Is The Property Market Crashing In Or Cashing In?

Is The Property Market Crashing In Or Cashing In?

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Here we go again – global financial markets went into yet another tail spin this week as they collectively expressed concerns about world growth and financial stability. Global credit markets face a ‘perfect storm’with companies across the world having to raise $40 trillion to finance upcoming debt. On top of this, in the March quarter, China’s economy grew at its slowest rate in three years.

I read with interest this week the Macquarie Economics Research Global Economics Update – Confidence ebbs, worries revive. “Against this background, our key macro forecasts have been altered to reflect some concern about growth trajectories of aggregate global demand and industrial production. We continue to forecast global GDP growth of 3.3% in 2012.

CBA prepares for Greek eurozone exit – For some time, the Commonwealth Bank has been preparing for a possible exit by Greece from the eurozone. Actually I believe that the vast majority see the same outcome, given Europe’s willingness and ability to implement the required austerity measures. While the Australian economy remains sound despite what’s happening at Fort Fumble in Canberra, confidence levels will continue to be challenged as will rising bank funding costs.

The good news is that the austerity show is coming to an end – a Greek tragedy, as the final curtain starts to close – and it won’t be a soft landing!

BUY PRINT

Amazing shot by Tim Mooney and no Australia won’t have a crash landing – how quiet is the Airport?

Rethinking Australian bank business models: Christopher Joye which again is much like the CBA’s exit strategy with our banks busy recalibrating their respective loan ratios. “With the misplaced preference (post – GFC) for retail deposits, Australia’s banks have managed to reduce their loan – to – deposit ratios from a high circa 180% in 2008 to closer to 140% – 150% today. This simply tells us that, on average, the total bank loans is roughly 1.4 to 1.5 times the value of their deposits. Another way of saying the same thing is that retail deposits only make up about 60% the value of loans. The other missing 40% is provided by wholesale funding and shareholder cash.”

Signs of life in Australia’s housing market could provide fresh stimulus to the economy: Gottliebsen “the greatest threat to the dwelling market is the large number of potential layoffs in the system and the fact that 47% of Australians are frightened about their job.” Harry Triguboff threw in his thoughts How to repair Australia’s property sector by increasing the migrant intake by at least half a million people per annum – forcing the property industry to build. Just one small problem with this scenario St Hilliers construction arm placed in voluntary administration plunging the Australian building and construction industry into deeper crisis. St Hilliers now joins Kell &Rigby, Royal & Taricon Constructions, Amorin Constructions, BQL Constructions, Bina Constructions, Simtom Constructions and Australian Property and Construction Pty Ltd. There is something very wrong within the building and construction industry with a federal Government inquiry long overdue.

Interesting to do a quick comparison on how the Mosman market is performing so I extrapolated the figures for 1 January 2011 – 16 May 2011 and 1 January 2012 – 16 May 2012. The results are really interesting with some fascinating trend reverses.

  • Number Offered 2011 – 124
  • Number Offered 2012 – 104
  • Number Sold 2011 – 100
  • Number Sold 2012 – 78
  • Private Treaty 2011 – 92
  • Private Treaty 2012 – 44
  • Auction 2011 – 8
  • Auction 2012 – 34

Plenty of conspiracy theories that in a tougher market, more vendors are auctioning in 2012? Well it’s easier for an agent to low – ball the price using the auction method and then claiming that the market has spoken. For the record, RWM has not conducted a single auction this year. Every property eventually sells for a price that we believe is in a vendor’s best interest and where humanly possible, they control the price of their property. I am yet to see a Mosman home sell above reserve price in 2012.

As I predicted, it will be slim pickings for stock levels until September at the earliest (unless we see an election) given stock levels are trending into decline. This is another positive sign that all but confirms property prices have bottomed. Vendors are not interested in selling and are far from panicking about getting out.

    MOSMAN – 2088

    • Number of houses on the market last week– 113
    • Number of houses on the market this week – 109
    • Number of apartments on the market last week – 98
    • Number of apartments on the market this week – 99

    CREMORNE – 2090

    • Number of houses on the market last week– 11
    • Number of houses on the market this week – 11
    • Number of apartments on the market last week – 32
    • Number of apartments on the market this week – 31

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 19
    • Number of houses on the market this week – 19
    • Number of apartments on the market last week – 62
    • Number of apartments on the market this week – 66

Source: Domain Property Monitors

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
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For this week’s open for inspections –
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Fort Fumble is having a difficult time trying to minimise the ongoing public back lashing over Craig Thomson, boat arrivals, the Budget and the Carbon Tax. So this week it rolled out its paid ‘Hired Guns’ to talk about all things climate change. Extreme heat, floods likely as weather evolves. Nice to see they are now including floods, considering five years ago Climate Commissioner Tim Flannery predicted that our nation’s dams would never be full again – and we would need de-salination plants. Well our dams are over flowing and the desalination plants that were built on that recommendation are dormant.

The spin this week by these fools – Climate commissioner Professor Tim Flannery said temperatures on rise in Sydney’s west Too funny that Julia Gillard has lost the vote in Sydney’s west, so try and frame the carbon tax as the saviour. Yet another bungle as nobody fell for it and employed government scientists went back to their respective laboratories – not to be heard again.

When Greece defaults and slides from the eurozone – strong word it will be re – named Grease!

Cheers ^__^

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