Mirage markets continue to stifle consumer confidence

Mirage markets continue to stifle consumer confidence

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Australia’s financial markets are off to a swashbuckling start in 2013 – Aust stocks hit 5000, 33 month high and so the psychological barrier has been conquered. This was quickly followed up with Aust stocks hit over four – year high this was the benchmark index’s highest point since August 9, 2008 when it reached 5047.9. The most interesting point is that investors were running scared last year given they were engulfed with fear, then when they see the coast is clear they come flocking back in. You see the very same behavioural patterns with real estate when the market is booming buyers are prepared to pay well over the reserve yet when the market is falling purchasers are mesmerised with fear.

As banks’ cash piles grow, so does the pressure to share with investors when on Wednesday this week the country’s largest lender the Commonwealth Bank announced it was headed for another year of record earnings. So it’s hard to fathom gloomy former RBA board member Bob Gregory predicts cash rate to fall to 1.5% but other bank economists more circumspect. Given the Reserve Bank of Australia (RBA) currently has the cash rate at 3.00 percent which is at what the bank terms “emergency levels”, one can only then assume that at 1.50 percent our economy would be in the intensive care. I can’t see that happening although the only positive is that at 3.00 percent the RBA still has plenty of fat to cut from the cash rate. Weak outlook weighs on business confidence: CEO’s although (Reserve prepares for ‘slightly weaker’ economy.

CampCove

BUY PRINT

So our fascination with markets continues to confuse given the balance of arguments are both for and against, which translates into the dreaded consumer confusion. Housing values maintain build – up where the much maligned “housing affordability” presently sits at a ten year low. Australia’s property markets consist of thousands and thousands of individual niche markets which is evidenced in the graphs below.

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If you look at the Mosman property market in the late – eighties it was the property developers who dominated the markets only to be wiped out in the early 1990’s with the “recession we had to have.” Our markets were benign until 1995 when Sydney was announced as the host of the 2000 Olympics – this period announced the rise and rise of the merchant banker – only to be severely impacted by the Global Financial Crisis. The new dominant buyer in Sydney’s top – end markets are the Chinese buyers. Chinese signal property buying intentions as permanent arrivals numbers rise and visitor numbers jump dramatically. According to the Australian Bureau of Statistics (ABS) around 17,580 Chinese people settled permanently in Australia in 2012, up from 15,780 in 2011 and 14,720 in 2010. We have seen anecdotal evidence at the top – end that the Chinese are the new main players which explains why last week we added a Chinese translation to our website.

Yet again, Lower North Shore vendors are not being drawn into selling with numbers of houses and apartments well down on this time last year. Given the volumes in 2012 were significantly up when compared to 2013 it is indeed difficult to explain the reasons why vendors are not attracted to sell. We believe the reason is many believe that property markets are set to jump significantly and given the low stock levels they are concerned about selling then seeing prices jump and being caught in that vacuum. This takes me back to what I said earlier. “You see the very same behavioural patterns with real estate when the market is booming buyers are prepared to pay well over the reserve yet when the market is falling purchasers are mesmerised with fear.”

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market this time 2012– 129
• Number of houses on the market last week – 84
Number of houses on the market this week – 95
• Number of apartments on the market this time 2012 –118
• Number of apartments on the market last week – 77
Number of apartments on the market this week – 80

CREMORNE – 2090

• Number of houses on the market this time 2012– 16
• Number of houses on the market last week – 10
Number of houses on the market this week – 14
• Number of apartments on the market this time 2012– 18
• Number of apartments on the market last week – 16
Number of apartments on the market this week – 23

NEUTRAL BAY – 2089

• Number of houses on the market this time 2012 – 17
• Number of houses on the market last week – 13
Number of houses on the market this week – 16
• Number of apartments on the market this time 2012 – 71
• Number of apartments on the market last week – 32
Number of apartments on the market this week – 35

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.
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For this week’s open for inspections.
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Our federal government Fort Fumble is in all sorts of trouble Howard predicts Rudd comeback should that happen the next few weeks will be fascinating. On top of that (how Treasury mucked up its super sums) then you have a MRRT that missed its budget by 94 percent. The Rudd/Gillard governments have spent in five years $150 billion more than the Howard government who were in power for double that period. Communications Minister Stephen Conroy admitted this week the NBN $35 billion price tag failed to factor in the $11 billion payment to Telstra. Then you have the ICAC enquiry victory of spivs guarantees decades of defeat one commentator said this week that the next NSW ALP leader is still in all probability attending primary school. This weekend’s Newspoll results will identify if Australia will have three prime ministers in 2013.

Unders and overs: APM’s askew market estimates upsetting Domain agents’ listings aplenty – I could not believe this Fairfax Media monumental stuff – up! We quickly had them remove this ridiculous and inaccurate pricing comparison for all properties on their portal under $2,000,000. Vendors were furious which is certainly justifiable given it is nothing more than a guesstimate – hardly an exacting science. Tension between a majority of Mosman agents and Fairfax Media is close to untenable. News Limited is watching this very closely where Fairfax Media will need to lift its game very quickly – it’s a management problem.

Cheers ^__^

One Response to “Mirage markets continue to stifle consumer confidence”

  • Paul Wilcox says:

    I totally agree with the stupidity of publishing the apm automatic price range , as it doesn’t take in the multiple options of why prices rise/ fall , things like market conditions, renovated since last sale, sale price consistent with the market when last transacted etc etc , there is nothing better than getting out into the market and inspecting properties and following up the ACTUAL sale price, a computer can only make “general’ observations.

    Cant really see buyers forking out $$$ to purchase a complete report thru APM

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