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It started as a two horse race then a last minute scratching but were they polls apart? A ruthless party room coup that saw The Emperor now destined for the Ministry of Where Are They Now – this was described by some as a professional hit by a broken party feeding on its own the execution of Kevin Rudd. On a sadder note we lost an interesting character here at Virtual Realty News – bugger! Gillard becomes Australia’s first female prime minister as a tearful Rudd stands aside – Operation Ranga which left The Emperor’s curriculum vitae resembling a post – it note.

Giddy Up Gillard announced the cull – a good government was losing its way and straight into a gallop, cancelled  the tax – payer funded mining advertising campaign. Ironic  that this was strongly supported by the newly anointed deputy prime minister Wayne “Left – Right” Swan. During Question Time they kept exiting Finance Minister Lindsay Tanner won’t contest seat so the “Big Four” – Rudd, Swan, Gillard and Tanner  has been reduced to the “odd couple”. The Emperor has become the first Labor prime minister to be removed from office in his first term. Giddy Up Gillard will be hoping in a short space of time, that  they become polls apart. Fort Fumble is today looking more like Fort Chaos  - all over the place with no compass in sight.  Will it sink as it takes  in water?

BUY PRINT

Another major stoush earlier in the week caught my attention and what a beauty this one is shaping up to be , with only Wayne “Left – Right” Swan left in the ring.   Watch this space.

It has been suggested over time in the media that Treasury and the Reserve Bank of Australia (RBA) don’t always see eye to eye insofar as economic policy is concerned and  here is the proof. Stephen Bartholomeusz from Business Spectator filed Warwick the wise “Reserve Bank board member and leading economist Warwick McKibbin has shown some courage in making an explosive contribution to the debate about the Rudd government’s management of the economy and the quality of the design of its proposed resource super profits tax.” He “accused the government of panicking in response to the crisis and ramming through decisions “fraught with risk”. It had over spent in its stimulus package (and, indeed, is still stimulating even as the RBA raises official interest rates to control growth) and then they come up with the RSPT to try to compensate.“

“So, the government panicked in response to the GFC, committed too much spending that couldn’t be reversed and, for   political reasons – the perceived need to claim a  fiscal surplus – for which he said there was no economic basis – it had came up with the idea of raising the profits of the resource sector. McKibbin also accused Federal Treasury of becoming an arm of political policy and Treasury officials of producing “what I consider to be fairly politically – based evidence in support of a political policy, not economic policy” and criticised Treasury secretary Ken Henry for not only failing to consult experts on economic issues but also trying to silence them.”

In only what can be described as an extraordinary outburst Henry tells economists “to put down their weapons” and get behind proposals such as the resources super profits tax. What we are seeing is simply unprecedented within Australia’s political history – guns at twenty paces. Just like the execution of The Emperor a public stoush between the RBA and Treasury will add more pressure  at Fort Chaos.

But wait,  there’s more!   Former federal Liberal treasurer Peter Costello jumped into the ring declaring If its tax reform you want, try GST as next week marks the tenth anniversary of the GST. So it was only to be expected when we  read Ken Henry should get a new career – as a pollie and  it is hard to remember a time when such differences of opinion dominated Australia’s political landscape. Rudd under fire from Labor MPs over mining tax ads the rest is history when Rudd’s golden honeymoon ends in a bitter divorce.

We will be reading about this coup for weeks as there are some who believe Labor wastes a perfectly good PM although it has been conceded that Gillard’s Labor must now change policy tack which I assume means more back – flips.

Most embarrassing for the government is that Australia’s housing stock is currently short 178,400 dwellings and this number is growing not reducing. This is certainly not helped with now the sad news: higher rates a certainty as the gap closes on fixed, variable rates which further explains why the RBA is at odds with Treasury. Perish the thought that Giddy Up and Left – Right may be forced to curb their ongoing stimulus spending.

