Or, should that read the light at the end of your tunnel?

Many are reporting light and others fright. I for one, support the light given that the Mosman property market remains controlled and given the current stock levels, the message is clear – Mosman houses are closed for business!

Should the current pattern continue, there remains a strong possibility that available properties will reach the lowest level in decades. Simply put: the fright no longer remains a concern and for the first time, real estate agents and vendors are not starting to see the light, but are now seeing a brighter turnaround, although it should be noted that longevity is not guaranteed.

Tim Mooney Photography

www.timmooneyphotography.com

It would then be somewhat reasonable to suggest that given the circumstances in our inherited global financial crisis, businesses today, require vision, strategy and greater acknowledgement of evolving technologies. For the first time, property market interaction has seen online take the lead over the previously preferred print campaigns which are no longer the dominant force. Print will still play a part just that from an economies of scale basis, it will require a re-definition so that it can remain competitive. The leading real estate agencies are now driving and presenting smart online marketing alternatives. For a real estate agency that does not host its very own website, the future is bleak to say the least – simply because all their competitors do.

Markets today are judged from online results, because they are readily available, subscriber driven, easily accessible (except property data) and allow individuals to draw compelling conclusions. The inbox today is what activates consumer interest first, simply because it now is the first point of contact and first impressions count. With the benefit of hindsight it is much easier to track our current recession simply because in our last recession (early nineties) the Internet was still in creation mode. Today, we extrapolate (and then pontificate) data and depending again on your point of view, some believe we have seen the worst and others predict that the worst is still to come.

The ongoing, frustrating debate continues but I believe we have turned the corner and slowly but surely, we are on the long road to economic recovery. When businesses move from economic growth to economic recession – you don’t lose intelligence, you learn and grow from the experience. Unfortunately, the reality of the current economic crisis can be attributed to one word – greed.

As Alan Kohler wrote on www.businessspectator.com.au The best kind of recession – “This is turning out to be quite a nice recession for Australia.

Aussie GDP has fallen just 0.5 per cent, compared to nearly 10 per cent in Japan, 4.6 per cent in Europe and 2.6 per cent in the US. Unemployment has actually decreased according to the latest data and is now at 4.5 per cent – at least two percentage points below other western countries, where unemployment is rising quickly.

With tax cuts and a drop in both mortgage interest rates and petrol prices, the after-tax disposable income of the average wage earner has actually increased by 19 per cent, according to calculations by CommSec’s Craig James.”

Furthermore, one in five international business people (in a survey of 7,500 across twenty four nations) named Australia as the country best surviving the recession. Australia first, China second and India and Singapore equal third.

Toxic debt within our banks has been a very well kept secret but in 2009, banks have certainly been responsible by opting to wait for property markets to stabilise instead of fuelling the problem as they did previously. Nobody can win the argument that property markets don’t recover as we all know that with time, all wounds heal. The Mosman market is not only healing, its appeal is greatly assisted by a cash rate of 3.00 per cent.

Without a doubt the media microscope of opinion has manipulated as well as injected fright into market perceptions. After an unprecedented period of economic growth in Australia, it was hoped that we would bask in economic consolidation before we found ourselves in economic recession. The decline from consolidation to recession surprised everyone. What remains to be seen is how quickly GDP recovers so we then climb back to economic consolidation. Whilst economic growth is still a way off, every Australian business has a strategy to climb back up. The test of time can only be measured by what you are actually testing and discovering.

We have to move with the times.

This time around the businesses with strong online content (in real estate) have done much better than those businesses that wait for it to happen. Watch the movement of property between now and June 30, which I believe will be a defining property market moment. RWM Internet sales jumped to $848,794,019 this week. Our point of difference over other real estate agencies is our online factor which is exactly where we have your eyeballs at this very point in time. You will also notice with this week’s recorded sales a substantial upward spike in sales volumes (see below).

