A PROPERTY MARKET OF TRUTHS AND DARES !!

A PROPERTY MARKET OF TRUTHS AND DARES !!

The real estate market has resembled a six-lane highway for the last eight years, it has cruised along at varying speeds despite calls that it would run out of petrol (and you thought property was expensive!). Many are of the belief that the market has now reached this destination, and the highway is now a much bumpier track that will be more difficult to navigate given the emerging evidence of clearance rates. Home Price Guide head of research Louis Christopher said “Looking through the results, most properties passed in had bids, but vendors weren’t prepared to meet the market.” From what I saw, most were passed in on a single vendor bid because the purchasers had elected not to bid. We are seeing just one vendor bid at auctions, as prospective purchasers are ‘reading’ more into the market. A vendor bid is 99.9% of the time announced when there is no bidding at all, and I have never seen the hammer drop on a vendor bid !!

Our advice to vendors is to hold your line, we are finding that we are getting the desired results. Purchasers are presently winning the battle on the auction floor, they always will when there is zero participation. We are finding that when the properties are passed in the phones start ringing, then it is advantage-vendor, as the negotiation process is no longer transparent. The skilled negotiators will always come up with the desired results, and agents are still ordering ‘sold by’ signs. An interesting analogy is between today’s clearance rates and those of the early 1990’s, when we were in recession (the one, we had to have!). We are a long way from a recession! The cash rate target then, was peaking at 17.5%, where today it has remained all year at 5.25%. Inflation was much higher, as was unemployment, which today are at record lows. So what caused this sudden property apparition ? My guess, something to do with selling newspapers !!

Looks like the ‘Blunder Cruncher’ of our NSW Treasury, Michael Egan, is fast realising that his numbers are not stacking up the way he had first intended. This realisation comes just weeks out from his acknowledgement that his new taxes would slow the property market, and he was happy with his newly introduced, never seen before, mentally taxing initiatives. Now, he is voicing his concerns that our economy could become overheated and our ‘Governor of Moolah’ may have to raise interest rates to overcome this. (Looks like the Governor of Moolah, paid little attention to these comments, as he left the rate at 5.25%) Here is what our ‘Mr.Blunder Cruncher’ had to say ” That’s a problem not just for the property industry, it’s a problem for the economy generally. It’s not just new property buyers who have to pay higher rates, it’s existing land owners and businesses. It affects everybody.” Obviously ‘Cruncher’ has not read a paper or listened to talk-back radio, where the chorus of those who own property in NSW said the very same about his new, inept taxes. I think ‘Cruncher’ has now worked out that if there is a fall in the market at say ten per cent, this equates to a government loss of $400,000,000 in lost revenue from Stamp Duty. Current budget estimates (before the new tax innovations) $4 billion in 2003-2004. On top of this, our ‘State of Decay’ has been keeping removal vans very active as the release of Australian Bureau of Statistics figures on interstate migration identified that NSW had the highest number of border jumpers in 2002-2003. In total, 125,195 people changed their addresses, with Queensland being the preferred option. 63,921 ventured off to the “land of the great white shoe”. It will be interesting to see the 2004-2005 figures, given that our esteemed government is now assisting the growth and prosperity of other states with their new taxes.

Despite what is being written we still remain up-beat about the property market. Our rental department posted their most successful week ever and we have seven properties awaiting exchange. For the month of May we recorded our highest ever traffic on RWM website. Fifteen years ago we could not monitor the Internet, as it did not exist. Today the Internet offers the perfect tool to monitor property activity and it is growing at an amazing rate. We are having interesting dialogue with potential purchasers following auction silence, and those who believe that the market is falling will be surprised when they see the ‘sold by’ signs covering the ‘for sale’ signs (two can play that game). We are still being called upon for opinions of value, and that is why we view the up-coming Winter market with confidence. What we are recommending is Internet marketing initially, before we enter into full-blown media campaigns.

Another home on Balmoral reportedly sold this week for in excess of $10,000,000 which is the second sale this year to join the ‘Double Digit’ club (we still hold the Top Two sales ever posted in Mosman), taking the Mosman membership to four. We are finding the current property market is keeping us way too busy to be miserable and negative. Yes, the workload is greater and harder, however a bit of hard work never hurt anyone, especially when the desired results are achieved.

Memo to a Mosman agency: If you are going to list the same properties twice on your website, so that it appears you have more properties, don’t put the double-dips on the same page !! Cheers and clink….^__^

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