Mystique, mystery or misery for real estate values in 2011?

Mystique, mystery or misery for real estate values in 2011?

.

Plenty of negative press about the property industry at the moment although we could well ask “what came first the chicken or the egg?” When consumer confidence levels are down, real estate markets have never boomed, although one market characteristic never changes, that being supply. Alas, that economic equation of demand V supply where plenty of demographic markets are experiencing an oversupply when demand is waning. To settle more than a few arguments in this week’s edition, we unveil exactly what is happening in the Mosman housing market where we identify plenty of mystique and mystery – with not that much misery. The figures don’t lie – so we went to Mosman’s most accurate market barometer Domain Property Data

Australian Bureau of Statistics (ABS) data published this week, revealed house prices fell 1.7 per cent across all capital cities except Melbourne where a 2.5 per cent drop was recorded for the March quarter 2011 – house prices dive in massive market fall. I actually love these commentaries given we are one of the few real estate businesses within Australia (with a very large voice) who can address these issues.

Steve Keen was at it again – Why Australia’s housing balloon is shot which focuses on the 1.7 per cent decline in property prices. Steve Keen predicted property prices would collapse in Australia by forty (40) per cent during the global financial crisis (GFC).  He lost that bet and he keeps (unsuccessfully) suggesting that property prices are in a bubble that will collapse. Just like me suggesting that Julia Gillard knows what she is doing as Prime Minister of Australia. Mortgage debt is the new “economic fascinator” although – RBA leaves rates on hold. The present cash rate is 4.75 per cent so there is plenty of scope to further reduce, depending on market movements.

BUY PRINT

What many forget is that in Australia, our property industry is defined by a thirty something analysis – one third rent, the second third own with a mortgage and the final third own without a mortgage. Here is the proof – it will be interesting to see how this pie graph changes after this year’s Census (I doubt by very much.)

Having been absorbed by the real estate gig for the last twenty five years I remain fascinated. Why? Purchasers go berserk during a property boom where they happily pay well above market value. Yet when the market slows and prices reduce they go into a self-induced hibernation/paralysis.  Even more intriguing is that today, online offers immediate property data anecdotal sales evidence. No better example, in How Twitter tweeted before Obama sang that Osama bin Laden had been found and executed.

So let me use the definitive sales evidence in Mosman to correctly explain what is actually happening where you work the numbers (not my words) pertaining to the mystique, mystery and whether or not there is any misery. Firstly, let’s look at the number of apartments and houses currently on the market compared to previous years.  Does this suggest that Mosman is experiencing a huge exodus of property owners?

Let’s analyse the Mosman house market March Quarter for 2010 as compared to the March Quarter for 2011- actually, we go back to 2005 to observe any patterns.

MOSMAN HOUSE SALES MARCH QUARTER 2010

  • Total Number Offered – 105
  • Private Treaty – 75
  • Public Auction – 16
  • Total Sales – 91
  • Total Value Sold – $230,950,500
  • Average Price – $2,685,470

MOSMAN HOUSE SALES MARCH QUARTER 2011

  • Total Number Offered – 83
  • Private Treaty – 40
  • Public Auction – 19
  • Total Sales – 59
  • Total Value Sold – $55,030,000 (37 sales recorded a zero sale price)
  • Average Price – $2,311,666

So to be fair let’s compare the March Quarters from 2005 to 2009.

MOSMAN HOUSE SALES MARCH QUARTER 2009

  • Total Number Offered – 64
  • Private Treaty – 48
  • Public Auction – 3
  • Total Sales – 51 (less than 2011)
  • Total Value Sold – 130,000,000
  • Average Price – $2,653,061

MOSMAN HOUSE SALES MARCH QUARTER 2008

  • Total Number Offered – 81
  • Private Treaty – 54
  • Public Auction – 7
  • Total Sales – 61 (2 more than 2011)
  • Total Value Sold – $188,720,000
  • Average Price – $3,093,770

MOSMAN HOUSE SALES MARCH QUARTER 2007

  • Total Number Offered – 108
  • Private Treaty – 78
  • Public Auction – 16
  • Total Sales – 94
  • Average Price – $2,617,332

MOSMAN HOUSE SALES MARCH QUARTER 2006

  • Total Number Offered – 99
  • Private Treaty – 69
  • Public Auction – 15
  • Total Sales – 84
  • Average Price $2,303,107

MOSMAN HOUSE SALES MARCH QUARTER 2005

  • Total Number Offered – 72
  • Private Treaty – 45
  • Public Auction – 8
  • Total Sales – 53
  • Average Price – $2,296,323

All in all, a positive story despite what is being written in the media (never let the facts get in the way of a good story). So moving on, let’s have a look at the ongoing debacle at Julia Gillard’s – Fort Fumble.

Source: The Australian- order Bill Leak’s print

Strong dollar spells political trouble for Labor as voters abandon Julia Gillard’s carbon pricing plan due to be released in July. Easily Australia’s worst ever policy announcement, which is now looks very much dead and buried. Fort Fumble can’t revoke any more new policies, given the number previously done and dusted – an Australian political record.

Budget surplus has to go and by 2012 -13 which is a political decision rather than an economic one. Still a very strong possibility that by the next federal election Australia will still be in budget deficit.

If asked to compare the strength of Julia Gillard’s longevity in Canberra to Mosman real estate prices – it’s a no brainer. Mosman house prices never looked better. Although while we have a Labor Government in power – that would represent a *BUY RECOMMENDATION*.

To all our beautiful “mums” enjoy your day this Sunday – very well deserved and forever the salt of our lives.

Cheers ^__^

This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here

4 Responses to “Mystique, mystery or misery for real estate values in 2011?”

  • Ann says:

    Happy Mothers Day to all VRN readers

  • Suzanne says:

    Hi Robert,

    Did you see the news today, Rudd’s big month almost blew the Bin Laden raid.

    http://www.theaustralian.com.au/national-affairs/rudd-in-row-over-osama-allys-arrest/comments-fn59niix-1226050795277

    I know Rudd is dead keen on a UN role in New York City, but seriously he would only get a job in the child care centre on level 1 or as car park attendant in the basement, cause his security clearance would not let him elsewhere.

    On second thoughts, maybe not the carpark, he may tip off who comes and goes. Window Cleaner, nope thats too risky as well.

  • Bill says:

    Suzanne, employ some critical thinking and perspective. Umar Patek was arrested in January so by late March, when Rudd made his remark, Patek’s associates would have long-realised that he had DISAPPEARED. This claim by Pakistan, which was given little oxygen by the wider media yesterday for good reason, is an attempt to deflect attention from its indefensible position in relation to bin Laden. Duh.

  • Chris says:

    Steve Keen is an associate university professor, not a professional property or sharemarket investor. The problem with Steve is that he believes all the economics he regurgitates to us all….he can’t even fathom that he could be wrong.

    Apart from Steve Keen who is really a small voice in the scheme of things, the largest risk for both the stockmarket and property market is the Gillard government which is putting at risk mining investment in this country and increasing the perception of Australia as being a country with a higher level of sovereign risk than it should have.

    Furthermore there is now talk of a vendor sales tax on investment property and a rumoured change in capital gains tax for investment property.

    All of this to fund dodgy Labor policies…..

    Have a nice mothers day all those mothers out there 🙂

Leave a Reply

Your email address will not be published. Required fields are marked *