No boom no crash but plenty of opera ahead!

No boom no crash but plenty of opera ahead!

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The ‘shock’ market was at it again this week as default fears spark $45b sell – off which clearly identifies how spooked the global financial markets are and what lies ahead. Despite an abundance of warnings, such extreme volatility is now a sign of the times while global leaders struggle to find a satisfactory anecdote for Europe to finally face the music. For the moment, let’s just call this ongoing saga The Rock Opera of Europe. In Australia this supports the argument why shares aren’t as safe as houses.

On the home front this week, Australian’s awoke to the headline that ‘Tsunami’ to hit Australian real estate. Forget the headline, this was a comedy of errors. “Australia’s love affair with property is about to turn sour as an ‘economic tsunami’ looks set to hit world markets, American economic forecaster Harry Dent says.” Dirty Harry touched – down in Australia last Sunday to guess what? Promote his book,The Great Crash Ahead – How to Prosper in the Debt Crisis of 2010 – 2012, although no offers yet of free steak knives should you decide to purchase the book – destined for the ‘discount bin’.

Must have been a full moon when Jeremy Grantham from the The Economist suggested that Australian housing is a terrible bubble that will pop, with prices falling as much as fifty per cent – the Australian property bubble can withstand greater adversity. Let’s look at the facts Sydney’s housing shortfall to double by 2014: Urban Taskforce.

BUY PRINT

This week stupidity was obviously contagious housing shortage a myth, bears claim “Australia, where home prices are falling at the fastest rate in more than two years has a glut of properties and is set for a US – style crash, some experts say.” What they didn’t say is just exactly what differentiates an expert from – an idiot? On the flip side in Property Observer this week, Christopher Joye wrote the worse the world gets the better housing willProperty Observerwas on fire this week with talk of a property crash is unfounded and sensationalist: HIA’s Harley Dale. “Australian dwelling prices have, generally speaking, demonstrated what could be most accurately described as a controlled moderation since the middle part of 2010. For example, according to RP Data – Rismark (the most closely watched dwelling price series), the seasonally adjusted hedonic price series for capital city house values declined by 2.6 % year on year as of June 2011. Similarly, national “rest of state” house values fell by 2.5% year on year.” Then Christopher Joye followed up with housing prices at a signal junction “it is plausible that Australia’s currently soft housing market will emerge as a relative winner from any global fall – out, much as it did in 2007 – 08.”

Australian businesses turned sour in August, as global markets tumbled as business confidence sapped by global turmoil. Prompting global economy in danger zone: World Bank chief “Unless Europe, Japan, and the United States can also face up to responsibilities they will drag down not only themselves, but the global economy.” Again on the flip – side consumer sentiment for buying a house at a two – year high:Westpac a house as consumer confidence rebounds strongly in September.

Decades of wealth from boom as commodities exports forecast to hit $480 billion which is an economic transformation unparalleled in the nation’s history with its resources and commodities boom. Australia continues impressive trade run where it has posted a trade surplus in 15 of the past 16 months. Of course this will be detrimental to house prices – not!

One must also not forget that NSW to scrap full  first – home stamp duty concessions for existing homes from 2012 so watch the market run hard up to Christmas with buyers getting in before the changes from 1 January 2012. To see what effect this has on the market it will be interesting to watch the following numbers each week – especially apartment sales.

    MOSMAN – 2088

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    • Number of houses on the market last week – 115
    • Number of houses on the market this week – 111
    • Number of apartments on the market last week – 91
    • Number of apartments on the market this week – 93

    CREMORNE – 2090

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    • Number of houses on the market last week – 14
    • Number of houses on the market this week – 14
    • Number of apartments on the market last week – 34
    • Number of apartments on the market this week – 26

    NEUTRAL BAY – 2089

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    • Number of houses on the market last week – 13
    • Number of houses on the market this week – 12
    • Number of apartments on the market last week – 79
    • Number of apartments on the market this week – 80

For this week’s sales in 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

Julia Gillard’s Fort Fumble was at it again when it was revealed that Labor plans Future Fund withdrawal as it takes aim at budget surplus only to then read that the government denies plans to raid Future Fund. The only problem for Fort Fumble is that Finance Department head, David Tune, had revealed the government’s revenue estimates for 2012/13 included revenue from “the unexpected sale of assets from the Future Fund”, along with the disposal of Defence properties, housing and land. Watch this space – caught red handed one might suggest? The reporting of such information would explain why Fort Fumble announced this week an enquiry into Australia’s media?

Struggling with the truth would have nothing to do with it – or would it? Mining tax rate hits 41.5%: study revealing federal Treasury used an “unconventional” method in claiming the mining industry paid just 27 per cent tax during last year’s heated debate over the now defunct resources super profits tax (RSPT). Its replacement the resources tax could be in for a tough time looks like failing just like its predecessor.

Business failures jump 12% in June quarter compared to 4.1% in the previous quarter which is exactly what a strong Australian dollar will do to some industries.

So get in, buckle up and hold on, as by all accounts we are all in for an amazing ride and one we’ve never seen before!

We are proud to announce that at the Richardson & Wrench Annual Awards presentation last night,we were named number one office in NSW and number one nationally. We would like to thank everyone for their ongoing support.

Cheers ^__^

8 Responses to “No boom no crash but plenty of opera ahead!”

  • andrew says:

    Jeremy Grantham is from GMO a investment management firm in Boston, not the Economist, he writes some excellent research and has been proved right about many ‘bubbles’ in financial markets

  • Ann says:

    Congratulations Robert and Team on your NSW and National Award, well deserved.

  • Andrew – that doesn’t mean that he is always right. There is just the one common denominator with all these so called experts – none live in Australia!

  • Andrew says:

    Great stats and article links Robert. It will be interesting to see the next couple of years unfold. Hopefully “Dirty Harry’s” book will, as you suggest, be lining the bargain bins.

  • andrew says:

    Yes he is an Englishman from Yorkshire living in Boston and that doesn’t mean he is always right and certainly he tends to be early with his timing but his firm manages equity portfolios and he has told clients equities are overvalued, i haven’t heard a realestate agent in Australia saying realestate is overvalued

  • Ann says:

    I know the ‘new owners’ of many shops in Mosman have jacked the rents, but surely they would prefer a tenant rather than a vacancy and the cost to secure a new tenant. I have never seen as many shops empty.

  • Fair point Andrew – the last person who predicted that property prices would collapse in Australia by 40 per cent was Prof. Steve Keen – we know that never came to fruition.

    If you were to ask a real estate agent in Australia (in the current environment) where he would like to be selling real estate? Anywhere around Sydney Harbour – would be the definitive answer.

    Mosman has just 4,900 houses and in recent years it has been trading annually at approximately five per cent volumes (houses). In boom markets this gets up to ten per cent. The residential delinquency rate in Mosman – currently stands as one of the lowest in Australia.

  • Ann says:

    Congrats on the coverage in the SMH P 8 today Robert

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