Australian real estate has plenty of questions with fewer answers

Australian real estate has plenty of questions with fewer answers


I am fast coming to the conclusion that real estate in Australia is one of the least understood industries despite having a total value of $5.02 trillion? During the global financial crisis (GFC) where property prices dropped on average by approximately 30 per cent despite some market choruses calling for 50 per cent plus price corrections. When we had clear evidence that the markets had bottomed we were then accused of falsely talking the markets up even though there was anecdotal evidence that this was in fact the case. So based on these observations with the markets now buoyant we constantly hear of the markets now being over – inflated and on the precipice of an almighty implosion.

To balance the argument I would make a few insider observations:

  • Historically real estate markets have always been valued from the top – end down so when the GFC arrived this actually skewed the valuation process as the top – end markets experienced the greatest valuation decreases. The demise of the merchant bankers and their annual bonuses further stymied price growth as this once dominant market aggressor dissipated at a rate never seen before.
  • Post GFC we saw the markets bounce back from the bottom – end as against the previous top – end in the shape of investors. The Bureau of Statistics housing finance figures for December show investors now account for 39.8 per cent of the value of home loans issued in December. That is the highest proportion of loans going to investors since October 2003, during the height of Australia’s largest recent housing boom.
  • What we are clearly seeing here is investors moving funds from the stock market back into bricks and mortar given the added attraction of negative gearing and Self-Managed Superannuation Funds is far too alluring to pass – up. Hedge funds and stock market manipulations have played a major role in this investor decision.

Northbondi
SYDNEY AERIAL PHOTOGRAPHY

  • Australia does not have, yet urgently needs, a Housing Strategy that would enable local, state and federal governments to work together on this blue print over pork – barreling strategies every time an election comes around. Infrastructure Australia should be handed this responsibility especially in light of significant dwelling supply problems across country: UDIA report.
  • MP Kelly O’Dwyer is heading up the inquiry into Australia’s foreign investment policy in the context of residential real estate. Ms O’Dwyer wrote a vague insight the Australian Financial Review this week – Foreigners and real estate where the focus is clearly on Foreign Investment Review Board (FIRB) data – which is about as useful as an ashtray on a motor bike. Real estate agents (the ones actually at the coal face) keep discussing the unprecedented explosion of online inquiries by Asian families from within Australia I might add. So what percentage of acquisitions by overseas purchasers do not get processed, when they should, by the FIRB?

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  • Temporary residents in Australia are permitted to purchase an established dwelling although they are legally required to sell this property when they depart Australia. As if they are going to sell – it is much easier to simply transfer the name on the deed into another name so technically the property has been sold. What is the data from the relevant Stamp Duty offices on property transfers?
  • The latest figures from the Foreign Investment Review Board (FIRB) reveal overseas buyers purchased a record 5,091 established homes worth $5.4 billion last financial year, compared with 647 properties to a value of $810 million in 2009-10. Next year’s figures will in all probability be much higher again as there is a clear movement of new residents to Australia because they want to get their fortunes out of China.
  • Another great Litmus test will be this week’s Mosman trophy listing with price expectations around $40 million plus which would smash the previous record set at $22.500 million by double – Hopetoun Avenue.

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So I expect the Inquiry into Australia’s foreign investment policy which will not be released until later in 2014 to unveil nothing sinister simply because the Terms of Reference are not specifically examined to explore the current loopholes that can be easily manipulated without our federal government even knowing.
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The state governments like it as they are receiving a double whammy in stamp duty but I guess we are not supposed to be saying that as the evidence is inconclusive given there are no terms of reference to explore such ridiculous assertions.
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Which brings me to where I started that Australian real estate is one of the least understood industries despite having a conservative total value of $5.02 trillion? It offers so many questions to better understand its make – up and composure just that nobody in government is really concerned about providing those answers at the moment.
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For the first time in 2014 the number of Mosman houses on the market has finally broken 100 last week with 104 on the market. No need to celebrate it dropped back to 93 on Monday morning.

MOSMAN – 2088

• Number of houses on the market this time 2013 – 98
• Number of houses on the market last week – 104
• Number of houses on the market this week – 93
• Number of apartments on the market this time 2013 – 72
• Number of apartments on the market last week – 61
• Number of apartments on the market this week – 53

CREMORNE – 2090

• Number of houses on the market this time 2013 – 11
• Number of houses on the market last week – 10
• Number of houses on the market this week – 10
• Number of apartments on the market this time 2013 – 17
• Number of apartments on the market last week – 15
• Number of apartments on the market this week – 15

NEUTRAL BAY – 2089

• Number of houses on the market this time 2013 – 9
• Number of houses on the market last week – 15
•Number of houses on the market this week – 14
• Number of apartments on the market this time 2013 – 35
• Number of apartments on the market last week – 48
• Number of apartments on the market this week – 44

Source: Australian Property Monitors

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