Once upon a time it was a window card placed in the shop front, then an advertisement in a newspaper. Today, consumers judge real estate agencies by their online content. After all, we are in an economic recession where it is all about money. In economic growth they show the money and in economic recession they slow the money.

The real fright at the end of the tunnel is actually shared by the real estate agencies that ignored the move into technologies– just like every other economic recession money is slower. In a recession one has to put the faith in themselves, not others.

Chk – Chk – Cheers ^__^

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

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29.05.09Robert Simeon14 Comments »

My curiosity was stirred last week by M Jackson, who said that, (subject to approval) the Australian Securities and Investment Commission (ASIC) may allow you to have a punt on our property markets. Described as a world first, ASX punters can take out a derivative contract based on Rismark/RP Data market indices which are in turn quoted daily to the share market. I did laugh when I read ‘daily’ – try months after the event if real estate agents decide to block data sales access.

Back to M Jackson’s comment on last week’s blog – “Contrary to popular myth, the water in Australian plugholes goes down the same way as everywhere else. So, too, the housing market. Figures from the Bureau of Statistics (ABS) on Monday showed that prices in eight capital cities were down by a record 2.2 per cent between December and March. The fourth quarterly fall in a row brought the year – on – year rate of decline to almost 7 per cent.”

Rismark/RP Data reported national dwelling values increased by 1.52 per cent for March 2009. Then the ABS reports a 2.2 per cent decline. Somebody got it wrong – but hey, take a punt?

Tim Mooney Photography

www.timmooneyphotography.com

Back to M Jackson’s comment – “Gross rentals yields of about 3 per cent, meanwhile, are near all – time lows; if houses were stocks, they’d be trading on wobbly price/earnings multiples of more than 30 times. Unemployment data, to be released on Thursday, may show a rise to almost 6 per cent, the highest level in six years. Job ads fell again in April. Mortgage flows are sputtering. The props are falling away. Currently the SFE is constructing a tradeable index on Australian housing, which should be completed by and ready by August 2009. I can’t wait to go short. If there was one specific to the Lower North Shore in Sydney. I would have double the size positions.”

I thank M Jackson for his input and look forward to reading more responses to our blogs.

The Global Financial Crisis was brought about by global banking institutions investing in (probable and possible) markets based on high debt ratios – otherwise known as gambling. The process for aggregating property data has always been flawed – highlighted by the simple fact that the ABS and Rismark/RP Data constantly report conflicting property data positions. Definitely not an each – way bet!

Consider the property market reality, if ASIC approves the trade derivative contracts and the Australian real estate agencies automatically cease providing all sales data to all the aggregators? It would then be one, two, three, four, five and six months until such data became available. Just who would punt on such irregularities? The data aggregators don’t act in harmony with real estate agencies in Australia where there is not the slightest possibility of any change – anytime soon. I would predict (and support) a total real estate data black–out.

After all, we act for our vendors (first and foremost) and are under absolutely no obligation to report sales data that aggregator’s then on-sell to institutions. One only has to look at the banning of shorting banking stocks to observe that this is conducive to assisting economic growth in a recession. The real estate industry is the largest employer in Australia where our economy is only in a sound position because our banking system is world’s best practise and world’s best profits too.

Simply put: real estate agencies would cease reporting sales and rental data and agents would then lengthen the odds quite considerably. If such a market was created where (just say) you could bet on the Mosman market – I would hope that collectively, Mosman agencies would turn such a proposal into a blank canvas with data support.

From “bricks and mortar” to “punt and hunt” derivative markets! The only people that I can see making money from these proposed markets are actually the real estate agents. Is this Australia’s financial version of subprime – a buy position without actually owning a house? Short on being exact and very long on accuracy.

I thought Malcolm Turnbull’s Budget response to be lame (to say the least). However, with the possibility of a double dissolution around the corner, it makes sense to keep ones “powder dry”. As one subscriber said this week, “depending upon the government for your future financial security, is like hiring an accountant who is a compulsive gambler!”

