AN ILLUSION CREATING CONFUSION!!

AN ILLUSION CREATING CONFUSION!!

If we could coin a phrase reflecting the Mosman market, more than a few would suggest “much ado about nothing”. The market has momentum and that is all we ask. Last we mentioned that the Mosman average price had cracked the $2,000,000 barrier for the first time and not to be outdone, the Australian share market closed above 5000 for the first time ever, last Monday. In reality, these announcements have little to no effect on the mindset of the market, as it is simply yesterday’s news. To best describe the difference between the property market and the share market, one is accurate and the other, farcical. It took the ‘Governor of Moolah’ (for the 82 new subscribers this week, we are referring to The Reserve Bank Governor) to sum up the method of collecting data for the property market as, in one word, “hopeless”. We are pleased to announce that since his announcement last year, nothing has changed, and the situation will continue to remain hopeless, as long as the statisticians choose to work off settlement figures, instead of figures at exchange.

Dyson Austen property valuers are in the process of compiling their quarterly report for the highest value homes transacted in Sydney for the March quarter, with the cut–off being $6,000,000. We had one sale at $5,900,000 and two sales in excess of $6,000,000 that can’t be reported as we are under confidentiality agreements. Whilst these sales were transacted during the March quarter, they do not become sales evidence until the September quarter of 2006, due to extended settlements. At that stage this information is superfluous as it is six months old. Ours is not an isolated case as one can only imagine the number of off–market sales that agents make across Sydney, that fly under the radar. You can take the data on property with a grain of salt because as the system stands, the property data is as accurate as a NSW Government tax cut.

The Iemma ‘Dilemma’ continues with a business strategy of turning the big business (otherwise known as an economy) into a small business. For those expecting some tax relief in property, think again, because at this juncture it ain’t going to happen. What we have at present is Land Tax now accounting for between twenty to twenty five per cent of the gross rent which would suggest that the applied process of calculating a fair return is today, very much exaggerated in the government’s favour. A fairer assessment would have the base rate of calculation reduced, as the dollar value of the property increases. The rip–off with Land Tax is the key ingredient at present as to why the rental market is currently labelled as “critical” and get the defibrillator at the ready. All tax relief in NSW has been ruled out by Michael “ Cost ya plenty” as he juggles a budget deficit. Let the good times roll. NSW remains the last state in the Commonwealth to address tax reductions. In the meantime, rents will continue to escalate as presently there is very little incentive for investors to jump back into the traditional bricks ‘n mortar. Presently, eighty per cent of our online enquiries are rental enquiries and when you look at the ratio of rentals (18 available) to properties for sale (50 available) this highlights the extent of the crisis. If the state government had half a brain (and I am not suggesting it does) it would offer all those investors who contributed to the failed Vendor Exit tax, a contra on Stamp Duty to the value of their contribution as a means of enticing them back to the market. Given the distractions of the share market at present, investors appear to be enjoying the Bond Street address, which still offers a “licence to thrill”, instead of the property market that has inherited a government ethos of a “licence to kill”.

Not everything is withering on the vine and we were recently asked to do a breakdown for a client (we won the business) on the number of sales RWM has made since 2003 over a dollar base of $3,000,000. It came in with a total value of $250,000,000. Our subscriber sales currently sit at $444,471,000. What we found even more interesting was, that out of the $250,000,000 in sales, seven out of ten purchasers and vendors were subscribers to “Virtual Realty News”. In recent times the move to electronic media has moved at a very fast pace and the question as to what will happen next, is even more appealing to consumers. We are presently testing a number of electronic initiatives for our website and we are confident we can release them during the next quarter. Another first for our electronic agency. The question we are most asked is “why do so many agencies not follow suit?” The answer is simple. They get a shock from electricity !! Cheers ^__^

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