2012 – Keep Accepting The Unexpected!

2012 – Keep Accepting The Unexpected!

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Who’d have thought that Australia’s year–on–year rate of economic growth would come in way above trend, posting 4.3 percent in the March quarter (economists projected 3.3 percent.) Whilst the mining sector played a major role, the elephant in the room was household consumption which rose by a thumping 1.6 percent to now sit at 4.2 percent on a year-on-year basis. This is significantly above the 3.6 per cent per annum long-term average since 1959 so it would be fair to suggest that GDP gazumps the gloom.

It is only fair that economists are now questioning the reliability of the Australian Bureau of Statistics (ABS) data given the patchwork nature of the Australian economy. I must admit that the June quarter GDP figures will either be refreshing or frightening and none of us will know those results until early September. So in the meantime, take care and mind your own business!

If you look at the reactions of the Reserve Bank of Australia (RBA) it is totally understandable why so many remain confused. It took the RBA until May 2 to adjust the cash rate downwards (-0.50) to 3.75 percent only to see another (-0.25) reduction in June take the cash rate to 3.50 percent. The vast majority were calling for a (-0.50) percent reduction (myself included) so the next question is should the RBA should have held fire?

Now look at the March quarter GDP figures. The RBA should be raising the cash rate not dropping it. Buggered if I know who’s right and who’s wrong!

BUY PRINT

When assessing the value of houses in the current market, the rule of thumb being adopted is to (hypothetically) calculate the value of a property back to a 2006 base date market – yes, taking six years off! So I was not that surprised when I read last week’s Goldman Sachs – Afternoon Market Report which stated that the yearly daily average value has declined for three years in a row. So far in 2012, with exactly 100 trading days – it’s running at just $4.56 billion a day which is $770m less a day or – 13% below last year’s average of $5.33 billion.

From $6.6 billion in 2007 when the market peaked (as did the property markets) we are now a whopping $2 billion less a day or 31% below those much missed days.

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This horror number is what the market was doing 6 years ago – 2006 where the daily average was $4.6 billion a day.

  • Average for 2012 (so far) $4.56 billion
  • Average for 2011 $5.33 billion
  • Average for 2010 $5.55 billion
  • Average for 2009 $4.71 billion
  • Average for 2008 $5.73 billion
  • Average for 2007 $6.6 billion
  • Average for 2006 $4.6 billion
  • Average for 2005 $3.55 billion
  • Average for 2004 $2.84 billion
  • Average for 2003 $2.26 billion

This prompts me to do a comparative analysis for Mosman houses next week – where I expect we will see a mirror image of these results.

Interesting to see what is happening to the loan markets. More particularly, that none of the ‘Big Four’ have responded to the RBA’s 0.25 percent cash rate reduction this week.

Macquarie increases loans to property investors 33% since January: APRA. The Macquarie Group has made a big push into the property investor space in 2012, growing its investment mortgage book by 33% during the first four months of the year, according to Property Observer analysis of APRA figures.

The investment bank has written $290 million worth of housing loans since January 1 – just behind regional players Bendigo Bank ($309 million), Bank of Queensland ($310 million) and Suncorp ($384 million). We anticipate that this is one of the hottest markets being contested by the lenders and certainly being closely monitored by the ‘Big Four’ banks – all good for the property markets.

The graphs above highlight how important these ‘rivers of gold’ are to the banking fraternity where the majors simply can’t be seen to be losing market share. I can see huge shifts in coming years away from the ‘Big Four’ as consumer trending to online follows the very same path we are now seeing with retail shopping. Mortgage shopping is a natural progression where consumers today can’t get enough of it. The “Big Four” would be plain dumb if they were to take the online market phenomenon for granted.

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I know only too well that with our business model, our primary goal is to continue leading and dominating our Mosman online market – that is where the eyeballs are. Otherwise known as keeping an eye on the market!

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The volume of property for sale in Mosman, Cremorne and Neutral Bay keeps diminishing and we can expect this pattern (based on previous years data) to continue until mid – August 2012.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week– 97
    • Number of houses on the market this week – 94
    • Number of houses on the market this time 2011 – 107
    • Number of apartments on the market last week – 89
    • Number of apartments on the market this week – 88
    • Number of apartments on the market this time 2011 – 96

    CREMORNE – 2090

    • Number of houses on the market last week– 15
    • Number of houses on the market this week – 16
    • Number of houses on the market this time 2011 – 21
    • Number of apartments on the market last week – 22
    • Number of apartments on the market this week – 21
    • Number of apartments on the market this time 2011 – 37

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 18
    • Number of houses on the market this week – 16
    • Number of houses on the market this time 2011 – 13
    • Number of apartments on the market last week – 56
    • Number of apartments on the market this week – 61
    • Number of apartments on the market this time 2011 – 66

For this week’s sales in 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


For this week’s open for inspections
• Click Here

Another week’s polling Abbott bad but Labor is worse although Treasurer Wayne Swan not concerned about new poll that shows the Gillard Government would have been swept from office. Maybe the ‘World’s Greatest Treasurer” just refuses to accept the unexpected!!

Now if you really want to see the unexpected?

 

Cheers ^__^

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