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The global financial crisis (GFC) has been a fascinating turn of events where businesses and households tweaked, sleeked and critiqued their respective currency flows in a battle for survival. So now we hear that as the good times roll, expect the cost of living to rise exponentially. With interest, I was reading another blog on Business2 which intrigued me.

“While you are talking to Glenn Stevens ask him how come the inflation rate is around 3% when everything we use or consume is rising at a much faster rate than that, and also – how come home mortgage rates in the rest of the world are SO much lower than here. And how come the banks are crying about the cost of funds – and making multi BILLION profits. And why won’t we let some other banks into this country to compete with the Big 4. Also – how come the homeowners of this country have to carry the burden of government stuff ups via monetary policy every time?”  Poignant questions to those residents living on Recovery Road, Australia!

Sydney real estate markets this year have been in a somewhat chill mode, although recent sales results are sending strong indications that the tide is turning and sentiment is starting to heat up. This week’s Mosman real estate sales are the strongest recorded this year as the results show here. Source: Domain Property Data

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I was consumed by this week’s announcements to the residents on Recovery Road, Australia – starting with The GFC saved Australia. “As an aside, the realities of what really happened at our Big Four banks over the past three years makes CEOs’ extreme pay packets all the more obscene. Remember that the CBA’s $16 million man this year, Ralph Norris, took the top job in 2005 – his latest bonus bonanza supposedly recognises his responsibility for the bank coming out of the GFC in such rude good health. Haven’t seen much impact of his presumed matching responsibility for the bank’s financial and reputational exposure to Storm Financial, ABC Learning, Babcock & Brown et all reaching their crescendo on his watch. Similar remuneration report follies are on the way from ANZ, NAB and Westpac.”

Plain old economic growth is good for society as inflation expectations of 3.1 per cent in September quarter – survey as the RBA beats the inflation war drums. The mining boom will push interest rates up, Reserve Bank’s Glenn Stevens says as the odds shorten for October rate rise. Let the speculation begin when former RBA economist tips 5.75 per cent cash rate which in real terms equates to a 125 basis point increase over the next fifteen months. This would place Australia’s first ever female prime minister at Fort Fumble under increasing pressure, given 2011 could very well be another election year? Which bank? CBA joins calls for an October rate rise despite the release of data this week that household savings fall signals money woes as home loan customers told to brace for $90 – a – month increase in repayments. On top of this the Reserve Bank of Australia revealed this week that the big banks increase penalty charges take 9 per cent to $536 million after more customers fell behind in payments.

Electricity charges have gone through the roof as power bills force big firms to flee from NSW as Fort Crumble continues to mismanage NSW’s power supply where price rises put power to 138,000 people in jeopardy. Opposition energy spokesman Duncan Gay said he would not be surprised if big businesses fled NSW after being forced to bankroll an overdue energy infrastructure upgrade. “NSW Labor has ripped $14 billion out of the state’s energy retailers in dividends and taxes and failed to re-invest in our ageing infrastructure.”

Fort Crumble is encouraging Sydneysiders urged to shift inland as they drown mentally in addressing infrastructure collapses in NSW. The problem with Fort Crumble is that with just six months in power, it doesn’t have a single plan – as public loses all faith with planning process. For example:

Taking the low road to disaster where Fort Crumble has delayed 60 major road projects by at least five years (some longer) because  it can no longer fund urgent road works. No wonder Fort Crumble, hopelessly and embarrassingly broke, is trying to push residents into the bush. There is no greater example of how the present state governments mismanage debt than as state’s debt binge to top $240 billion as private sector faces squeeze. Analysis by The Australian of state (fake) budget round has found that borrowing is forecast to soar 52 per cent from $159.6 billion this year to $243.2 billion in 2014 to help fund upgrades to rundown transport, electricity and water infrastructure. The analysis found NSW and Queensland had the highest level of borrowings and both face re-election within the next six months. Constituents are wondering whether we have state governments or fake governments?

Yes, the road to recovery is long, winding and bloody confusing where even the strings on our elected puppets have worn thin and in NSW, the show can no longer go on. No wonder there is increasing demand for property within five kilometres of the Sydney CBD.

Alas, Fort Fumble embarks on a $45 billion NBN network which will become Australia’s greatest ever white elephant. We need a Very Fast Train to link cities because road works in NSW have virtually ceased.  For the record, wireless (not cable) works very well even on very fast trains.

In answer to the earlier question, “how come homeowners of this country have to carry the burden of government stuff ups via monetary policy every time?”  What Australia needs, is a train of thought – not a broken cable car!

