Australia is “trending” differently to world economies!

Australia is “trending” differently to world economies!

.

The Reserve Bank of Australia (RBA) releases today its Minutes explaining why it decided to keep the cash rate on hold. Here is the real reason why. The National Australia Bank (NAB) released its business survey yesterday for the December quarter 2011. “Business conditions strengthened in the December quarter, following a moderation in activity in the previous quarter, and were suggestive of an economy growing at around trend. The pickup in conditions in the quarter was attributable to broad – based improvements in profitability, employment and trading conditions. Forward indicators of near – term demand, including forward orders, stocks and capacity utilisation, all rose in the quarter, implying an expectation that domestic demand will strengthen a little in the first three months of 2012.”

With the benefit of hindsight the RBA erred with their December meeting when the cash rate was reduced from 4.50 percent to 4.25 percent. That being said I doubt it will be as trigger happy with the cash rate in the next four scheduled meetings (until June 30).

Last Monday, I filed the following article on Property Observer Australia is building momentum, and property markets will stay stable”The RBA is well aware that Australian banks funding is under great pressure as a result of the global financial crisis to the extent that our banks have already forewarned that if the cash rate is reduced it is highly unlikely they will pass on such cuts. I agree with former RBA board member Warwick McKibbin that the Board should wait until the European debt crisis is sorted out “its better you have your weapon loaded so when the crisis comes, you can hit it with full force.”

BUY PRINT

I keep harping on the fact that in Australia approximately one – third rent, the next third own with a mortgage and the final third own their home mortgage free. Those renting are much worse off Sydney rents set to rise as vacancy rates plummet given the vacancy rate remains unchanged at 1.4 percent as Melbourne surges to a six year high of 4.4 percent.

The above graph shows that if home owners with a mortgage want to shop their rate any decision by the RBA becomes superfluous. CUA cuts fixed – rate mortgage to undercut major banks although it should be noted that the “World’s Greatest Treasurer” Wayne Swan has no idea what is happening in the home loan markets. He said last week “the big banks can no longer assume that once a customer signs on the dotted line they’ll just stick with them.” Obviously Wayne was yet to investigate that ‘Hundreds not thousands’ switch mortgage banks. Interesting that 24 out of 27 economists got this week’s RBA decision wrong – so whilst I’m on a roll I predict that ANZ will increase its rate by 0.10 percent today.

Time to critique the 2011 Mosman house market. Before you read further do you think it was up or down on 2010? If you thought down you were wrong – 2011 sales results surpassed 2010. The only statistic that went down was the auction clearance rate – Mosman is a private treaty/expressions of interest market which is clearly evidenced by the figures.

Source: Domain Property Monitors

  • Total House Numbers Offered in 2010 – 289
  • Total House Numbers Offered in 2011 – 324
  • Total Houses Offered By Private Treaty in 2010 – 193
  • Total Houses Offered By Private Treaty in 2011 – 226
  • Total Houses Offered By Auction 2010 – 40
  • Total Houses Offered By Auction 2011 – 115
  • Adjusted Clearance Rate 2010 – 25 percent
  • Adjusted Clearance Rate 2011 – 24 per cent
  • Total Number Sold 2010 – 233
  • Total Number Sold 2011 – 266
  • Total Value Sold 2010 – $499,283,500
  • Total Value Sold 2011 – $623,681,292
  • 2010 Mosman Median Price – $2,250,000
  • 2011 Mosman Median Price – $2,275,000
  • 2010 Mosman Average Price – $2,684,319
  • 2011 Mosman Average Price – $2,711,657

*Settlements still not completed

The standout statistics for Mosman houses is that sales numbers (recorded thus far) is that house sales increased from 233 to 266 and the Total Value Sold jumped from $499,283.500 in 2010 to $623,681,292 in 2011 it will finish at close to $700,000,000 when all sales are recorded. Bear in mind that at close to $1,000,000,000 our market is a boom level. This coincides with my previous thoughts that the Mosman market has bottomed.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market last week– 102
• Number of houses on the market this week – 109
• Number of apartments on the market last week – 112
• Number of apartments on the market this week – 111

CREMORNE – 2090

• Number of houses on the market last week– 18
• Number of houses on the market this week – 17
• Number of apartments on the market last week – 17
• Number of apartments on the market this week – 17

NEUTRAL BAY – 2089

• Number of houses on the market last week – 13
• Number of houses on the market this week – 15
• Number of apartments on the market last week – 66
• Number of apartments on the market this week – 67

A slight increase in the Mosman house listings, however well below the spring peak of 168 house offerings. Just two weeks to get on the market before Easter! I don’t believe we will see more than 125 houses on the market before Easter.

