Fire And Brimstone – Just Don’t Forget The Facts

Fire And Brimstone – Just Don’t Forget The Facts

I can’t ever remember seeing as many conflicting reports on the state of the Australian economy as we are seeing at the moment. Maybe in 23 days time when the outcome of the federal election is known we may be in a better position to get a true reading on exactly what is happening or to that extent where our economy is headed. At this juncture in time it’s anyone’s guess depending on your political persuasion.

Just over a week ago the Reserve Bank of Australia (RBA) singlehandedly attempted to steady the economy when they dropped the cash rate to a record low of 2.5 per cent. Only history will be the judge as to whether this decision was the right or wrong way to go – albeit already we are seeing some very scary symptoms emerging with the property markets. Sydney auctions in 80% plus overdrive for fifth consecutive weekend where it should be noted that previously it has been acknowledged that when clearance rates hit 80% plus the markets are in what is known as a technical boom. This time around it appears that it is the lower end markets participating in this buyer frenzy with the top – end markets not seeing anywhere near the same excitement. Just look at this week’s Mosman and Neutral Bay Sales Watch which hardly suggests that our demographic markets are actually booming.

In some ways I agree with Robert Gottliebsen’s comments in Business Spectator this week Beware of the mother of all housing booms. “If we are not very careful Australia is going to have the mother of all dwelling booms. What we are seeing is a three – pronged boost to prices. First is a dramatic push to lift the demand for dwellings by banks offering cut mortgage rates thanks to the Reserve Bank Governor Glenn Stevens. But second, and just as importantly, there is reluctance by banks to fund new supply. In any commodity if you inflate demand and squeeze supply, prices go through the roof. Thirdly taxpayers will subsidise the boom via a massive increase in the use of negative gearing via both personal and superannuation tax breaks.”




Again it should be noted that investors (in the vast majority of instances) only invest within the lower end of the market so we don’t expect to see this resonate through to the top – end markets. Rental and price growth to drive more investors to Sydney inner city apartment market: BIS Shrapnel’s Angie Zigomanis.

10-08-2013 11-51-00 AM

Which then permits the next school of thought to enter the property debate China slowdown threat to house prices: S&P Australia’s banks’ credit ratings would be cut by up to two notches and house prices would fall by 25 per cent if China’s economy were to slow sharply, Standard & Poor’s says. Well that could be true to an extent although I would also add that presently certain Australian property markets are experiencing unprecedented investor action. Having said that Australia’s four major banks currently hold 80 per cent of Australia’s banking assets and a staggering 88 per cent of residential mortgages.

In the meantime Lower bad debts and stronger profit margins on loans trigger CBA’s record $7.8 billion profit – just take a look at how the CBA has performed since the Global Financial Crisis.

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Now take a look at investors bracing, but iron ore price stays steady this time last year the iron ore price was in a dramatic free – fall hitting a September low of $US86.70 ($94.10). The iron ore price has been creeping higher since late June, and spent most of last week in a positive trajectory towards $US133.10 ($144.45) per tonne; a very comfortable price for most Australian miners, made even better by the local currency trading well below parity.

12-08-2013 9-43-11 AM

But wait, there’s more New home building recovery at risk of running out of steam: HIA. HIA estimates housing starts rose 8.3 per cent last financial year to 157,108 following two consecutive years of decline. Yes, decline, so it is hardly neither likely nor credible that we will see any sort of property crash. After all if we were going to see the mother of property collapses we would have as a result of the GFC which turned out to be a correction not a crash. Then again some will no doubt argue this was in fact a crash.

Whilst on crashes the only crashes we have seen of late within our Mosman, Cremorne and Neutral Bay real estate markets has been a crash in volumes not prices. For the very first time in thirteen years of Virtual Realty News we missed a couple of editions when I was overseas so let’s catch – up. On July 12 Mosman recorded its lowest ever number of houses on the market at 59, which then moved to 64, 68, 76, 88 and this week 85. Apartments went from 61, 62, 68, and 62 to 59 this week. In Cremorne houses went from 7, 5, 6, 8, 7 to 3 this week – the lowest ever number. Cremorne apartments recorded 15, 18, 17, 18, and 20 to 17 this week. Neutral Bay houses 5, 7, 8, 11, 12 and 11 this week. Neutral Bay apartments 34, 28, 26, 28, 34 to 30 this week.

MOSMAN – 2088

• Number of houses on the market this time 2012 – 89
• Number of houses on the market last week – 88
.Number of houses on the market this week – 85
• Number of apartments on the market this time 2012 – 85
• Number of apartments on the market last week – 62
.Number of apartments on the market this week – 59


• Number of houses on the market this time 2012 – 12
• Number of houses on the market last week – 7
.Number of houses on the market this week – 3
• Number of apartments on the market this time 2012 – 15
• Number of apartments on the market last week – 20
.Number of apartments on the market this week – 17


• Number of houses on the market this time 2012 – 15
• Number of houses on the market last week – 12
.Number of houses on the market this week – 11
• Number of apartments on the market this time 2012 – 46
• Number of apartments on the market last week – 34
• Number of apartments on the market this week – 30

Source: Australian Property Monitors

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.
Click Here

For this week’s opens for inspection
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15-08-2013 4-27-07 PM

Thought Alan Kohler from Business Spectator nailed it The Piffle statement – Yesterday’s Pre – election Fiscal Outlook PEFO statement should be renamed the Piffle statement: it is a triumph of hope over experience, guesses over reality.

Remember the days when Australia was in Budget surplus?

After three or four months of hard work we are proud to release our latest online platform which went live this week. Enjoy the latest and smartest technologies – thanks to the team at Agentpoint the best web developers in Australia.

Cheers ^__^

One Response to “Fire And Brimstone – Just Don’t Forget The Facts”

  • Robert Simeon says:

    – Apologies I accidentally sent out our last edition – which has obviously now been remedied.I’m being seriously challenged by the new technologies.

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