Ruddy Fantastic and Wayne Swans’ missing word disorder’ may have been cured this week when it was revealed on www.smh.com.au “It’s been suggested that Kevin Rudd would not utter the phrase “$300 billion” for fears his words will be used in coalition advertisements during the next election campaign.” So much for “sticks and stones may break my bones but words will never hurt me.” Then “Mr Rudd said Australia’s debt would peak at “around 200, or gross debt at about 300” in 2013 – 14. Now journalists are on to this political spin game and will play this to their hearts’ content. Very petty, although Australia’s deficit needs much more than petty cash as we will continually be reminded for many years to come.

Australia’s housing prices are at their most affordable level in seven years and in the March quarter the Housing Industry Association – Commonwealth Bank First Home Buyer Affordability Index recorded a 14.6 per cent increase. The average home loan fell by 11 per cent from $2056 a month to $1831 last year.

Despite confidence levels still being down, car sales in April were up on the March figures. Just as interesting is that in Mosman on www.domain.com.au there are only 118 houses/semis (I removed double entries, apartments, and out of area listings from the listed 135) available for sale which is an all time low in available stock levels. This will only get tighter over winter given that purchasers are now engaging with vendors.

This week’s video is a brilliant story about the annual Balmoral Burn Race Day which happens next Sunday on May 31. The Balmoral Burn Sponsors’ Dinner takes place on Friday May 29, 2009 so watch the video for more details. Keeping in the theme, this week’s aerial photograph by Tim Mooney Photography, highlights the best beach on our planet and in the background Awaba Street – the Balmoral Burn tread mill. Congratulations to Phil and Julie Kearns who started this brilliant fundraising event back in 2001. Given that I have won the race three times now, I am no longer eligible to compete.

Cheers ^__^

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

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22.05.09Robert Simeon8 Comments »

In years gone by, on Budget night the government (of the day) would broadcast in the first sentence the surplus (this last happened in 2008). This time around, there was absolutely no mention of the exact deficit figure which is quite unbelievable to say the least. Should one then assume that the hiding of the deficit beast within the Australian economy is part of the spin, better known today, as political whispering?

One can then assume that transparency is not exactly of paramount importance, given that the previous largest Budget deficit was $18 billion back in 1992 -93 and 1993 – 94. The Budget Speech 2009/10 took most by surprise as it was pure political spin, better known as being politically correct – a A$57.6 billion was obviously deemed “Not For Publication”.

A$57.6 billion Budget deficit is nothing more than a temporary phase that our economy currently is experiencing , so Wayne Swan keeps reminding us. This was brilliant sugar coating as the reality of a double dissolution election jumps to the fore, given that the Budget deficit will escalate alarmingly should Federal Labor serve a full term.

Piers Akerman wrote on his Daily Telegraph blog “Prime Minister Kevin Rudd and Treasurer Wayne Swan have lost a word. They can no longer bring themselves to utter “billion”. Asked yesterday on radio why he’d declined to mention the precise deficit amount in Tuesday’s Budget speech, Swan replied to a direct challenge with the answer “57”.Not 57 billion. Just 57. Then, in Question Time, Rudd responded to a similar challenge with his reply, “57.6.” Sounds like a clue to me.

I read with interest the Macquarie Research Economics Report – “It is important to note, however, that the vast majority of policy action was taken by the Government prior to the formation of the 2009-10 Budget. As a result, policy actions in this Budget appear to be more targeted towards achieving political objectives rather than undertaking any major spending reform.”

Prior to Budget night we heard a record twenty one Budget leaks. In the Budget speech there were ten references to the word recession and two to the words Great Depression. This was modern day political conditioning, where the implanted theme was to expect the worse and then be suitably impressed with the outcome … again – a brilliant spin.

No doubt Ruddy Fantastic was rejoicing when last week, when the Reserve Bank of Australia (RBA) announced that it believes the current recession will not be as severe as the recession of the early – 1990’s. What the RBA failed to identify was that back in the 1990’s the internet had not been invented.

