Let’s hear it again, the winner is Sydney!!

Let’s hear it again, the winner is Sydney!!


The NSW O’Farrell Government is facing an interesting dilemma – does it borrow and risk losing its precious Triple-A credit rating or sell-off state assets. I’m sure everyone has mixed feelings about which is the smarter alternative although I must admit I favour losing the Triple-A credit rating for one simple reason: it makes the Government leaner and meaner.  Business is run under that economic philosophy, so why not the NSW Government?

There is nothing wrong with infrastructure funding questions given that in previous Governments the taxpayer waste defied all logic, e.g. the failed/aborted Rozelle Metro that saw the previous NSW Government waste $500 million and all for no gain. The O’Farrell Government has $53 billion earmarked for transport and roads infrastructure and services over the next four years – Rebuilding NSW: 20 – year vision.

You may be surprised to learn that on November 19 – 20 the 4th Annual NSW Major Projects Conference 2012 is being held where they will state the obvious. “New South Wales is entering an exciting time of renewal as the challenges to build and exceed beyond its past achievements is reaching critical tipping point. The NSW economy has grown to become the largest and most diverse economy in Australia, contributing one third of the nation’s Gross Domestic Product and is home to 32 percent of Australia’s population with even more significant population growth on the near horizon.”

One would be correct in asking why NSW is holding just its 4th Annual NSW Major Projects Conference when it should be around the 24th. The simple answer is that due to ‘no infrastructure’ under the previous Government, in all probability it was formed from pure desperation to simply get something happening. City might appear to be down, but it is far from out which takes me to James Packer’s article – For the good of Sydney, back this plan a very interesting read and I back his plan.


The biggest news for the property market this week was Macquarie Group takes Yellow Brick Road into home loans market which will see Yellow Brick Road going head- to- head with the big four banks. Under the deal, Yellow Brick Road will try to undercut the big banks by offering a 1.15 percentage point discount on all new homes in the first 12 months of the loan. The big four have actively acquired all the second tier banks to protect their market share which is approximately 80 percent of the Australian home loan market. It should also be noted that most of the biggest real estate agencies within Australia, bank with Macquarie Bank (us included) so this announcement provides Macquarie Bank with direct access to Australia’s biggest and most successful real estate agencies. I will make a prediction Yellow Brick Road will be the first bank to respond to a rate cut by the Reserve Bank of Australia (RBA).

We predicted last week that the RBA would keep the cash rate at 3.25 per cent which I believe is directly aimed at what happens in the United States of America following the re-election of Barrack Obama – Superman has just 54 days to save the world. The simple reality is that the RBA holds rates but with a loose grip. So the stark reality of the decision is quite simple: RBA keeps its powder dry. Congratulations to the ANZ economists who have correctly called the RBA’s cash rate announcements 7/10 thus far in 2012.

Building data still gloomy, outlook brighter although it should be noted that construction activity in Australia has now been in contraction for 29 months. If that is not a warning to the Gillard Government then nothing is.  When the economic principle of supply V demand is applied, you don’t have to be Einstein to work out which demographic market is going to benefit.  Australia already, is recording the highest ever rental markets which are  being further driven by the Gillard Government decision: Sydney executive rentals stung by Living Away from Home Allowance reform. An idiotic decision that punishes business simply because our elected Government is marred by reckless spending deficiencies – decisions are made solely on re-lection not economic competence.

Fascinating that twelve months ago, Mosman houses and apartments reached their peak numbers for 2011. The same can’t be said for 2012 with house listings down 32 percent from 365 days ago. For property voyeurs, this clearly indicates a strong market and it will be interesting to see whether  the house numbers fall below 100. In 2011, Mosman recorded 38 weeks with house volumes below 100, the lowest recording being just 78.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week– 114
    • Number of houses on the market this week – 114
    • Number of houses on the market this time 2011 – 168
    • Number of apartments on the market last week – 92
    • Number of apartments on the market this week – 96
    • Number of apartments on the market this time 201

    CREMORNE – 2090

    • Number of houses on the market last week– 15
    • Number of houses on the market this week – 15
    • Number of houses on the market this time 2011 – 21
    • Number of apartments on the market last week – 15
    • Number of apartments on the market this week – 18
    • Number of apartments on the market this time 2011 – 44

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 20
    • Number of houses on the market this week – 19
    • Number of houses on the market this time 2011 – 21
    • Number of apartments on the market last week – 56
    • Number of apartments on the market this week – 85
    • Number of apartments on the market this time 2011 – 136

    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

It should also be noted that Aussie Home Loans reports best monthly results since 2009 Wizard acquisition with a reported 27 percent year-on year increase for October 2012. Very positive signs for our property markets.

Oh dear!  Wayne Swan to warn US of ‘fiscal cliff’ which is a bit strong coming from the ‘World’s Greatest Treasurer’ who personally negotiated his MRRT which delivered zero income. Australians need to look at one economic graph which should be viewed no differently to personal household debt. As they say “a fool and his money are easily parted” – the only problem is that it is (was) our money.

There is a simple answer for Treasurers.  Make your predictions and should you not deliver, then resign (which will never happen in politics). It happens with CEO’s who get sacked by the Board of Directors. Last week, the NSW Government revised its budget position from a $337 million deficit to a $680 million surplus – following an audit from the NSW Auditor-General.

Ironic that State and Federal elections are three (3) and four (4) year terms, whilst in business they hold an Annual General Meeting. In a perfect economic world, politicians would put-up or stand aside.

Unfortunately, politics is an asylum that is self-medicated!

See you next week.

Cheers ^__^



4 Responses to “Let’s hear it again, the winner is Sydney!!”

  • Mick says:

    The photo confirms the boring, tedious sameness of Mosman’s denizens is a characteristic they share with their residential built environment.

  • Gordon says:

    The only thing that is boring about Mosman seems to be the tedious sameness of comments about it from people who have never been here. 🙁

  • Robbie Mac says:

    The state’s AAA rating is, like the Federal budget surplus, a political red herring. Both created by the ALP, and happily at Federal level the ALP are paying the price for such stupidity. Sadly, in NSW, those paying the price ultimately are the good burghers of this state, and the government who followed the ALP. There are however signs that the incumbent recognises this folly for what it is, and will break free from this negative cycle. Based on the spending needs of the state, especially infrastructure, they will have to make some changes. Borrowing more will be part of it, and acting on the state’s electricity assets should play a part too. Adele Ferguson has covered this in the Fairfax press very eloquently this week – let’s hope Bazza and Mick read that piece.

    And why do we care? Simply because we live here, and if the graphs provided above are to change for the better (e.g. dwelling starts), then those investing in such developments will need some comfort that the government has a strong, decisive hand on the tiller. There is a strong causal link between the performance of the state government and investment, as we have seen over the past decade. If the incumbent state government can get it right, then the inhabitants of real estate blogs will have plenty to talk about, if they have time at all between dealing with a much busier market.

    In a nutshell – does Barry have the balls? And in turn as voters, do we have the vision to back him if he does?

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