It’s either you’re out of touch or just another touch up!

It’s either you’re out of touch or just another touch up!

Politicians of all persuasions believe today, that anyone who deems to criticise them, is out of touch. This week we experienced many touch ups and a few more touch downs (figuratively speaking). This leads me to suggest that we are now in a touching market where property prices are either out of touch and others a touch up.

This week a caller to ABC morning radio announced that Mosman was about see one hundred and thirty mortgagee – in – possession properties about to be released to the marketplace. The only problem with this market touch up is that nobody has bothered to tell the real estate agents. For the record, the number of mortgagee – in – possession properties that we have been asked to sell in 2008, is just one.

This announcement prompted me to then crunch the numbers of houses in Mosman currently for sale, so I went to www.domain.com.au to do the mathematics. Now we know that Mosman has just over 4,900 homes and 136 (2.78%) are currently listed on this portal for sale which is exactly the market norm for this time of year (commonly regarded as a peak selling period). One also needs to bear in mind that on average, Mosman houses trade annually at five to ten per cent of the total number.

Here is the breakdown for Mosman houses, compiled yesterday.

  • $1,000,000 to $1,500,000 – a selection of 24 houses
  • $1,500,000 to $2,000,000 – a selection of 27 houses
  • $2,000,000 to $2,500,000 – a selection of 15 houses
  • $2,500,000 to $3,000,000 – a selection of 5 houses
  • $3,000,000 to $4,000,000 – a selection of 20 houses
  • $4,000,000 to $5,000,000 – a selection of 15 houses
  • $5,000,000 to $7,500,000 – a selection of 19 houses
  • $7,500,000 to $10,000,000 – a selection of 5 houses
  • $10,000,000 + — a selection of 6 houses
  • Total 136

Now for the touch up, touch down and out of touch Mosman market test. We used the days on market analysis to put the volume into greater perspective.

  • One month on the market – day one to day 31 identifies 58 houses
  • Two months on the market – identifies 26 houses
  • Three months on the market – identifies 24 houses
  • Four months on the market – identifies 28 houses
  • Total 136

Also, one should not forget that the expat market is the strongest we have seen all year. They now enjoy a thirty plus percent discount, after the Aussie dollar caught a cold.

So let’s take a peek (or should that be peak) at the touch ups that occurred this week. As I predicted last year, the consumer price index (CPI) jumped to five per cent. Year on year, the biggest annual jump since 1995. Rentals rose another 2.1 per cent which comes as no surprise given that rentals accelerate CPI every month as investors continue to desert this market. I will now predict that CPI will hit 6 per cent although the Federal Treasurer Wayne Swan said “In terms of inflation I think this is expected to peak, and we would hope to see it moderate over the year ahead.” Unsure if this is either out of touch, a touch up or hopefully a touchdown (love the ‘hope’ word).

Yesterday, NSW suffered its first monthly deficit in eight years and naturally, blamed the property and financial markets. This amazing administration identified a surplus of $109 million in July that was smashed in August with a $163 million deficit. As always, the decline in Stamp Duty was the blame – maybe (no I will do a Swan) the NSW government should hope that a reduction in Stamp Duty rates will stimulate the property markets.

Kevin Rudd keeps spending his inheritance on the economy where the key might be spending in state governments to reduce taxes that would obviously bolster economic activity.

You can be the judge on who is out of touch, who keeps touching you up and what constitutes a touchdown and we aren’t talking Australian Idol. Just keep paying your taxes and hope for the best!

Interest rates are coming down and we are very very confident (not hoping) that property is about to experience a touch up! History identifies that when property prices are a touchdown, property prices then touch up – and I don’t believe I am out of touch!

After all – it is a numbers game. Interest rate reductions will certainly help to stimulate the market, but what would really kick it along is a reduction in stamp duty and those in State government are the only ones who fail the test. Cheers ^__^

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