlook.
If you are hoping for a NSW recovery (Fort Crumble) think again. Fort Crumble remains the worst performing state or territory in Australia. The rankings are – Tasmania, South Australia, Western Australia, Queensland, ACT, Northern Territory and then NSW. Surprise, surprise! In NSW in 2008 – 2009, dwelling starts collapsed to the lowest level in 56 years and the total was 43 per cent lower than the average for the last decade.

Should one simply apply economic hindsight as against economic incompetence. If you own property in NSW you will prosper, as long as you reside within 12.5 kilometres of the Sydney CBD. Beyond that point, the planning for infrastructure is archaic.

Rest assured – The Master – Chef is cooking up a storm, even though the retiring Member for Higgins, Peter Costello, announced this week that he saved Australia from global financial crisis. The Emperor (fortunately) inherited all his successful economic recipes. It will be interesting to see how The Emperor decelerates the budget deficit – which will take some cooking of the recipe books.

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Congratulations to our undefeated over – 45 Mosman rugby team, competing in the World Masters Games. The Daily Telegraph captured Peter FitzSimons in the midst of yet another of his brilliant team motivational speeches. I am not sure about the team mascot though – must have been a ring in from the Eastern Suburbs.

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Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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16.10.09Robert Simeon3 Comments »

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Please tell the Australian voting public that we made the correct call. The Emperor (Kevin Rudd) is a worried man, given that when interest rates start rising the Government of the day (historically) receives all the blame. Monash University political analyst Nick Economou was more succinct “The Reserve Bank of Australia (RBA) is a game – changer” (where this time around nobody will be able to keep them low). “With the indicators being that the bank is starting to ratchet up the rates, the Labor Party would be thinking ‘we ought to go to a poll sooner rather than later, because if we go as scheduled in November next year, there might be three or four interest rises by then’,” Mr Economou said.

It needs to be immediately recognised that the Global Financial Crisis (GFC) was a direct result of failed business/consumer transactions that occurred outside of Australia which furthermore, explains why Australia was first country out of the crisis. Other than Australia, ( thus far) no other Central bank has raised its cash rate – which begs the question, just what makes Australia different from the rest of the world? Is it a direct result of the Federal and State/Territories artificial insemination of our property markets when they introduced the (combined) First Home Buyers Grant Scheme (FHBGS)?

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Were the property debutantes advised that there remains a strong possibility that the RBA cash rate will move from 3.00 per cent to 5.00 per cent over the course of the next two years? The RBA described last week’s cash rate of 3.00 per cent as its “emergency rate” so what then becomes the first home buyers’ emergency exit rate? Were they simply pawns to keep property transactions ticking over during the GFC? Fort Fumble (federal government) did extend the FHBGS . It has happened before – and it is set to happen again, although this time around the consequences will be dire especially for those debutantes now caught in an interest rate upward spiral.

Cast you mind back to when the cash rate hit 4.25 per cent on December 5, 2001 where South/West Sydney went into a property boom. Then the unimaginable happened two +0.25 per cent rate increases in 2002, another two +0.25 per cent rate increases in 2003 (a property boom year), no increases in 2004, one +0.25 per cent increase in 2005, three + 0.25 per cent increases in 2006 and another two +0.25 increases in 2007. In 2007 South/West Sydney property prices fell by as much as 40 per cent, otherwise known as bank sales (10 +0.25 per cent rate increases). Here are the interest rate movements from July 31, 1996 – October 7, 2009 Cash Rate Target.

 

Macquarie Economics Research went a step further by predicting (and they are usually spot – on with interest rate predictions) that it expects the cash rate to rise by a further 25bp (basis points) before the end of the year, and to reach 4.00 per cent by 2010. In this week’s edition of Australian Economics Interest Rate Outlook “The RBA decided to raise rates sooner rather than later, and the 25bp increase in October was the first step “towards more normal levels.” With the economic data consistently stronger than expected and downside risks dissipating, the RBA now expects growth to be at trend levels in 2010. Consequently, the “basis for such a low interest rate setting has now passed.” No doubt Australia’s weekly clearance rates are being closely monitored on the RBA radar where our recession if you want to call it that was mild when compared to other advanced economies. From September 3, 2008 to April 8, 2009 (seven months) the RBA slashed the cash rate target by 4.25 per cent which still remained the highest when compared to other advanced economies – hardly a Great Depression.

 

If you look at Sydney’s clearance rate (74.2 per cent) this is a very strong result. There were 811 public auctions conducted and many more would have subsequently sold after auction. A combination of record low interest rates, our fastest growing population explosion in forty years and grants to first home buyers – what a cocktail! A report compiled by Access Economics found that Australia’s population grew by 1.9 per cent in the past year, helped by the highest birth rate since 1971. But let’s not forget one other major initiative (if I can call it that) that was introduced by The Emperor in December 2008.

Adam Schwab wrote in Crikey Foreign buyers blow out the housing bubble “ The causes of Australia’s ever-inflating housing bubble are many – artificially low interest rates, government stimulus and a real estate industry devoted to an ever – increasing house price to name a few. However, a less well – publicised factor may also be at play, that is the influence of foreign buyers.”

“In December 2008, the federal government, whose primary goal appears to be maintaining property prices at unsustainably high levels, introduced legislation relaxing rules for foreign buyers of Australian property. The rules were especially helpful for property developers, who coincidently happen to be large donors to the Labor party.”

In search of anecdotal sales evidence I went ran an article on News ”Million – dollar sales force up property prices” Forget the “for sale” sign, the new catch – cry in Melbourne’s leafy suburbs is “duoshao qian”. Victoria’s top real estate agents have begun hiring Mandarin – speaking salesmen to cash in on the property boom. Translated, “duoshao qian” means “how much” And it’s a question being asked more than ever before, The Herald Sun reports. Leading agents say more than 30 per cent of their stock is bought by families from mainland China.

Back to Adam Schwab in “Such is the federal government’s fear that a residential property slump will be a negative at the polls, they have introduced a policy that exacerbates Australia’s housing shortage and prolongs an asset bubble. According to Foreign Investment Review Board (FIRB) data released last month, foreign investment in Australian real estate shot up by more than 30 per cent this year to $20.4 billion.” Wonder when the mirror on the wall will speak about or even repeal this legislation – especially when you look at this.

 

Again, on Crikey, NSW the epicentre of our housing crisis Bernard Keane wrote “NSW is the epicentre of a long – term public policy disaster in housing that will have a major impact on Australia’s recovery from recession.” Technically Fort Crumble (NSW government) has been going backwards for years technically known as government economic retreat. “This graph shows housing and other dwelling commencements in NSW over the past thirty years. Despite wide variations, in the ‘80s and ‘90s housing commencements essentially moved around a band of 6 – 7,000 a quarter. The GST caused a spike and then a sudden drop across the country, and NSW recovered like other states, but then, inexorably, began to decline. Non – house dwellings, which had been growing as a proportion of the total NSW housing stock, similarly peaked and then began falling with housing commencements. The problem lies in the lack of land released by the NSW Government and NSW’s disastrous planning regulatory system, which makes life immensely difficult for developers.”

The Emperor has much to answer – however he has not been sighted since the RBA upped the cash rate this week. I wonder what he proposes with his very own legislation that sent out a universal invitation to buy up Australia. Mirror, mirror on the wall……. our real estate markets have much reflecting ahead.

Tim Mooney will be back with his weekly photograph next week – I forgot he was on assignment this week.

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

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9.10.09Robert Simeon2 Comments »