A newly elected prime minister and deputy, the RBA and Treasury bluing over economic policy and  the inflation genie now up and away. Throw in a federal election then a back – flip with the RSPT and the budget will have an almighty big hole in it. Alan Kohler wrote today on Business Spectator Gillard must mop up Swan’s mess “Julia Gillard’s biggest and most immediate problem is her deputy, Wayne Swan, and specifically the budget he brought down six week’s ago.

“Wayne Swan must bring down a mini budget that fixes his and Ken Henry’s catastrophic mess of May 11, so the RSPT can be removed as an election issue before the Prime Minister asks “the Governor – General to call an election so that Australian people can exercise their birthright and choose their prime minister”, as she put it yesterday.”

Gillard admits that her government was losing its way, but who was the navigator ? The Governor – General should cancel any plans for a holiday in the near future.

Taking a bullet for the party just took a whole new meaning.

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

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25.06.10Robert Simeon6 Comments »

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The circuses at Forts Fumble and Crumble are folding their tents because, with below par performances, the crowds are disgruntled.  Angry voters ready to give Rudd the red card an amazing turnaround where this fairy–floss policy is being eaten away and RSPT now means ‘Return Sender Priority Termination’.  Having said that, under the big tent in Canberra, The Emperor (Kevin Rudd) is the  star performer of his pet event – the back flip, which he performs with ease.  It would be much easier to call an election and put the RSPT to a referendum.

Can the tax be fixed when Rudd says it’s not broken? The Emperor appears to be a broken man bearing no resemblance to Broken Hill. Kevin Rudd fights dissent in ALP ranks yet the Ring Master PM Kevin Rudd holds line on mining tax reform. The trampoline at Fort Fumble is losing its bounce, as Peter van Onselen declared this week in The Australian novices at the wheel of state. It was revealed that two thirty year olds and a thirty one year old, with no experience in the labour movement and next to none in industry or business, are coaching The Emperor with his back – flips. “However, now that Rudd appears out of his depth, caught up in poorly constructed defences of policy positions and back downs over challenges he had previously described as too important to walk away from (think emissions trading), the trio is being blamed for bad advice that could culminate in Rudd becoming the first Prime Minister in nearly 80 years to lose office after one term.”

The show must go on…..

Bugger – I thought I had Tim with this week’s request. Thinking North Pole next week!

BUY PRINT

Having read the Minutes of the Monetary Policy Meeting of the Reserve Bank Board and feeling somewhat comfortable that one institution has its act together, out came Australian housing market ‘a time bomb’.

Humming “send in the clowns” and in they came. “The Australian and British housing markets are the last two bubbles left in the wake of the financial crisis, and it is only a matter of time before they crash, warns legendary US investor and co – founder of global investment firm GMO, Jeremy Grantham. Mr Grantham famously reported a year before the global financial crisis: “In five years, I expect that at least one major bank (broadly defined will have failed and that up to half the hedge funds and a substantial percentage of the private equity firms in existence today will have simply ceased to exist”. The Australian reported yesterday that he said “ Australia had an unmistakable housing bubble and that prices would need to come down by 42 per cent to return to the long – term trend”.  “You cannot possibly miss it,” he said.

Reserve Bank waters down fears of real estate housing bubble and consumer sentiment is holding up. The Real Estate Institute of Australia weighed in No housing bubble in Australia citing over the period December 1996 – December 2009, median house prices increased from around $160k to around $500k; a trebling in thirteen years. Within this period there were four phases:

• From December 1996 to September 2000, median house prices in Australia showed a moderate average growth of 2.1 per cent per quarter.
• From December 2000 to December 2003, house prices appreciated at a greater rate of 3.9 per cent per quarter on average.
• From March 2004 to December 2008, house price growth moderated to an average growth of 0.8 per cent per quarter.
• During 2009, growth of median house prices again accelerated to 2.9 per cent per quarter.

