Woo Hoo !! Looks like we’d better sit down and hang on if we want to believe the amazing predictions of The Organisation for Economic Cooperation and Development. Our subscribers never miss a thing and one very kindly brought to our attention an article that appeared yesterday in The Melbourne Age. “The Organisation for Economic Cooperation and Development (OECD) has forecast steady economic growth for 2006, with data from the September quarter showing a record 18 per cent rise in construction in the past year. Retail sales climbed 0.5 per cent in October after falling twice in the previous three months, while credit from financial institutions jumped 0.9 per cent. However, the OECD estimated that Australian house prices were overvalued by 52 per cent relative to rents, and warned that a correction in prices could trigger a recession.” Many would argue that 52 per cent is on the conservative side, although it does present a strong argument that alcohol should be banned from future meetings.

Whilst on Sydney rents, which still remain at “sixes and sevens” these are not to be confused with the increase in the September quarter of approximately 3.6 per cent. These figures came from the NSW government so we can only assume that they are incorrect. Overall, we have been applying increases from five to ten per cent depending on the property. Although man of the moment, Louis Christopher from Australian Property Monitors said “We think many buyers have been waiting on the sidelines and renting instead of buying”. Not so Louis. When ”Bobby Dazzler” Carr introduced his Vendor Tax, which in turn led to Morrie “I’m sorry” dispatching this tax into his ‘no-brainer’ division, investors had long since left the building. Although it needs to be acknowledged that the ‘State of Decay’ continues to lead the way in tax deformity (not to be confused with reform) and obviously, still has matters well in-hand !! With tax being such an integral part of a democratic government, it is justifiable to increase the number of tax collectors from 734 to 1371 in two years, as was pointed out in The Daily Telegraph. If we put matters into perspective (which more often than not takes the fun out of the equation), we realise that without investors, rents would be higher. Sadly for those in the rental market, the investors continue to abstain from market participation.

It is not that they don’t find the markets attractive – their primary concern is that they don’t trust the government. As we all know, institutions that are facing (possible) bankruptcy, can often do foolish things !!

John “Simple” Symond predicted (in an interview on the Sunday Program November 2005) a further fall in property prices on the eastern seaboard on top of the ten per cent correction in Sydney, the biggest market since the height of the boom. He told Sunday reporter Graham Davis: “Anyone who thinks this softening of the real estate market is about to turn around quickly is in for a shock because this gradual decline, I believe, will go on for several years.” Mr Symond urges those with investment properties especially to bail out as soon as they can: “I would be putting it on the market, because by my reckoning, the price you get today will be higher than that of tomorrow”.

Rental returns on investment properties today, are at the highest level in years. Vacancy levels continue to remain in reduction mode, with weekly rentals on the increase which explains why investors should sell. Obviously, we must be missing some key ingredient that would support this “sell” recommendation.

As we continue with the fight against adversity, we can confirm reports that last week we posted the highest ever sale price for a home in Cremorne. The previous record was $7.35 million and we can assure you that we gave that a good nudge north. As we are under a confidentiality agreement and the vendor(s) are subscribers, we won’t be publishing the price for obvious reasons. What this does identify is that the market at the top end remains strong as long as you get the price right. Agents can often forget that purchasers in the end, value the properties and many of the properties that are currently available were valued incorrectly (and yes, we get them wrong too). Just that some seem to get more wrong than others!!

Exchanges keep rolling through with 61 Raglan Street, Mosman, 115 Deepwater Road Castle Cove, 69 Middle Head Road Mosman and 6/82 Raglan Street Mosman departing our well consumed property menu. With just one more edition left for 2005 the pressure is on to get more exchanges. Unfortunately, The Mosman Daily Christmas parties always have a habit of slowing agent responses for a few days. If you listen to some agents on the night, Mosman has recorded well over 500 house sales this year and many suggested that they posted a good number of quiet sales(maybe it was the beer talking)? Cheers ^__^

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