Well that’s a relief, we are already noticing overdue confidence within the Mosman real estate market. We foresee a tight winter as the expected avalanche of distressed properties hitting our markets simply won’t happen. One does not have to be an economist to realise that if supply is constrained then demand increases. We anticipate very few new properties being offered to the market until September.

The waiting game, which is happening everywhere as Peter Costello wrote in the Sydney Morning Herald www.smh.com.au on April 29, 2009 “Buy now and pay much more later.” The member for Higgins wrote “I’ve often wondered about those advertisements that offer: “Buy now. No repayments for 24 months. You pay nothing until 2011.” Pre – empting the forthcoming Swan Budget Costello wrote “I wonder if people ask themselves whether it’s going to be easier to pay more, later than it is to pay less now? Or do they just take the benefit today and leave the worrying until tomorrow. “For mine, a smart analogy, given that Australians now have a A$57.6 billion Budget deficit and the interest meter is running.

Peter Costello went on to write – “And there’s no repayment? Actually, the Government borrowed this money, so it will have to pay interest to the lenders. And since it gets all its money from taxpayers, it’s the taxpayers who will foot the interest bill.” For those residing in Fort Crumble – in less than a month our NSW government will deliver its budget and it will get even uglier as it is in deficit, which equates to more increased taxes. This budget has the potential to be the hardest cash grab in history, which adds fuel to why Ruddy Fantastic sugar coated his Federal Fudge – it. Expect a shocker which is actually in line with the way Fort Crumble has administered NSW.

In summation Peter Costello wrote – “I recommend that families enjoy the Government’s “buy now, pay later” policy because a bill is coming. And it will be a big one. We don’t yet know how many years, or decades, of interest payments are in front of us.”

“Retailers would not get away with the kind of sales technique the Government has engaged in. Retailers have to detail the number of repayments, the interest rate and the all up cost before the sale. You get to choose whether to take the package. What’s more, if a retailer gives misleading information the interest payments are suspended. Try getting that from the Federal Government.”

This week’s brilliant aerial capture by Tim Mooney is of Balmoral Beach Club and its Nippers squad – points a poignant question, how old will these nippers be before they see a Federal budget in surplus?

Now for the steak knives … Mosman Council is installing parking meters along Balmoral Beach and other harbour side locations from July, 2009. Interesting debate brewing and here is a video of those against. Many of those whom appear are subscribers to Virtual Realty News.

Reece Coleman, Director – Real Estate Services at Fairfax Digital has responded to our queries about property data in last week’s edition. Here are Reece’s responses – http://www.rwm.com.au/2009/05/the-mumbo-jumbo-of-politics-and-property-data/

Editions of Virtual Realty News, thanks to Ruddy Fantastic have been extended another two years as a direct result of the retirement age extension. I’ll make a mental note to write an edition then, called , where are they now? Let’s hope it won’t be a case of still paying off Ruddy Fantastic’s temporary budget deficit.

We have expanded our RWM real estate media platform where aside from weekly, Tim Mooney photographic contributions we will also be adding weekly videos for your enjoyment of our weekly E-Zine. We are always re-shaping our online industry with new technology investments and setting new industry standards.

Next week – we assess Malcolm Turnbull’s Budget response and from what I observed he was smoking!

Cheers ^__^

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

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15.05.09Robert Simeon16 Comments »

HISTORY was made in the Grand Hall of the Mosman Art Gallery and Community Centre on Tuesday night, April 28.

Mosman Council passed its controversial paid parking proposal before the largest crowd of outraged denizens attending a Council meeting in living memory.

The meeting had to be moved from Mosman Council Chambers to the Community Centre to accommodate a record-breaking crowd of about 300.

There were more than 60 registered speakers. Most argued strongly against the scheme to cheers, applause and whoops from the crowd.

Mosman resident Brian Wilder said: “Balmoral is a wonderful, rare, exotic jewel … surely one of the best beaches in the world. We don’t want it turned into another Bondi or Manly.”