Time to take a Mosman tent snapshot to see where we are today, compared to this time last year. The messages are mixed as the results show. We collated the data from Domainpropertydata and it should be noted, that a significant number of sales in 2010 are yet to record a sale price because of confidentiality agreements. It will take a few more months before we have an exact position, so these figures will be higher, rather than lower.

Mosman house and semi sales 1 January 2009 – 15 June 2009

• Total number offered – 148 @ $329,394,627
• Total number sold – 132 @ $305,159,627
• Private Treaty – 120 @ $280,714,627
• Auction – 12 @ $24,445,000
• Total Combined Median – $1,815,500
• Total Combined Average – $2,347,381
• Highest Price – $13,200,000
• Lowest Price – $975,000

Mosman house and semi sales 1 January 2010 – 15 June 2010

• Total number offered – 171 @ $276,487,629 (2009 – $329,394,627)
• Total number sold – 147 @ $276,487,629 (2009 – $305,159,627)
• Private Treaty – 91 @ $206,089,629 (2009 – $280,714,627)
• Auction – 56 @ $70,398,000 (2009 – $24,445,000)
• Total Combined Median $2,105,000 (2009 – $1,815,500)
• Total Combined Average $2,425,330 (2009 – $2,347,381)
• Highest Price – $11,000,000 (2009 – $13,200,000)

The Auction Comparisons

• 2009 Number Auctioned – 34 (2010 – 87)
• 2009 Number Withdrawn – 27 (2010 – 10)
• 2009 Number Sold – 12 (2010 – 56)
• 2009 Clearance Rate – 35 % (2010 – 64 %)
• 2009 Adjusted Clearance Rate – 20 % (2010 – 58 %)

The challenge ahead for real estate in 2010

This is not confined to the Mosman market. All real estate markets will face the challenge of matching and/or bettering the sales results recorded in the 1 July 2009 – 31 December 2009 market where results were significantly higher, compared to the previous six months.

Mosman house and semi sales 1 July 2009 – 31 December 2009

• Total number offered – 192 @ $418,706,750
• Total number sold – 174 @ $408,296,750
• Private Treaty – 127 @ $340,354,750
• Auction – 47 @ $67,942,000
• Total Combined Median – $2,250,000
• Total Combined Average – $2,617,286
• Highest Price – $12,000,000
• Lowest Price – $836,000

There is no way to avoid  the fact that our property markets have slowed since April economic recovery seen losing steam.  Events in Europe and of course the ongoing hangover of the RSPT debacle have  also been major contributors. So back to those green shoots we go – home building the biggest in nearly six years and investors ignore signs and pile into property.

Figures from the Australian Bureau of Statistics show that while home loans to owner/occupiers fell a seasonally adjusted ten per cent in the first four months of the year, lending to property investors rose eleven per cent. In the past year, lending to investors rose thirty per cent nationwide, and twenty per cent in NSW.

Our property markets (historically) tend to hibernate over winter so I wouldn’t read too much into present activity. It’s actually a good time to buy!  It does appear however, that the “fat lady” won’t be singing for some time to come, which shows just how hard it is to read property markets. Unlike the share markets, we don’t have buy and sell recommendations.  Investors are selling out of the stock market and moving their funds into the property markets – another clue?

Word from Sideshow Alley this week is that The Emperor is considering performing until April 2011 where he will call an election. Looks like his advisers consider it would be smart to go to the polls immediately following the Fort Crumble election in March 2011. I wonder if this weekends by – election in Penrith may change that decision?

Cheers ^__^

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18.06.10Robert Simeon2 Comments »

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It’s the state Fudge–it week and Fort Crumble was on a roll. We’re not talking about polls either, thanks to asset sales and a property recovery leads surge into surplus. Our economy expanded by 4.4 per cent which is the fastest growth since 2007 – 08. So why was the Fudge–it not constructive, given housing all over Australia is showing alarming structural problems? Whilst construction has expanded in March, April and May it has been modest according to a recent survey conducted by the Australian Industry Group and the Housing Industry Association. Then the Real Estate Institute of Australia – dropped the bomb lowest level of housing commitments since 2001.