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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24.09.10Robert Simeon3 Comments »

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After all, we are in the greatest performing economy on the planet. Having sailed through and mostly ahead of the global financial crisis (GFC), our property markets once again find themselves positioned at the business–end, following a term of prolonged holding patterns. Ground conditions are perfect for take–off, with clear skies ahead and very little turbulence on the radar. Although what remains unclear, is who will be playing and who will be staying? The buzz word during the GFC was stimulus and it was merchant bankers who stimulated top–end property markets. There was no better example than Mosman, which remains the most expensive municipality (not suburb) in Australia. Bankers’ bonuses have been ‘rivers of gold’ for our bricks and mortar markets (merchant bankers remain our single largest subscribers) although their market engagement appears to have peaked in early 2008.

What is acutely clear, is that households have been actively paying down debt, instead of rolling it over and taking on more. Not that long ago, real estate agents made diary notes as to when the big banks were paying bonuses, which translated into the annual game of house trap!

Property markets move in mysterious ways (remember when the GST was introduced in 2000?). We saw property developers in Mosman gradually withdraw (especially with houses) because the additional ten per cent impacted their returns on investment and this once popular vocation became academic.

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Pittwater weekenders were also very popular in the real estate indulgence markets where these properties failed the financial reconciliation of the GFC as the owners headed back home.

Another factor that needs to be considered when house values are flat, is that when additional acquisition costs (stamp duty) and selling costs are measured, vendors find themselves at breakeven. This was the norm, when purchasers were playing with additional income streams and stimulating markets with bonuses that can no longer be taken for granted. The following three graphs show the volume of stock on the market for houses and apartments in Mosman, Cremorne and Neutral Bay, with houses showing much more consistent patterns.

MOSMAN

CREMORNE

NEUTRAL BAY

The Punch guide to our rich suburbs and big houses identifies a study conducted 2003–04 and 2007–08 which identified Mosman as having the highest average income in Australia, at $131,606 (the national average is $44,402). Considering that we are now post GFC and these results are more than two years old, it will be interesting to see if there are any significant changes to Sydney’s wealthiest the richest in the land.

Confidence has always provided the much needed oxygen to all financial markets so overseas travellers would be happy this week, to see the dollar bounces as economy worries fade. The question many are asking is ‘will confidence remain sky high’? Consumers turn cautious as outlooks clouds when the Westpac and Melbourne Institute released its index this week which showed that consumer sentiment fell 5 per cent in September to 113.2.

The consumer sentiment must have been taken before Julia Gillard announces cabinet which is just in time as parliament resumes in two weeks. The broadband debate will be riveting given Tony Abbott picks Turnbull to ‘demolish’ Gillard’s broadband plan. I wonder if he read skills shortage threatens Gillard’s NBN pledge when it was revealed the regional rollout could face a skills shortage. “The Communications Electrical and Plumbing Union estimates around 7,000 now have the competency to work on the NBN’s construction, but 25,000 technicians will be needed each year to build and operate the network over the period of its construction.” In the meantime, The Emperor is off to the USA for a sleepover at the White House and here are the other cabinet members.

The big banking announcement of the week was Basel III agreement announced. Global regulators are enforcing rules for banks to hold top–quality capital totalling seven per cent of their risk bearing assets (up from two per cent) to prevent any repeat of the recent international credit crisis. Australian banks are unfazed by tough new rules given they already qualify, with the ANZ sitting on 11.1 per cent, Commonwealth Bank 10.1 per cent, NAB 9.4 per cent and Westpac 8.6 per cent according to Deutsche Bank figures. Our banks are jumping back into the property market as lenders back throwing cash at buyers although our property bubble is too fit to burst. ‘A report last week from Moody’s Investor Service found that delinquency rates are still very low. For example 30+ days – past due delinquencies were 1.34 per cent in June compared to 1.39 per cent in May. That means that less than 2 per cent of loans are falling into arrears of 30 or more days past the due date’.

As stated previously, many Australian households are pre–paying their mortgages. Major banks report that over 55 per cent of mortgagees are ahead on their payment schedule, with 40 per cent, by more than a year. What a pity that U.S.A. banks were not in that position when subprime hit!

Here is a great one on one interview by our very own Steve Patrick with Glen Spratt from Mortgageport.

This video was produced by visualdomain

This week, we celebrated the 10th anniversary of the Sydney Olympic Games. Coincidentally, we celebrated the 10th birthday of Virtual Realty News. Ten years ago, when I sent out our first edition, it went to 38 subscribers (we still have a few of these originals) and look where we are today – $956,784,220 in online subscriber sales and Australia’s longest and most successful online newsletter. I am proud to say that over that time we have never missed a single edition. We have quite a few new initiatives in store and will be working very closely with visualdomain to produce fortnightly/monthly (still working that out) video editions of Virtual Realty News for those who don’t want to read them. Stay tuned for many more real estate industry firsts!

All will be revealed soon.

