It’s cold and we’re off to the polls – acute market negativity!

It’s cold and we’re off to the polls – acute market negativity!

Plenty of negative sentiment about the property markets at the minute – so try telling somebody who cares, given purchasers and vendors appear a thousand miles apart (for the moment anyway).

Last week, I wrote that July can be a lost property month as so many are away on holidays. This is echoed with website traffic where Unique Visitors are busily visiting other sites such as beach resorts and or snowfields. Sour outlook for house prices as investors are the only source of growth in market which is interesting given investors tend to only play when they identify a buyer’s market. Clearance rate slumps as supply surges where it was reported “Sydney’s auction clearance rate plummeted at the weekend with just 49 per cent of properties selling – the poorest result for 18 months.”

To confuse the issue further home loans up for first time in eight months which is a clear sign of market recovery. “The number of new owner – occupied home loans rose 1.9 per cent in May, the first increase in eight months. Lending to housing investors continued its recent surge, rising 2.6 per cent in value, and has now swelled by 35 per cent since early last year. No doubt investors are circling First Home Buyers who are feeling the strain of increased funding costs.

The Australian Bureau of Statistics (ABS) released its lending finance approval data this week – lending remains subdued, easing bubble fears. The average in 2009 was $53.14 billion per month, compared to $65.67 billion per month in the pre – crisis year of 2007, meaning $12.53 billion less coming into the economy per month via lending institutions. At the current growth rate, total lending, at $51.58 billion in May, would take another six years to regain the high point of $70.63 billion reached at the end of 2007. I am not sure that we need to reach the high point anytime soon as borrowers told to pay down debt given the cash rate overtime will go up not down. In 2007 we saw borrowers lock and load debt where today, it is the complete opposite of lock and unload debt.



Business conditions hold steady given interest rates remain attractive as well as strong job growth, this identifies that Australia has solid business fundamentals. It should be noted that I am referring to businesses not governments. One of the biggest global bond managers Pimco rated Australia as a top investment destination so the outlook from a business perspective looks sound. Although that scenario could quickly change as banks face pressure over cost of lending and look likely to raise rates. Contrary to what the Reserve Bank of Australia (RBA) suggests, the banks are becoming increasingly triggered happy to reprice their mortgages – banks to cool on rate rises until after poll.

12-07-2010 11-46-21 AM

As a business we rely strongly on the Macquarie Economics Research data as an economic compass for our advice to purchasers, vendors and subscribers to Virtual Realty News. So let’s look at its economic forecasts, where the key issue is how long will rates remain on hold? Throw in a likelihood that banks could increase rates independently and the heat comes back into the market again.

12-07-2010 11-49-47 AM

The Macquarie Economics Research – Outlook for the September quarter 2010 identifies both calm and choppy waters ahead. The common denominator is quite simple (for me anyway) based on the above forecast, simply put: excessive debt is dangerous. This would explain why in our real estate market demographic we see bonuses being paid directly back into reducing debt levels. Leveraged lending on speculative investments is today a thing of the past, as households have all but ruled out those global financial crises – margin calls. A clear message: to borrow within not without.

Sydneysiders have always been proud that collectively our property markets are the benchmark for the Australian property industry, however for the very first time this is about to change. Our state Government – Fort Crumble (the most incompetent in Australia’s history) will show you why with the following graph.

13-07-2010 3-14-28 PM

Source: Australian Property Monitors

Senior Labor figures face annihilation – “Secret polling shows state Labor is facing a near wipe – out at the next election, with seven ministers and former Premier Nathan Rees among 28 MPs likely to lose seats. Polls by Labor and unions showed a 15 per cent swing against the Keneally Government statewide.” Fort Fumble due to their inability to provide infrastructure have driven residents to other States and Territories – Melbourne close to overtaking Sydney in price stakes. With annual population growth in Victoria running at 2.2 per cent, compared to NSW at 1.7 per cent, driving demand, it’s not hard to imagine Melbourne seriously challenging for the crown of Australia’s most expensive median priced city in the near future.