Construction activity expands at slower pace where the overall construction index fell 2.6 points in May to 53.2, but remained above the 50.0 threshold between growth and contraction  a strong probability that it will fall below the 50.0 threshold in June. Fort Crumble treasurer announced “the Keneally government is taking NSW forward into an era of economic growth, building a better future for families and businesses of NSW.” Australia is marinated in (hurtful hikes) where on an annual basis the number of new loans is actually down 25 per cent. The Australian Bureau of Statistics released this week that Australia will be home to 11.8m households by 2031 which is up from 7.8 million in 2006 – so why have the ladders disappeared?

Whilst new home buyers big winners on the Fudge–it, I’m not sure that the NSW Home Builders Bonus is the answer. Morphing First Home Buyers into ‘Residents Over 65 Buyers’ (as long as the acquisition is off the plan) is intriguing as seniors’ duty cut lacks stamp of approval. The former proposal was to entice people into the market and the latter, directed to people already in the market. These new subdivisions are well west of Sydney and plagued with massive transport infrastructure neglect. In May, apartment construction fell 16.8 to see the index now at 42.0 and house construction at 57.7 which is a direct result of a lack of available credit within the Australian economy. This statistic won’t be changing anytime soon.

BUY PRINT

Each week, I challenge Tim Mooney with a photo request and it is plain to see that he has on file, Australia’s largest aerial photographic library.

What Keneally and co achieved … and what they didn’t where simply put: “Kristina Keneally and her Treasurer did little or nothing to bring this revival about. It came thanks to national and international forces beyond their control.” I would call that constructive criticism because one major element that NSW keeps missing are those builders’ ladders. It is all very well to roll – out Stamp Duty relief announced for some buyers however let’s not forget that in May 2010 Fort Crumble introduced its Ad Valorem tax increase of 0.2 per cent for properties between $500,000 and $1,000,000, and 0.25 per cent for properties above $1 million – on top of the usual Stamp Duty fines that were not reduced in the Fudge–it.

Here we have construction being dominated by the public sector over the private sector – so on with my missing ladder concerns. Alan Kohler on his Inside Business programme spoke with Nicholas Collishaw, Mirvac managing director. A great interview Nicholas Collishaw on encouraging development. Alan Kohler, “Australia is experiencing a dire shortage of houses – 40 – , 50,000 completions short of what the actually needs.” Nick Collishaw “Well, I certainly agree with that statistic. We expect a shortfall of 45,000 dwellings for the 2009 year and, as we see 2010 unfold and ’11 ahead of us, that gag increasing.” A must read, as too on Inside Business Christopher Joye discusses lower house prices given the headline mortgage rate has moved from 5.75 per cent to 7.4 per cent. Ironic, that property developers are finding it increasingly difficult to draw credit given no access to the housing emergency chest of funds. Conflicting in that The Emperor PM to pour $5.6 bn into poll fight a decision that shattered faith in PM.

Melbourne close to overtaking Sydney so up the ladder Melbourne goes and down the ladder Sydney goes because of its property structural problems. “With annual population in Victoria running at 2.2 per cent and driving demand in Melbourne, when compared with New South Wales 1.7 per cent growth, it is not hard to imagine Melbourne soon seriously challenging for the crown of Australia’s most expensive median priced city.” Whilst Sydney has a greater proportion of apartments (26.5 per cent compared to 16.7 per cent for Melbourne), Melbourne actually has more houses than any other city in Australia. Although it should be noted that infrastructure determines property values – position, position, position. So why do respective governments find themselves in opposition as against market directing? That would be political bias coupled with ignorance and an extension ladder aimed at re-election. Propping up marginal seats is not the answer given the vast majority of those constituents have re-located elsewhere across Australia.

