From Financial Crisis to Financial Confidence

From Financial Crisis to Financial Confidence

With the healing process well underway, what has become overwhelmingly apparent, is the confidence generated by the power that lies within. Initially, the powerful information highway ran amok with comparative analysis that compared the Global Financial Crisis (GFC) to the Great Depression and christened it ‘Great Depression Two’. What next? With the benefit of hindsight, fighting adversity can be very revealing, especially for those who backed their business models in trying times. If you are not prepared, you won’t be spared!

Let’s look at the rings of confidence – well the ones I recently observed that I consider noteworthy.

www.timmooneyphotography.com

The Organisation for Economic Co-operation and Development (OECD) announced this week that our local economy should shrink 0.3 per cent in 2009 which, when compared to other OECD economies, is the lowest decline predicted. It predicts that in 2010, the Australian economy will roar back 2.4 per cent in GDP growth. The OECD identified China as the driving force and upgraded growth estimates from 6.3 per cent to 7.7 per cent in 2009 and 9.3 per cent in 2010. This is good news for Australia given that China is a major trading partner. Just as interesting, will be our June quarter GDP results. Whilst our unemployment rate is predicted to reach 7.9 per cent (lower than Budget forecasts of 8.25 to 8.5 per cent) our labour markets remain resilient compared to other global economies.

Minutes of the Reserve Bank of Australia (RBA) meeting in June, confirmed that Australia is negotiating the current global downturn well (also noting a very strong recovery in China). The RBA also noted that bank funding costs are rising. This coincided with a statement from the Commonwealth Bank’s head of retail banking, that the bank faces extra costs equivalent to 0.6 per cent over the next eighteen months. This announcement has seen homeowners rushing to lock in mortgage rates, believing that in Australia, interest rates have now bottomed. The lowest variable rate that can be obtained from the major banks is 5.74 per cent and three – year fixed rates this week jumped to 6.69 per cent.

Also, this week, in the opinion of The Real Estate Institute of Australia, residential property markets have bottomed and there is anecdotal evidence that property markets are now consolidating. This is in line with what we have been suggesting in recent editions (you heard it here first). Auction clearance rates are a great barometer and this week’s results certainly confirm this market positioning. Markets recording sales evidence above 80 per cent are considered booming markets.

What didn’t happen in the Mosman housing market in 2009 was a capitulation of values. The presumption that every second home was on the market never came to fruition and in 2009 it was not 50 per cent, rather 2.75 per cent. Here is a three year snapshot of Mosman house sales from 1 January to 23 June 2007, 2008 and 2009.

    1 January 2007 to 23 June 2007

  • Total recorded sales – 215
  • Total sales value – $573,794,220
  • Median house price – $2,230,000
  • Average Mosman house price – $2,668,810
  • .

    1 January 2008 to 23 June 2008

  • Total recorded sales – 160
  • Total sales value – $452,066,112
  • Median house price – $2,530,000
  • Average Mosman house price – $2,861,177
  • (Note: less sales higher median and average price)
    .

    1 January 2009 to 23 June 2009

  • Total recorded sales – 95*
  • Total sales value – $218,141,001
  • Median house price – $1,780,000
  • Average Mosman house price – $2,134,602

*Our recent sales have not been included in the 2009 figures as yet

Now this is where it gets interesting – for Richardson & Wrench Mosman & Neutral Bay (RWM) sales data.

RWM sales in June 2007 – $18,836,000
RWM sales in June 2008 – $19,815,000
RWM sales in June 2009 – $51,038,200

The reason for this amazing result (given the current GFC) is quite simple. Our point of difference is our online positioning. The number of online and email newsletters has jumped over the last five years, increasing by 475 per cent, while print (only newsletters decreased 43 per cent from 7,395 to 4,180) and those in both print and electronic formats remained about the same (4,859, vs. 4,949), according to www.mediafinder.com

The moral of this story lies in our discipline and determination to lead our industry by example. What you put into your industry of choice determines what you get out of it. Yes – writing a weekly online newsletter takes time and effort. So does maintaining one of the largest databases in the industry. However in simple terms this point of contact is what generates results.

We all know that actions speak louder than words and all any business can hope to achieve, is client satisfaction with optimum results. Subscriber sales rose this week to $899,066,219 (the Australian record) http://www.rwm.com.au/sales-list/sold_listing/

Cheers ^__^

For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales http://www.rwm.com.au/news/

2 Responses to “From Financial Crisis to Financial Confidence”

  • Brian Boardman says:

    Well done Rob.

    I read with interest your regular commentary.

    It is good material

    Regards

    Brian

  • MFM says:

    “Recession over”

    “From Financial Crisis to Financial Confidence”

    “Australia to Escape Recession”

    Very amusing. The very people that completely missed the impending global crisis are the same people that are saying we are all back to great times. Yes. You know who you are.

    Well done. Glad you all comfort yourselves and talk yourselves into a frenzy.

    Just remember that whatever you think, there is a reality that you failed to see coming and why should we believe you when you claim that after 5 minutes of pain its all over? Dont you perhaps for one second believe that there is something in the way of process that will play out to remind us all that the past 15 years of unhindered deregulation has created a bubble and to even suggest that its all over borders on stupidity?

    The very last thing that will appreciate in price is global high end property which has already been over-valued for many years. Where, exactly, is the money coming from that will allow people to buy over-valued property, in a de-leveraging environment, in a declining labour market, in an environment where the rules are being re-written with respect to financial markets regulation, where we will see jobs disappear never to come back, where credit has now effectively stopped in the mainstream market.

    Tell me where I am wrong?

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