Steve O’Halloran of Balmoral argued that the scheme was a “revenue-raising” proposal in breach of RTA regulations.

Esther Rd resident Don Mickleborough likened Mosman Council to a dictatorship.

“There was a man in Germany who didn’t listen to his people and he brought the world undone,” he said.

Only one man standing in the back corner dared to vote in favour of the proposal.

And only Tony Larnach-Jones, of Raglan St, Balmoral spoke in favour of the proposal.

Three councillors – Libby Moline and Tom Sherlock from Balmoral ward and Jim Reid from Middle Harbour ward – voted against the paid parking scheme.

Members of the gallery slammed the decision as undemocratic, ill-informed and a “betrayal of the people”.

Cr Denise Wilton said the lampooning response from the crowd was rude and disrespectful.

Mosman Council director of corporate services Max Glyde said the parking meter machines and signs are expected to be rolled out, beginning with Balmoral and The Spit, in July this year.

Source: The Mosman Daily

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14.05.09Robert Simeon3 Comments »

So let’s clarify a few points from an insider’s perspective. Property data is in all probability, ages away from being conclusive (after the result) and why, today does it still remains a dog’s breakfast?

Collectively none of these data collection institutions get it – they spread it and sell misinformation that is simply incomplete and many months away from accuracy.

The dilemma is quite simple. The property aggregators sell the information gathered from the agent, then continue to charge agencies to access its data … which is actually, the intellectual property of the agent. Until they get it right there is a very strong argument as to why agents should cease providing such data.

There are no better examples of such anomalies, when this week, the Australian Bureau of Statistics (ABS) announced that house prices fell by minus 2.2 per cent in the March quarter 2009. Australian Property Monitors (Domain Property Data) reported that its research identified that house prices increased by 0.1 per cent in the March quarter 2009. Australian Property Monitors works from exchanged property information and it is no secret that in the current market condition, many vendors instruct agents that the sale price is confidential and not for publication.

Therefore, it can take months (depending on settlement terms) to collect an exacting position which I will identify with the data I have collected. For the record, RP Data – Rismark reported that house prices were up 0.1 per cent in the March quarter 2009. I remain unaware that we supply any data to RP Data – Rismark. I would also add that RWM receives no payment for supplying any property data.

Mosman House Sales – 1 January 2007 to 30 April 2007

• Total sales – 139
• Total value – $350,165,720
• Median price – $2,200,000
• Average price – $2,632,824
• Highest price – $10,200,000

Mosman House Sales – 1 January 2008 to 30 April 2008

• Total sales – 119
• Total value – $309,519,612
• Median price – $2,700,000
• Average price – $2,919,000
• Highest price – $8,500,000

Mosman House Sales – 1 January 2009 to 30 April 2009

• Total sales – 62
• Total value – $86,621,000
• Median price – $1,525,000
• Average price – $2,221,051
• Highest Price – $8,500,000

Source: Australian Property Monitors (Domain Property Data) owned by Fairfax Media

I would suggest that property voyeurs are much more interested in niche markets , for example, Mosman, as against “stew” markets where all the data ingredients are fed into the one murky pot.

As you would have noticed the Mosman House Sales – 1 January 2009 to 30 April 2009 look a tad sick when compared to 2008 and 2007. So when I add our confidential house sales to the data the Total Sales move up from 62 to 71, Total Value from $86,621,000 up to $126,026.000. For the record, RWM has sold the greatest volume in terms of number of sales and total value over this period. The Highest Price also changes where the first number starts with a one (in excess of $10,000,000). This additional $39,405,000 in house sales makes a noticeable change to the current figures. It’s just that now you are the first to know and the aggregators are left shaking their respective heads. This is further complicated by the fact that the vast majority of sales data provided today leaves out the sale price.

I had trouble containing my excitement this week when an old favourite, Bobby Dazzler Carr, made an unexpected appearance, spruiking further debate about the condition of his once beloved Fort Crumble. Obviously, his work time sheets must now be down after he moved from Fort Crumble over to the Millionaires Factory.