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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17.09.10Robert Simeon4 Comments »

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Excellent one on one interview where Steve Patrick interviews Glen Spratt from Mortgageport about the state of the market regarding the local home loan market. The interview discusses -

• What state is the mortgage market currently?
• What trends are noticeable?
• Tell us briefly about Mortgageport
• What type of customers does Mortgageport focus on helping?

This video was produced by visualdomain

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15.09.10Robert Simeon3 Comments »

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It has now been revealed that the weakest link found by the key players two independents who delivered the government to Julia Gillard, preferred a leader who was more likely to run Parliament to its full three–year term. Tony Windsor believed that Tony Abbott was more likely to run a new election as soon as possible.  Asked why he thought so, Windsor replied: “Because I think they would be more likely to win.” So the Independents tear us to a new Paradigm as $10bn regional package seals Labor win. Who will forget that speech Oakeshott holds Australia hostage with self – indulgent theatrics better known as his 15 minutes of fame and his later admission he weighed up offers from Tony Abbott that got ‘bigger and bigger’.

Australia has a population of 22,454,686 and 14,030,528 voted according to the Electoral Commissioner where the breakdown is interesting. NSW – 4,591,748, Victoria – 3,547,403, QLD – 2,707,464, WA – 1,356,228, SA – 1,102,827, TAS – 357,873, ACT – 246,436 and NT – 120,489 which was a 385,455 increase from the 2007 election, when 13,645,073 were enrolled to vote.

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No time for woulda coulda shoulda from Gillard as less than 24 hours following the announcement the insults start to fly from furious Coalition as Liberal Senator George Brandis told ABC Radio, the Labor government had “as much legitimacy as the Pakistani cricket team”. Then Fort Fumble (or should that now be Fort Eggshell) faced a landslide when Wayne Swan appears at odds with independent by excluding mining tax from summit which promptly saw Windsor at odds with Labor over mining tax review as miners take up fight against rent tax again.

Even more revealing, Swan let Rudd down on MRRT: WA premier when it became obvious that many missed reading perhaps now politicians will stop trashing their reputations. One thing we are already assured of will be many more back flips as Hockey warns of government instability where it would be irresponsible to rule out The Revenge of The Emperor – Kevin Rudd back in the spotlight after Julia Gillard wins government.

I can see the headlines now “Gillard fights testosterone”, although I prefer, ‘here-ego’ again, to the polls! You would have noted that the new buzz word from our esteemed leader is “regional” which never saw the light of day in the pre–election hysteria. In whichever direction you look, you will see  too many seasoned bulls in the one paddock with very little room to ‘moo-ve’ in the lush paddocks surrounding Fort Fumble.

Economy held up well post – GFC, says RBA “in that market, unlike a number of others, conditions have generally returned to those before 2007.” Interesting to see that the Australian dollar has become the fifth most traded currency, overtaking the Swiss franc, with the AUD/USD remaining the fourth most traded currency pair. The Reserve Bank of Australia left rates on hold when directors met this week for their monthly cucumber sandwiches – rates unchanged, statement lacks ‘meat’.

The main triggers that determine home values are recessions, unemployment and interest rates, so this week’s announcement jobs surge increases rates risk delivers a strong possibility that in November we will see interest rates increased. On a positive note, investors are jumping back into term deposits making a comeback which means that the banks don’t have to buy more expensive money on the wholesale market. A great barometer for the property markets is consumer confidence, which is headed to ten–year highs.

Don’t bet the house on a property price bubble bursting provides an excellent assessment of how our property market is so different to the US housing market – subprime 2.0 is on its way. Yes our construction activity remains weak given poor planning to blame for building slump where again the culprit is Fort Crumble, Australia’s worst performing state government. The number of new dwellings completed in 1999 – 2000 was 32,358 and in 2007 – 2008 it was 14,795. The value of residential homes built in NSW since the late 1990’s has fallen from 36 per cent of Australian output to just over 20 per cent. The report estimates that for Sydney to keep up with demand, we will require 25,000 – 50,000 new homes each year. The present government target is 25,000. Here is an interesting graph showing Lower North Shore house and apartment sales from April 2008 to August 2010.

Here are the Mosman sales which remain consistent and strong for both demographics.

Mosman home values are still a very strong currency as the graphs indicate although when one looks at last week’s sales it is most obvious that the 2010 Federal election has confused consumer confidence. Based on our analysis of all data available, we can advise that we won’t see a property boom for at least a few years and prices will gradually increase. This leads me to suggest that we may now find ourselves in an entirely new space, where our households have transgressed from previous debt collection, to fast track debt reduction.

We don’t expect to see a sudden influx of properties on the market anytime soon, so get used to a property market that remains in a holding pattern (much better than a market in a folding pattern). The Mosman graph above, clearly indicates this and is anecdotal market evidence.

