2010 – An historic case of the chicken or the egg!  Or maybe just feeding those chooks?

2010 – An historic case of the chicken or the egg! Or maybe just feeding those chooks?

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The cocoon of life in Australia has never before been under greater scrutiny where many await the findings of the Henry Tax Review recommendations (reportedly 10 centimetres thick). Just what remains to be seen is, exactly what comes first? And just who will be indentified as swimming in those new “rivers of gold” that will allow The Emperor (Kevin Rudd) to stimulate his fast growing budget deficit. It would be difficult to imagine his “financial conservative” tag re-emerging!

The Late Kerry Packer once said “Now of course I am minimising my tax. And if anyone in this country doesn’t minimise their tax they want their heads read. Because as a government, I can tell you you’re not spending it so well that we should be donating extra.”

Welcome back to our first 2010 edition – where we celebrate our tenth year of Virtual Realty News (VRN) arriving weekly into your inboxes. Your scribe has somewhat mixed emotions relating to the year(s) ahead. Fort Fumble (Federal government) simply put; has a cash flow problem.

2009 produced just one election – Queensland. 2010 however, offers four elections being three state; Tasmania and South Australia in March and Victoria in November. The Emperor will also contest his second term which no doubt will be the taxing election given he has now frozen his (failed) climate cap for an economic sombrero! Rubbing hard on that inflation genie (growing from within) no need for predictions as 2010 will be either The Emperor ruling the roost or morphing a feather duster. Interest rates, inflation and our banks to name just a few are threatening and indeed most inclement. For example, this week Westpac withdrew from the home loan market when RAMS (Australia’s largest mortgage broker) was reined in (no loans) until Westpac gets its funding issues in order – what a message that sends to our property markets (especially to first home buyers).

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Tim Mooney Photography

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Again, Australia’s finest aerial photographer Tim Mooney, will be showcasing his amazing captures with each and every edition of VRN. No wonder Prince William declared that he would like to buy a residence in Sydney – he spent plenty of time cruising Mosman foreshores and who could argue with this view. It is a fact that ‘Balmoral’ is very well known within the Royal family!

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The global financial crisis (GFC) dealt the death knell for every state and territory in Australia – all of which are now trading in budget deficit. Only Western Australia and Queensland can return to the black due to mining royalties.

Without the benefit of hindsight it appears more than likely that in five years time, state and territory governments will simply be made redundant given their inability to manage infrastructures within their electorates (did Henry pick that?) Fort Crumble (NSW government) is Australia’s finest example of incompetence personified – it’s still going backwards and has been doing so for well over a decade. At least our property markets are back on the road to recovery having posted a most impressive December quarter report card adding to the intrigue for the March 2010 results.

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As strange as it may seem, if you cast your mind back prior to the GFC where, for housing prices to shake and move it could only start at the top-end. Australian Property Monitors (APM) identified that this is exactly what happened over the December quarter where average prices nationwide, recorded an average 12.1 per cent increase. The Reserve Bank of Australia (RBA) raised the cash rate – an unprecedented three consecutive months to finish 2009 at 3.75 per cent. Next Tuesday, when the Board meets for cucumber sandwiches and English breakfast tea, the cash rate will move to 4.00 per cent in another effort to curb our exuberance for bricks and mortar (the result of cash splashes and government gifts for first home buyers) – a false economy!

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The latest RBA figures identify that consumers spent more than $20 billion on credit and charge cards in November (December figures not in yet) so do the maths as the average Australian credit card debt now sits at $3,196.00. Consumer confidence that is currently at near record levels, is in for some shock treatment, thanks to irresponsible government intervention. The top – end was slow, contracted and non responsive to the GFC, because these home owners were smashed in the recession of the early nineties. Now those who were too young to remember will have their turn and this is highlighted by the Westpac retreat this week from the home loan market.

As a result of overcast economic conditions during the GFC, landlords were aware that a paying tenant was a viable business model where APM identified that houses increased 2.2 per cent and apartments 2.4 per cent in the December quarter. With the economic clouds now clearing (given that in 2007 and 2008 rents rose by an average 12 per cent) the rental amnesty is now over and they will again be up, up, and away in 2010. Don’t forget that Australia’s immigration intake (rightly or wrongly) is the highest of any other country on the planet. Despite new construction remaining in the doldrums as consumption/immigration grows, the “lucky country” is failing miserably in the accountability stakes.

I make no apologies for my dislike of politicians (generally) especially when during a worldwide economic downturn, they sugar coat the economy with taxpayer monies. The Westpac decision this week flew under the political radar – quite conveniently.

Although, I do love the irony! The Henry Tax Review will target high income earners and they in-turn will benefit financially from the government- promoted property debutants. Interest rates are heading north – government intervention and opportunity knocks.

A pleasure to welcome Andrew Blaxland to the RWM fold. We have been chasing him for years and he is a perfect mix for our culture. Subscriber sales have jumped to $892,854,220 and hopefully our business model will record the magic billion this year (Australian record). In 2009 we led the market and this won’t change in 2010.

Welcome back friends and foes, it will be action packed for property voyeurs!

Cheers
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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/

6 Responses to “2010 – An historic case of the chicken or the egg! Or maybe just feeding those chooks?”

  • Nicholas says:

    Robert,

    Happy New Year and its great to look forward to VRN each week

  • THM says:

    Please forward to the Senior Partner !

    Hi Steve happy new year

    I dont know about you but I feel as if my peace has been shattered as it has been a blissful VRN free 5weeks !! Can you beleive he’s been preaching his gospel for 10 YEARS ! My suggestion to you is get smart and retire like I did and hopefully maintain some sort of sanity.

    Must catch up soon for a beer.

    Cheers and Beers Billy

  • To TMW
    Happy new year to you ,hope all is well. As we have just experienced our annual 4 weeks of peace and tranquility ,as we know all good things do come to an end. Having Simeon’s in stereo certainly keeps the office active on all fronts, however your weekly policing of Roberts report and your superior sense of humour keeps me sane! Look forward to your dragon slaying in 2010. I have had Robert here for 18 years now…geez you only get 12 for murder !! Look forward to retiring when school is over,i should be about 90 by then !!! cheers Steve

  • Michael says:

    Robert,

    Well done on the tenth year, and 18th at RWM. Good luck passing the billion dollar mark in 2010.

    Best post of the year should get a trip to the Aussie Bar in Phuket for a week or two…..

  • Ryan O'Grady says:

    Great to see you’re back at it Robert, you always keep us entertained on a weekly basis!

  • Thanks for the welcome Robert, love your work.. you tell it as it is!
    Andrew Blaxland

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