Australia has a contentious property paradigm

Australia has a contentious property paradigm

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Paradigm was the buzz word when Australia was handcuffed to a hung parliament so to be different let’s take a look at Australia’s property paradigm given we can expect to be reading plenty about the direction Australian property is headed in coming months. Many vastly differing opinions are front and centre at the moment given for some strange reason commentaries keep reverting back to Australia’s property boom in 2003/04 – which I am struggling to accept.

In 2003/04 Australia was basking in an unprecedented period of economic growth together with a booming resources sector which for want of a better expression this may be better described as the old economy given our resources sector is now in decline. The latest capex figures were released by the Australian Bureau of Statistics (ABS) this week which revealed that total capex fell by 4.2 per cent in the March quarter. Most notable was the mining industry which declined by 8.7 per cent in the March quarter with total new capex now 5 per cent lower than this time last year. As Australia moves from mining to non – mining industries the building sector was suggested as the biggest benefactor from mining and also declined by 7.4 per cent in the March quarter. Capex has now fallen by 8.5 per cent over the last two quarters – which puts the Australian capex on par with the largest six month decline since the recession back in 1993.

There are many questions that today remain unanswered given there is growing opinions that Australia’s long – term planning may need an immediate visit back to the drawing board as these unknown economic irregularities have Australia steering into unknown waters. Certainly the latest capex figures indicate that our productivity is headed completely in the wrong direction.

Harbord-to-CBD

SYDNEY AERIAL PHOTOGRAPHY


With interest I have been closely watching the ANZ – Roy Morgan weekly consumer confidence rating which has revealed that confidence is now down 15 per cent since the Abbott government first started spruiking its budget policies. This has brought about a most unusual trifecta given we see confidence, terms of trade and property prices (apparently) in decline. What we are seeing today is a complete opposite to what happened back in 2003/04 although the cash rate back then was approximately double what it is today and from 2003/04 the cash rate steadily increased to 7.25 per cent in 2008 only to be halted by the global financial crisis.

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Although what is conflicting is the property dynamic over the same period for residential term loans to households which may very well explain why we are starting to see the early signs of the property markets easing. Although it must be noted that the traditional real estate markets have only recorded modest capital growth when compared to the outer Sydney areas that have posted unprecedented capital growth. It is anyone’s guess when the RBA will start increasing the cash rate again although most agree that they will remain where they are for some considerable time to come.

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With interest this week I read Ian Macfarlane on central bank policies, inflation and China on Cuffelinks. What I find most interesting about China is that aside from them being a number one client for buying our iron ore which is now in decline they are now fast becoming the number one foreign purchaser of our real estate. What that in itself may suggest that given their insatiable interest in Australian real estate prices will flat line for some considerable time to come as they are definitely a noteworthy driver of real estate today – this reinforces the mislead perceptions/predictions that real estate values will fall.

The biggest question marks over Australian real estate are quite simple and twofold – what will happen to the markets when the cash rate goes back to some form of normality say at 7.50 per cent which represents a 200% increase? Lastly, they keep mentioning negative gearing and given the Australian government’s debt position there will come a time when this great tax deduction is re – examined.

Although maybe we are looking at the wrong paradigm given nobody can explain why the ASX surged to a six year high this week?

.Obviously I must have missed something?

MOSMAN – 2088

• Number of houses on the market this time 2013 – 85
• Number of houses on the market last week – 101
• Number of houses on the market this week – 98
• Number of apartments on the market this time 2013 – 64
• Number of apartments on the market last week – 60
• Number of apartments on the market this week – 66

CREMORNE – 2090

• Number of houses on the market this time 2013 – 8
• Number of houses on the market last week – 6
• Number of houses on the market this week – 6
• Number of apartments on the market this time 2013 – 15
• Number of apartments on the market last week – 25
• Number of apartments on the market this week – 16

NEUTRAL BAY – 2089

• Number of houses on the market this time 2013 – 11
• Number of houses on the market last week – 6
•Number of houses on the market this week – 4
• Number of apartments on the market this time 2013 – 34
• Number of apartments on the market last week – 46
• Number of apartments on the market this week – 44

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate

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For this week’s opens for inspections

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Source: Australian Property Monitors

Close but no cigar! Mosman houses managed two weeks at just above 100 houses on the market although we expect to see these numbers reducing as we enter winter. Having said that, these numbers will probably climb back over 100 next week to prove a point – that everything is a bit strange at the moment.

Cheers ^__^

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