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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10.09.10Robert Simeon7 Comments »

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Australia’s presiding government has now been in caretaker mode for  almost two months and in all probability, will move to a makeshift government, better known as a ‘political pantomime’. The political care factor is all about me, myself and I, but hopefully by this time next week, we will finally know the outcome of the 2010 federal election.

Already many cracks are appearing given we failed, Julia almost admits as three amigos turned into Mexican bandits which was best summed up with funny farm on the hill loses a few inmates, gains some more. Although at the end of the day, there is no escaping the fact that once decided, this will be the government we’ll have to have. It would be catastrophic for Julia Gillard’s CV to read Australia’s shortest serving (union elected) prime minister – no wonder she has turned green.

Unlike this week’s political speak – it was the Australian economy that “walked the walk and talked the talk”. This  highlighted the fact that Australians (not politicians) know their business. Australia’s economic growth accelerates as it remains one of the world’s best performing economies, with the latest data showing growth is back to pre – financial crisis levels. GDP growth was 3.3 per cent at an annual rate, faster than the 2.7 per cent pace in the March quarter, and surpassing the 2.9 per cent tipped by analysts. Just wish one particular bloke would mind his own business as Wayne Swan claims Labor responsible for GDP growth. Somebody should tell him that if that was the case, his government would have been re-elected with a majority.

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This is a sensational photo identifying our urban sprawl – at first I thought it had been photo shopped however I can assure you that it has not. Another brilliant Tim Mooney capture.

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GDP speeds ahead of economists’ forecast as China fuels mining sector. This  needs to be put into perspective given “the resilience of the economy is thanks to demand for the nation’s iron – ore, coal and other minerals, particularly from China, which has helped boost company profits. This has helped support business and consumer confidence and kept household consumption buoyant, a big contributor to economic growth in the June quarter.” Is this green Gillard’s political blunder? Given federal Labor and the Greens support future Mining Super Profits Taxation revenues which could deliver diabolical consequences as Australian miners flock to Africa. The moral to this story…?

So will all this positive data reporting be the catalyst for the long awaited return of the top–end real estate recovery? They say it comes in threes so first, we had anecdotal evidence that the Australian economy had returned to pre – global financial crisis levels. Secondly, we are now in September (which historically coincides with our peak selling period) although this market has been in  prolonged hibernation. Last but not least, property shakes off winter blues with $52 million sale. Historically, property markets follow GDP growth. Our property markets peaked in 2003 and 2007 which is clearly indicated in the following graph. If trends continue, 2010 will see a period of consolidation and growth and 2011 will return to 2007 prices and probably beyond.

The Mosman house market sales in 2010 (thus far) are far from impressive and turnover is well down on previous years.

MOSMAN HOUSES

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• 2007 – 414 transactions to a total value of $1,169,107,720
• 2008 – 445 transactions to a total value of $736,789,726
• 2009 – 474 transactions to a total value of $730,889,500
• 2010 – 172 transactions to a total value of $402,766,550

Source: Domain Property Data

Interesting to note that in 2010 there have been 141 recorded sales up to $5,000,000 (79 recorded sales up to $1,500,000 and 62 recorded sales above $2,500,000.) Just 19 sales have been recorded in excess of $5,000,000 (12 above $5,000,000, 2 above $6,000,000, 2 above $7,000,000, 1 above $9,000,000 and 2 above $10,000,000.)

When the Reserve Bank of Australia (RBA) meets next week, the cash rate will remain on hold despite some predicting a reduction. The reality is that the RBA will only cut rates when our economy starts heading pear – shaped. Risk of double – dip recession: Debelle which this week was dispelled when rate rise on the radar as profits surge.

Onwards, however not necessarily upwards the great housing dilemma continues as does Sydney rental vacancies rise, data shows. NSW is heading backwards as is our presiding government, Fort Crumble, which continues to stuff – up growth as developers furious at reversal of home levy savings. Australia’s worst ever government is dysfunctional, corrupt and rotten, the end is finally nigh for Labor as corruption fighters take on Keneally. Ferry services are being cut to Mosman, Cremorne and Neutral Bay as Fort Crumble tries to appease voters in Labor heartland seats despite – No minister, don’t cut ferry services – let us run them, say private firms as NSW minister quits for using adult and gambling websites. The stethoscope was then applied as $131 million ‘missing from NSW health budget’ which would explain why NSW is terminally ill in the political sense.

Whatever happens next week when our federal government is announced we can expect plenty of pollies to be singing from different hymn books and not in chorus? Some suggest a parliament of enlightenment although I see a parliament of disenchantment.

Off to the polls we go – yet again.

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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3.09.10Robert Simeon18 Comments »