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

For this week’s open for inspections – Click Here

As for those economic, inept lunatics in Canberra why we can’t trust Gillard any more it’s a great start!

This was best summed up with – Business ‘fed up’ with politics in Canberra, says incoming RBA board member Heather Ridout (a Mosman resident I might add).

Speculation that the Australian dollar will climb to $1.20 over the $USD? Julia Gillard and her union (no pun intended) who have never owned or run a business before will be hammered, with our exclusive Carbon Tax just 141 days away.

Ironic in that the Gillard government is shaving overheads to get back to a ‘once in a lifetime’ Labor surplus and when businesses cut costs, they are to blame.

Go figure?

Cheers ^__^

5 Responses to “Australia is “trending” differently to world economies!”

  • Ryan O'Grady says:

    Good to have you back Robert, rents around the Eastern suburbs of Sydney are crazy at the moment. 1 bed apartment in my block leased last week $500 no parking and very average apartment (non executive).

  • For those who could not read the article in The Australian because of the firewall here it is.

    Hundreds not thousands’ switch mortgage banks
    BY: LAUREN WILSON AND ANNABEL HEPWORTH From: The Australian February 08, 2012 12:00AM
    Increase Text Size
    Decrease Text Size
    Print

    THE man behind a website designed to help home owners switch banks says “hundreds rather than thousands” of people have used his site to change lenders since the Gillard government scrapped mortgage exit fees.

    Paul Hunyor, who founded the website One Big Switch with Kevin Rudd’s former press secretary Lachlan Harris, said more than 50,000 people had registered their interest in switching banks since the site was launched in July last year. The website was set up weeks after Wayne Swan’s policy to abolish mortgage exit fees came into effect on July 1.

    The Treasurer has used the abolition of exit fees from new mortgages as ammunition against the big banks and claimed it had reintroduced competition into the home loan market.

    On Sunday, Mr Swan said that as a result of the ban on exit fees on new home loans “the big banks can no longer assume that once a customer signs on the dotted line they’ll just stick with them”.

    Mr Hunyor said 3000 people had taken action through One Big Switch to get a better deal on their home loan.

    Of these, about two-thirds had negotiated – or were in the process of negotiating – a better deal on their mortgage with their financial institution.

    However, he said the number of people who had switched institutions through One Big Switch was “in the hundreds rather than thousands”.

    Despite this, Mr Hunyor said that in December the website had home owners with a total property value of about $200 million looking to speak to a new lender, which was driving financial institutions into bidding wars. “This is a new reality for banks when there is flat mortgage growth.”

    Mr Hunyor said the sector still needed to look at making it easier for people to switch banks by reducing the administrative burden and making it easier to transfer mortgage insurance.

    A spokesman for Mr Swan yesterday said his department’s analysis of the Australian Prudential Regulation Authority’s latest banking statistics confirmed Australia’s smaller banks had taken about $9.7 billion in mortgage business from the major banks since December 2010, when the government announced its banking reforms.

    “It’s encouraging to see the competitive pressure in the banking sector with banks moving to undercut each other on interest rates, and some other lenders offering rates around a full percentage point lower than the major banks,” the spokesman said.

    In his economic note on the weekend, Mr Swan cited Treasury estimates that say the number of households taking out loans free of exit fees will grow to 1.1 million by the end of this year and nearly two million by the end of next year.

    Figures from the Australian Bureau of Statistics on refinancings of loans suggest that these have been increasing since the worst of the GFC. In November, for instance, there were 16,984 commitments for refinancing of home loans – or 33.5 per cent of home loan commitments.

    This was down from 35.5 per cent from last September.

  • ANZ has lifted its standard variable rate by 0.06 per cent – I was 0.04 per cent out with my prediction today.

  • Ann says:

    I think the ALP will let Gillard take the heat on the Carbon Tax and hope people forget when they install a new leader shortly before the next election. They won’t get rid of her now, cause they can’t afford to trigger a new election.

  • Ann says:

    I think Crean is a possible replacement for Gillard, he is near retirement, expendable and I am sure he would love his photo on the wall and the perks.

    One of the others like Shorten, Smith, Combet etc won’t risk their career, knowing the outcome of the 2013 election.

    I think Rudd has no chance given his teamwork abilities

Leave a Reply

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