The audacity of the argument that the Dazzler was the architect (or should that be builder) whilst presiding over the State of Decay. Whilst stopping short of revealing just exactly where all those “rivers of gold”, disappeared to, on the back of the financial floods from GST, stamp duty and poker machines taxes proved to be of little consequence. It was the system, not, the government the Dazzler declared (to those that listened – not many I think).

Of course it was , how silly of us to assume anything else as Fort Crumble now stumbles down an estimated $2 billion budget deficit by June 30. Just as interesting, south of the border, Victoria’s Fort Fabulous is in surplus and offering tax cuts because Jeff Kennett did what our very own Dazzler couldn’t deliver, while Kennett financially and politically, renovated his Fortress.

Tensions between Ruddy Fantastic and the latest landlord over at Fort Crumble are not that good to say the least. Ruddy Fantastic is presently conducting a three day jobs summit in Western Sydney, and no members from Fort Crumble were asked to attend – another clue?

As quick as a flash, Fort Crumble jumped the land tax rate for property valued above $2.250 million from 1.6 per cent to 2 per cent. The irony is that these properties are already (after tax) in negative rental return, so the landlords then increase their negative gearing tax deductions, which Ruddy Fantastic then picks up.

Will negative gearing be abolished in next week’s Fudge-it?

One should also not forget, that Fort Crumble is reportedly crunching the numbers to introduce its latest annual land tax grab which apparently applies to every property owner within the State of Decay. If true, this would be political suicide – but then again, when you have a $2 billion budget deficit Fort Crumble is now in critical decision or, should that be condition? Ruddy Fantastic would be thankful he resides north of Fort Crumble’s moat.

Next week’s Federal “Fudge It “ will be riveting, more particularly if the budget deficit blows in (or should that read out) around $70 billion as quite a few are predicting.

With elected politicians in overdrive on their Twitter accounts all will be revealed on next week’s Tweet’s – if you are not on Twitter, you don’t know what you are missing out on. Have a look http://twitter.com/ Compelling viewing indeed – love Twitter.

We are very happy to announce that each week we will showcase one of Tim Mooney’s aerial masterpieces in Virtual Realty News. Tim has been a subscriber for many years. After prolonged negotiations – we now can bring you these amazing shots exclusively. Tim has actually spent more time in the air than Superman – if you click on this week’s aerial photograph you will be taken to Tim’s website.

Cheers and Tweet’s ^__^

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

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8.05.09Robert Simeon7 Comments »

Sounds like the latest “add” word in political speak today, is temporary. If this week’s media spin from Ruddy Fantastic is anything to go by – where how temporary is temporary, one might ask?

Speaking at a lunch in Perth this Wednesday, Prime Minister Kevin Rudd said” this global economic recession has also dragged Australia into recession and has also produced the single biggest collapse in tax revenues in post – war Australia.” What Ruddy Fantastic failed to take into consideration was that tax revenues are down because we are all earning less, so it is not just the Federal Government feeling the pinch.

Kevin Rudd said, (here we go) a temporary budget deficit was inevitable given the current economic crisis. “In the current unprecedented global conditions a temporary deficit is not an option it is inevitable.” And, “that is why temporary deficits are necessary and temporary government borrowings are necessary as well, necessary to support businesses and support jobs until the private sector recovers.” Meaning when the private sector recovers government tax receipts then increase – however historically budget deficits in Australia have never before been temporary.

Treasurer Wayne Swan was busy spruiking that the Australia economy will rebound faster than international forecasts predict. Alas, the meaning of temporary. He said “the consequence of that is a higher temporary deficit.” All eyes are now fixed on the May 12; budget to:

A) See just how large our temporary budget deficit is.

B) How many times the word temporary will be used in the explanation of the budget deficit.

