MARKET THAT COMES IS NO SURPRISE

MARKET THAT COMES IS NO SURPRISE

As we embark on another year of property plays, it is fast becoming obvious that some niche markets will excel and others are set for a very difficult year. The top end of town will do very well and it will be the outer areas that struggle with values that, in all probability, will continue to fall. If you look closely at the overall property market, the pattern is that the Eastern Suburbs and Mosman set the climate with other markets following suit. Although it should be pointed out that these areas have recorded very little, to no capital appreciation, in recent times. For the twelve months to 1 January 2006, the average recorded price for a Mosman house was at an all time high of $1,948,000. The median price creeps higher and higher and now sits at $1,663,000 and when the December quarter results are in, we can expect these figures to climb even higher. In 2006 we predict that Mosman will be one of a few suburbs that will trade in cash positive terms.

We can expect the apartment market to do an about face and investors will be back trading after taking a few years off. On January 25,2006 Morris “It’s a dilemma” Iemma announced that he would increase the land tax threshold for the 2006 year from $330,000 to $352,000. He also declared that in future, the land tax threshold would be annually indexed to average increases in statewide land values. As we stated last week, the apartment market is certainly very much rejuvenated, with the average price for a Mosman apartment jumping to $656,000. Climbing 10 per cent over the last twelve months, the median is now $515,000. This week Marize Bellomo exchanged 11/21 Grasmere Road Neutral Bay for $880,000, 7/144 Milson Road Cremorne Point for $740,000, 4/7 Ballantyne Street Mosman for $425,000, 7/6A McLeod Street Mosman for $415,000 and 13/1 Mosman Street Mosman for $347,500 and the most important news is that investors are back !!

Houses in Neutral Bay for the twelve months to 1 January 2006 posted an average price of $1,112,000 and the median price came in at $899,000. This then saw the median price for that twelve month period come in at – 27 per cent. It should be explained that in 2005 Neutral Bay sold just 62 homes and the top end of that market was all but non existent which explains why the average median price is in the red. The average price for an apartment was $573,000 and the median price is $500,000 which is break even on the previous twelve months with a zero per cent gain.

In Cremorne houses average $1,423, 000 with the median price at $1,100,000 which equates to a 4 per cent drop over the twelve months. The average price for an apartment is $598,000 and the median currently sits at $490,000 which was a 2 per cent drop over the twelve month period.

In looking at these figures in 2006 we can expect the average price for a Mosman home to climb over the $2,000,000 mark (if it is not already there). The days of 20 per cent annual capital appreciation are now a thing of the past. The Mosman dollar will still remain one of the strongest currencies in property and this market is fortunate that so many who reside here still enjoy healthy annual bonuses.

With the cash rate remaining at 5.50 per cent this week you can expect very little activity from the ‘Governor of Moolah’ in 2006 (this is his last year as Head Teller). Even if there was an increase in rates, history shows that it would have little to no effect on our local markets. The most obvious observation is, that property markets have stabilized and are trading at more restrained levels. The only market that remains volatile is the top-end, which is an indulgence market where clearly, money is no object.

We believe we are still a few weeks away from witnessing first hand just how strong the housing market will be in 2006. Already the apartment market is sending out a very clear message that it has done a complete about face with the investors back in the market which is also great news for the rental markets. Cheers ^__^

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