A reason why the electorates are at loggerheads with The Emperor and his ailing Fort Fumble is exemplified, as he presides over a government that knows best. Trust the government? Not now whilst the result is clear: voters are fed up. Rudd set to lose election on mining tax Australia needs to get back to basics – why is our building demographic market contracting? It certainly does not help when lenders say no to loans as buyers knocked back as consumer sentiment drops in June. There is no doubt that Aussies are cautious after rate rises: RBA which was reinforced this week when RBA governor announced cut debt, save more: Stevens.

It is possible that never before, has Australia vented such anger at Fort Fumble and Fort Crumble – watch the Penrith by-election next week which will identify a record swing against the Premier Pristine government. Sovereign debt capitulations resonate through markets evidenced home loans drop to 9 – year low which represents the fewest number of new loans for owner–occupiers since 2001 and the seventh straight fall in housing finance commitments.

I’m sure that everyone was amazed to read this week lawyers consulted on sacking NSW government, says Governor whilst (not surprisingly) it does identify just how bad our governments are at present. I leave you with this comment from Alan Kohler on Inside Business Talking Point which says all about the RSPT. As Clint Eastwood once said “Do you feel lucky punk?”

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

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11.06.10Robert Simeon11 Comments »

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With my iPad still on order – my attention this week was on the release of ‘Betrayal’ – The Underbelly of Australian Labor by Simon Benson, senior political journalist at The Daily Telegraph. Like many Aussies who are in absolute dismay at what is currently unravelling within the seams of our ailing economy, here is a book with more twists than a Rubik’s cube. Rudd broke secret pact with Iemma so as quick as a flash The Emperor denied such a thing.

More importantly, past Prime Minister Paul Keating commented in Betrayal – “When the motivation of the machinery of the Party is unfurnished as to policy purpose, it has nothing to offer than to focus on marketing and polls. After a while the public becomes aware of this and they realise that marketing and spin have no basis … That is more the rule these days than the exception.” Again another week of prolific marketing spin from both Fort Fumble and Fort Crumble – our esteemed federal and state Governments collaboratively spinning this most uncomfortable electoral seat of bad poll therapy. So here I go again, to ‘spin’ this week’s edition of Virtual Realty News.

Heaven forbid – How Sydney’s iconic Opera House is at risk of ‘financial tragedy’ a damning internal report has revealed , that unless urgent action is taken, the Opera House will have to close. “In April last year Prime Minister Kevin Rudd hit the roof after The Daily Telegraph revealed former Premier Nathan Rees planned a $900 million rebuild.” Sydney Opera House has been lobbying Fort Crumble for ten years so in next week’s State Budget $130m to save Sydney Opera House from closure. Maybe our mining companies can save our Opera House. After all, they are expected to save everything else in Australia. As for the State, it is stone motherless broke – absolutely devoid of imagination and concept. Marketing and polls won’t save it.

BUY PRINT

Frustrating when you see that Fort Crumble wasted $500 million when it axed the failed CBD Metro proposal and it’s all about to get worse. Second harbour crossing – or chaos where a team headed by the state’s former rail and roads chief, Ron Christie, identified that without a second rail link across the harbour, the CityRail system will face paralysis by 2022. I thought we were already there which may explain why Fort Crumble is using marketing and polls in an effort to change its identity.

Fort Crumble is fast becoming Fort Chaos – mates race: $45 m deal snares MP as the V8 Supercars race will now cost taxpayers at least $10 million more over the next five years – the budget was $35 million. So when all else fails what does the government do? Labor shuts off access to secrets the Ombudsman, Bruce Barbour, is seeking to change a nine-word loophole where access to documents has previously, been refused. The cost of hosting World Youth Day came in $64 million over budget yet, $50 million was pledged this week, to keep the rugby league grand final in Sydney. This was $20 million more than Queensland was prepared to pay. Little wonder senior Fort Crumble ministers joke that Labor should re-name itself “the Keneally Party”, as it is now politics without a whiff of Labor just another example of marketing and polls.