On budget night we will also find out how temporary is the First Home Buyers Grant (FHBG) which from a real estate agency perspective has resulted in a surge of lower price range property transactions. The 7.30 Report on March 9, 2009, revealed “Encouraged by the lowest interest rates in decades and the Rudd Government’s decision to double the first home buyers grant, nearly 30,000 people have entered the property market since October. However, at the top end of the market it is a different story, an oversupply of properties for sale is driving down prices.” I would suggest that Mosman does not offer an oversupply of top end properties rather an undersupply, given the anticipated bloodbath of mortgagee sales, simply did not eventuate.

The Housing Industry Association (HIA) is proposing that the First Home Buyers Grant Boost (FHBG Boost) be increased from the current $21,000 to $30,000 for the purchase of a new home and decreased from $14,000 to $7,000 for existing homes. I would be most surprised if such a proposal came to fruition. No doubt the “Boost Package” is driven by the news that new home sales rose to their highest level in 13 months in March thanks to the FHBG (without Boost). Total new home sales rose by 4.2 per cent in March where 8,210 sales were recorded, accelerating the 3.9 per cent growth pace set in February, 2009.

A few months ago, I likened the FHBG as Australia’s mini sub-prime given that again we see identical DNA in that; too many are borrowing too much – too fast! Already in our agency, we are witnessing tenants giving notice to take up the FHBG because that it will be (possibly) removed after June 30. The irony is that before we had tenants competing against one another because of the record low vacancy rates. Now they are competing again against each other to secure a property, because of the FHBG – a legacy of record interest low rates and high rents. What they don’t take into consideration is that interest rates rise much faster than rents which raises the potential of negative equity in years to come. Why?

Access Economics published a report this week which identified that by the time the next election is due there will be close to one million unemployed. While Australia’s recession is unlikely to be as deep as those in comparable countries, the unemployment rate is set to hit 8.5 per cent late next year as the economy reels from the steep collapse in commodity prices. At no stage did Access Economics use the word temporary.

With interest this week, I read an article in The Sydney Morning Herald by Jessica Irvine titled, “It’s bricks and slaughter out there.” A brilliant article in which Irvine wrote, “But it’s not just parents egging young buyers on, it’s politicians. As preparations for this year’s budget enter their final stages, the Rudd Government must decide whether it will extend the deadline for the increased first-home owners grant past June 30. I don’t think they should, but suspect they will.

Labor has undergone an about-face on housing policy. The contrast between pre-election posturing and the reality in government is stark.

On July 27, 2007, the Labor opposition hosted a “housing affordability summit” in the main committee room in Parliament House. About 150 housing experts from all over the country braved Canberra’s winter chill to discuss solutions to the housing affordability crisis.

I was there, there was little agreement on what needed to be done, but summiteers were unanimous in what shouldn’t be done. Everyone agreed that increasing the first-home owners grant would simply result in higher house prices.

Labor seemed convinced and produced a discussion paper quoting the chief economist at ANZ, Saul Eslake, saying: “Anything which puts additional cash in the hands of buyers …results merely in more expensive houses.”

This is certainly the case today, based on the latest figures released by the HIA. The decision by Ruddy Fantastic to increase the FHBG will be judged in history as a brilliant economic decision or, a monumental massacre of young Australians where bankruptcy remains a strong possibility.

Maybe, they should learn from Nathan Rees over at Fort Crumble who recently decided to withdraw financial backing for the AFL’s plans to locate a second team in Western Sydney. The reason why Fort Crumble withdrew? They reportedly decided pumping big money into the AFL’s expansion- right in the heartland of rugby league – would risk a voter backlash. The politics of the decision making process.

I then assume that this explains the sudden surge by politicians to use the word temporary given that if their respective economic policies go pear shaped – in return they can then become the temporary government. Bankruptcy is definitely not temporary – not in Australia anyway.

Let’s hope Ruddy Fantastic changes the word temporary to exemplary. Sugar coating is not the answer in a Global Financial Crisis where unemployment and budget deficits won’t be temporary either.

Cheers ^__^

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

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1.05.09Robert Simeon4 Comments »