Join Those Dots To Follow The Property Path

Join Those Dots To Follow The Property Path

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Since the Global Financial Crisis (GFC) hit in 2008, our top-end property markets have been the major casualty with corrections in values of up to 30 percent. Each and every time a pricing guide was drawn in the sand, a new wave of destruction came crashing in and brought about the ongoing value retreat. It should be noted that the top-end value correction was nowhere as severe as that experienced in the recession of the early 1990’s.

For the prestige property markets to show those signs of recovery, it will be necessary for the elite property markets to start posting anecdotal sales evidence – only then, can the rest of the adjoining suburbs can follow suit. Mosman is the elite suburb north of the Harbour Bridge which explains why it attracts so much attention and scrutiny. So it was a ‘good news week’ for Mosman’s top – end when it was reported Western Australian buyer pays $10.1 million for Mosman harbourfront – congratulations to our very own Richard Simeon and Mark Manners who negotiated the sale. Before the market gets too carried away, what is required now, is further sales evidence. What makes this sale all the more interesting is that mysterious line in the sand – where the market believes that the top-end has bottomed?

Adding to the intrigue, is that prior to the GFC, Mosman buyers found it nearly impossible to compete with merchant bankers. Today, the local buyers are now competing with Chinese buyers who are expressing an insatiable desire for the 2088 postcode! The next four months will be riveting for top-end properties and we are predicting that this market is in recovery mode (albeit a modest one). More importantly, the dots are now aligning and vendors can and will have a greater part to play in the negotiations.

Watch – wait and see.

BUY PRINT

Further clues to joining those dots are auction clearance rates hits two year highs so it is interesting to see how the current rate of 60 percent plus compares to mid – 50’s this time last year. First – home buyers at highest level in five months: ABS first – home buyer commitments rose from 18.3 percent in June 2012 to 17.8 percent in May 2012. We expect this trend to continue its upward spiral even with the embarrassing complacency of the “Big Four” banks. Borrowers beat path away from big banks where a record 35 percent of all housing loans written in 2011 – 12 revealed that borrowers re-finance existing mortgages with a new lender, rather than buy or build a new property.

Clue: In the year to June, lending to re-finance loans increased by $7.3 billion or 17 percent from a year ago and by 30 percent from two years ago. Fixed – rate loans losing their appeal: ABS data which is more a decision by home owners to ‘divorce’ their previous banking relationships. You can attribute this movement to complacency by the banks.

NAB surges ahead of big four rivals on owner – occupied mortgage lending since February 2011 ‘break – up’: APRA which is more a consequence of homeowners being much more online savvy where they can chase much improved rates and relationships elsewhere.

Now those dots get even more interesting as Mosman house numbers take a significant drop when they should be climbing, as in September/November of 2011, the number of houses on the market was sitting at around the 150 mark. It is not just houses numbers in decline. All the local markets in houses and apartments dropped this week – which indicates a vendors’ market, not a buyers’.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week– 90
    • Number of houses on the market this week – 80
    • Number of houses on the market this time 2011 – 88
    • Number of apartments on the market last week – 98
    • Number of apartments on the market this week – 89
    • Number of apartments on the market this time 2011 – 95

    CREMORNE – 2090

    • Number of houses on the market last week– 12
    • Number of houses on the market this week – 11
    • Number of houses on the market this time 2011 – 15
    • Number of apartments on the market last week – 24
    • Number of apartments on the market this week – 13
    • Number of apartments on the market this time 2011 – 25

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 18
    • Number of houses on the market this week – 15
    • Number of houses on the market this time 2011 – 6
    • Number of apartments on the market last week – 52
    • Number of apartments on the market this week – 45
    • Number of apartments on the market this time 2011 – 65

    For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

    • Click Here

    For this week’s open for inspections

    • Click Here

So with every dot on the property path there are always those knots – Star commentators of the Australian home loan and property market none of which I would add, have any idea what is happening in Mosman. I did laugh when Steve Keen, who predicted that the GFC would result in a 40 percent house price collapse, was added to this list. Well he was wrong and a bet with Rory Robertson had him walking Mount Kosciusko. One would have thought Australia’s most incompetent property predicator would have learned something from his lonely walk. ABS figures show Australia’s housing bubble is bursting: Steve Keen which was predicted in May 2012. Then three months later house prices to fall further but even Steve Keen ponders the extent of any Australian property bubble which I find amusing, considering that I have been writing Australia’s longest property blog and have said time and time again – Australia does not have a property bubble!

We have niche markets which can easily be destroyed by an obvious over-supply of stock and this was evident this week, when a family buys back $1.550m unit for $381k which is a typical story coming from the Surfers Paradise markets.

All of markets change – The big bull call: bear market is over and I totally agree with Charlie Aitken who was also one of the first financial market bloggers. I see a very simple similarity where many who comment on the market are just observers. Those at the coal-face are much more succinct and in touch. This explains why the economic observers spend so much time reading the blogs!

Thanks to Jacqui, Richard and Steve for filling in while I explored Asia.

Cheers ^__^

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