The Reserve Bank of Australia (RBA) met this week to spin the cash rate where house prices ‘out of whack, set for slump’. A comment from abroad where the International Monetary Fund voiced its concerns on house price values compared to average incomes. Possibly too much time was spent reading two American dreams shatter although Australian property markets are witnessing households pull back spending as rates rise. Yes – a chill wind through house prices which prompted the RBA to place rates on hold.

Interesting to note that when property markets are booming, buyers adopt an aggressive pattern of behaviour and yet when property markets cool, become passive. I’ve been doing this gig for twenty five years now – currently I am selling the first home I ever sold in 1986 for $285,000. 43 Rangers Road Cremorne can now be purchased for around $2,250,000. So are you better off buying in an aggressive or a passive market? I suggest the latter. Here is an interesting graph courtesy of RP Data that I found this week. It amazed me, considering we are more a private treaty real estate model compared to public auction. In 2010 – 80.4 per cent of public auctions were conducted in Victoria and NSW. This will become an interesting topic in weeks to come.

For the month of June, the RBA left rates on hold prompting Treasurer Wayne Swan to make this comment: “This news will be a welcome relief for many Australian families and businesses around the country, who are of course doing it tough.” Again, this would be marketing and polls.

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Wayne Swan again “Tomorrow we have the national accounts, and I have every confidence that with the right policies in place, our economy can continue to be one of the best in the world over coming years… From our perspective on this side of the house, we will do everything to reform our economy, to build economic capacity, to keep pressure off inflation so we can grow sustainably.” Wayne, please allow me to explain a few basic economic fundamentals that escape you.

When Swan released his Budget 2010/11 – he announced that it was hedged on a consumer price inflation of 2.5 per cent, even though the RBA recorded a March 2009/10 rate of 2.9 per cent. In Virtual Realty News I suggested that inflation would be at 4.5 per cent by June 2010 and your 25 per cent increase for cigarettes tax slug would further ignite inflation. So what happened? Cigarette tax sparks inflation jump where prices increased by 3.7 per cent in the year to May, up from the 2.9 per cent annual pace in April according to the TD Securities – Melbourne Institute Monthly Inflation gauge. Given the RBA has an inflation comfort zone between 2.00 – 3.00 per cent, let me adjust my inflation prediction to 5.00 per cent by June (this month). Petrol prices up, rents up, vegetables and electricity always increase over winter – spin, marketing and polls.

Taxpayers fund Swan’s ad blitz where the mining tax sets nerves on edge as the big miners gave Rudd the fight he was looking for just that taxpayers never expected another back flip where they foot the bill on a tax that is yet to be passed,despite a $40 million advertising campaign approval. Although Rudd treats us like mugs with latest backslide on government ads. On The 7.30 Report Swan defends mining tax ads and the smaller miners reject Kev’s idea of help. Head of Infrastructure Australia offered this advice restart tax plan: Kevin Rudd’s man Rod Eddington as too did Alan Kohler The government’s RSPT spin is a disgrace. Then the first of many announcements as the tools go down Xstrata suspends development spending two projects over super tax and that, as The Emperor described earlier , is neither “bunkum” nor “balderdash”.

My iPad is yet to arrive so I keep reading Betrayal, so can marketing save PM? Absolutely no chance as the Mad Monk enunciates from his soap – box keep fighting Rudd and super – profits tax. Don’t pay too much attention to the March GPD figures. The June GDP will paint an entirely different position. Europe debt situation serious – Treasury which is a burning issue as too – home insulation inspections yet to begin. Kurraba Point declared a new suburb and ASIC give up on the Offset Alpine mystery.

The stand–off between The Emperor and Australia’s mining companies is a compelling visual. My tip: the mining companies will smash Fort Fumble. Why? Simply because nobody at Fort Fumble has ever run a business before. So how does one turn a big business into a small business? That would come down to marketing and polls. Australia would be better off if it had invested our $38.500 million in BHP and Rio Tinto shares.

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

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4.06.10Robert Simeon11 Comments »