Yet again, the Mosman market has delivered another week of great results by posting an impressive 83 per cent clearance rate. Now many will say that the Mosman market is always strong however, what they should really be saying is that those living in Mosman are doing exceptionally well in business!

On the other side of the coin a survey completed by the Housing Industry Association of sales by Australia’s 100 biggest builders, suggests that buyers in NSW are struggling. It identified that from December 2006 to February 2007, sales had picked up but remained 21.4 per cent down on last year.

The Reserve Bank meets next week and many are suggesting a rate rise of 0.25 per cent where rates are presently at a six year high. On top of this we have many households finding themselves in what is called “negative equity” where their mortgage is higher than the value of their home. The Reserve Bank struggles to keep inflation between two and three per cent and for many, the outlook is not good.

It will be interesting to see how much emphasis the Reserve Bank puts on its recent figures which identified that NSW has the greatest proportion of families falling behind with mortgage repayments. In a recent report it said, “The number of bankruptcies, personal insolvencies and debt agreements in NSW was more than 45 per cent higher than in Victoria and Queensland, and nearly double the number in South Australia, Western Australia and Tasmania.” Just as interesting in the report – “the number of 55 – 64 year olds with a mortgage rose sharply between 2002 and 2005. Reflecting a greater willingness of people to take on household debt closer to retirement. The number of home borrowers aged 15 to 24 fell in the same period.”

For those preferring the rental option the news continues to worsen with the release of February vacancy rates at 1.4 per cent which, on the current path, should fall below 1 per cent by Christmas. In September 2002, Sydney’s vacancy rate was at its peak of 4.6 per cent. Makes one wonder if Peter Costello would now prefer to retract the comment he made last month. “ The housing market has a history of oscillation, overcorrection, but at the moment what we’ve seen is the situation move from very high vacancy to very low vacancy – that’s because construction has been cool over recent years and this will trigger an increase in construction which will start addressing the problem.” This week, the Managing Director of building products and investment group, Brickworks, said that there is no recovery in sight for a soft NSW building market. “In most areas, there has been a 25 per cent downturn, but in NSW that downturn has been 40 per cent,” managing director Lindsay Partridge said. He went on to say that the NSW downturn had lasted 40 months, which is the longest since World War II.

So why are certain sections of the market talking that four letter word “BOOM”? That is an easy one, as the current state of play is the result of years of state government mis-management. The irony is that its party faithful are the ones today, feeling the pressure, and those in the strong Liberal seats (where property prices are doing the reverse by showing capital appreciation) have accumulated wealth. Taxes such as the Vendor Exit Tax forced investors out of the market and into the share market where they made plenty. These very same investors will no doubt be waiting in the wings when the government is forced to offer tax concessions and incentives as an inducement to venture back into the market. Now there is a conspiracy theory doing the rounds that these (generally) Liberal voters actually voted for Labor at last week’s election, purely for monetary gain. Although I did hear, that at the next state election, the Liberal Party actually intend to contest it! Cheers ^__^

Leave a Reply

Your email address will not be published. Required fields are marked *