It will be a fascinating run into Christmas for both political and property voyeurs. The Colmar Brunton survey is always an interesting read Bubble – burst fears rise where investors are expecting house prices to remain flat or possibly fall. A very interesting read as well is show us your ticker, Gillard, before you force us to vote. Then our non – elect Prime Minister has to hose down the stoush where Paul Keating unleashes on Bob Hawke: I carried you through years of ‘Malaise’.

Julia Gillard announced that if elected the failed Emperor Kevin Rudd will sit on the front bench – I doubt she will hand him the Insulation Portfolio.

Steve and Richard have returned back from holidays so over to them.

I’m looking forward to road testing my iPad under my umbrella on the beach in Thailand as well as reading RISE OF THE RUDDBOT. Given what transpired at the Press Club yesterday PM Julia Gillard accused of double deal where it very much looks like the Labor Party is witnessing the Revenge of The Emperor – and it’s looking ugly.

Back in three weeks to cover the federal election which is taking more turns than a Winter Olympics.

Why is Mosman the strongest real estate market in Australia? Mosman is way out in front which, explains ladies and gentlemen, why, Mosman is Australia’s ‘numero uno’ municipality.

Just announced Federal Election – August 21.

Got a plane to catch,

Cheers ^__^

This week’s sales 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

7 Responses to “It’s cold and we’re off to the polls – acute market negativity!”

  • Ann says:

    Have a good trip Robert. Almost certain election will be called while you are away.

  • Ryan O'Grady says:

    Excellent post summing up a number of topics. Make sure you keep that iPad close while on your break. This election campaign is sure to keep us amused!

  • Robbie Mac says:

    For the record, my edited comments from 11th June:

    “Business confidence waning and everyone starting to go into “hold” mode, pending resolution of the political landscape;
    Federal government advertising campaigns only booked until sometime in August, suggesting an election thereabouts or shortly after – a bit earlier than might be expected; and
    A Labor party powerbroker, off the record, when asked if Julia Gillard was being prepared to take over from The Emperor, not denying the assertion and quickly changing subjects.
    The Emperor has a new name – “Dead Man Walking”.”

    So, date and new PM on the money. I only wish I could predict the winner, as I think the next few weeks will be a melodrama of the greatest magnitude, with more twists and turns than an Agatha Christie novel. The worm will end up in knots.

    Thankfully, only a few weeks and it will all be over, and then we can get on with things, at least temporarily. Once done, in NSW at least, we will then be focusing on the March election, and the battle for who will be “least worst”. Won’t that be exciting for all of us??? Like having root canal treatment twice in the same week. What did we do to deserve this? Hopefully the federal certainty will be enough for the long suffering NSW businesses to survive until March, as the current freeze on both federal and state activity is in itself a clear reason that the SME and B2B sectors are really suffering.

    One final thought. Given we now have a stoush between the Orange Roughie and the Mad Monk, if one was allocating corners of a boxing ring, who would be entitled to the red corner, and who would be entitled to the blue corner? It may not be as obvious as one might think. But will we see the true colours over the next few weeks? Only time will tell……

  • Robbie Mac says:

    Stop Press:

    The contractor doing the BER work at our local school, Middle Harbour Public, has just gone into liquidation, for reasons not yet clear. Therefore, the BER is on hold until Bovis Lend Lease find another victim, sorry, subcontractor. An omen for the Orange Roughie even more fitting than the octopus? No doubt some more noise on this shortly.

  • Ann says:

    Interesting Robbie. Thats was the first works at Middle Harbour since the early 1950’s when they built the Hall and th 1960’s when they added the demountable Art Room. A few demountables since where the building works are now.

    Pretty poor. I see the small brick structure to the right of the front gate is there. The milkman use to leave the milk for the kids in there on hot days.

  • Makes a mental note to quote Robbie Mac for my election editions upon my return. In the meantime back to riveting book under umbrella in Phuket (getting tired of being a Foreign correspomdent).

    Beer time 🙂

  • Patricia says:

    Robbie Mac, I predict the worm will take a flying leap into the nearest bottle of mezcal on the evening of 21 August!

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