Aussie Aussie Aussie $ $ $ Oi Oi Oi!

Aussie Aussie Aussie $ $ $ Oi Oi Oi!

What a difference a week makes, the real estate industry has to thank the Aussie $ for ensuring that properties will trade well in the final quarter of 2003. It would appear that we will not see any rate adjustments for some considerable time, although many believe that we were not going to see one at all. It has been well documented that the ‘Governor of Moolah’ prefers to organically grow the economy, hence his decision to leave the rates alone since 5 June 2002. With the Aussie $ climbing past the US70c mark for the first time since November 1997, one must not forget that the property market has been climbing since September 1996. 2003 will be the seventh year of this unprecedented run, and it is the overall dynamics of the market that need to be closely monitored. Back in September 1996 the cash rate target was 7.00 per cent then in December 1998 it hit today’s rate of 4.75 per cent. Then on August 2000 it had climbed back to 6.25 per cent and in December 2001 it hit the all time low of 4.25 per cent, and 5 June 2002 the ‘Governor of Moolah’ locked in the present rate of 4.75 per cent. Really, when you look back at the cash rate targets, talk of rate rises is not much more than “a storm in a tea cup”.

The burning question for most will be how the property market performs in this final quarter given that in 2001 and 2002 at this same quarter we were coming to terms with effects of terrorism. The December quarter for 2002 was a disaster with clearance rates being the lowest in living memory. This in turn led to a hang-over of failed properties over the Christmas break. Then the market for the March quarter jumped twenty per cent, which once again contradicted many who were of the belief that the property market was ailing. From our perspective we are seeing a market that still continues to look strong and confident. Our Home Unit Department has listed thirteen apartments so far this quarter, and eighty per cent of sellers are young couples making the natural progression to trade-up. The other twenty per cent are either retiring or selling an investment property to fund a renovation. The Rental Department is averaging one new lease a working day, and this market is very buoyant and healthy. Then the Sales Department, is in the middle of the first run of marketing campaigns and all the properties are in the process of identifying new owners. At this stage we are unsure if we can emulate last month’s record sales of $42,500,000 however we believe that we can go close to matching this. One of the greatest market dynamics is without a doubt the role of the Internet, and that dynamic salesperson data-base. I had a laugh when I spoke with a subscriber this week who was questioning other agents on what they use to monitor the market ? Their response was “number of pages in The Mosman Daily”, which is the complete opposite of our business model. We look at the long term and where the market will be in 2005/2006 and what technology will be at the forefront of our industry. Just ask the founder of “Penthouse”, Bob Guccione who has just placed the magazine on the market for sale, as a result of falling sales. Playboy Inc has not posted a profit since 1999. This is a classic example of those at the top failing to recognise what effect the Internet will have on their business.

Whilst many are concerned about household debt, which set a new record at the conclusion of the June quarter posting an incredible $693 billion, what needs to be defined is how much of this is managed debt, and are there sufficient resources to absorb any overflow should there be a sell-off? I personally believe that there is (in our market anyway) and the market for 2004 is certainly looking promising, given that we will be entering the eighth consecutive trading year. It is really interesting to look at the enormous changes that have occurred in our industry since 1996, the most interesting phenomenon is how fast our industry is changing. We have fast tracked a long-term relationship with technology, and agencies are now moving into the banking/finance arena. When we start 2004, we will also be launching some new exciting brands under the RWM business plan, and every new brand will be completely Internet driven. We are in the process of registering the Domain and Company names, so watch this space.

It is fair to say that we don’t know what the future holds for any of us, but from our perspective we know that the future will start with www!! Sadly, some just don’t get the ‘point’. Cheers and clink…^__^

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