Not just the horses are off and racing!

Not just the horses are off and racing!

Next week the nation stops for the running of the Melbourne Cup, so out comes the form guide. Nothing unusual one might say, as it is well documented that Aussies would have a bet on two flies climbing up a wall. I’m not sure if any punters will have a wager as to whether or not the Reserve Bank of Australia (RBA) will hike up the cash rate when they gather to assess the track condition of the Australian economy. On Melbourne Cup day last year, the RBA broke tradition when it reached for the whip and increased the cash rate target by +0.25 percentage points to 3.50 per cent.  When the RBA meets on Melbourne Cup Day we don’t believe the cash rate will move from the current level of 4.50 per cent.

The Australian Bureau of Statistics (ABS) released some interesting data this week that identified how the GFC pushed businesses to the wall – in the two years from June 2007 – encompassing the boom and subsequent bust – more than half a million Australian businesses shut up shop. Nationwide, there was a 73.6 per cent survival in that two years, with the number of businesses falling from 2.07 million to 1.52 million. The number of small businesses (up to 20 employees) fell 24,931 nationally in the period, with more than 80 per cent of the fall occurring during the worst of the financial crisis, in 2008 – 09. It was interesting to note that the majority of failed businesses  employed between one and four people and this is the number where the vast majority of businesses open their respective doors. What you won’t read is why these businesses actually failed which makes one wonder exactly what the Minister for Small Business actually does during the week. Obviously, not very much at all which hardly comes as any great surprise.



All eyes were this week on the Consumer Price Index (CPI) figures which came in at 0.7 per cent for the three months to September 30 – slightly up from the June 30 figure of 0.6 per cent according to the ABS. What is clear is that inflation is being driven by rising government charges and not increased domestic demand. As Macquarie Economics Research intelligently pointed out “Indeed, business surveys point to a very subdued inflation in the retail sector, partly due to cautious consumer behaviour. This has also been complemented by Australia’s major supermarket chains, which last week reported flat to negative price growth in the food segment. The point is, if all households are facing rising electricity and gas costs, then this in itself will be a dampener on discretionary consumer spending. And this should lessen – rather than boost – the case for further monetary policy tightening.”

26-10-2010 11-26-24 AM

Surprise, surprise, as Fort Crumble – NSW government, has moved to rein in surging electricity prices in a bid to put brakes on runaway electricity prices. Household power prices have already risen by up to 13 per cent this year and within three years, could go up by 42 per cent under power company increments approved by federal and state governments. One of my favourite graphs shows the price changes – so here it is for the year to September where I draw your attention to electricity, health and housing which just so happen to come under the jurisdiction of our elected politicians.

27-10-2010 4-06-25 PM

For the year to March 2010

28-04-2010 2-57-48 PM

BER projects fail to boost construction which comes as little surprise because construction in schools, bears absolutely no resemblance to housing. Chronic rental shortage a fact of life, says new study as metro areas in NSW face a permanent, chronic shortage of available rental homes. The Real Estate Institute of NSW revealed that the residential vacancy rate fell to its lowest level over the past twelve months, falling to 1.2 per cent. Bear in mind that one third rent, one third own with a mortgage and the final third own without a mortgage. The general rule of thumb a few years back, was 2.5 per cent (that was without population increases) so today it should be over 3.00 per cent. It won’t be that far off when the Sydney vacancy rate falls below 1.00 per cent and that will deliver catastrophic  results. Sydney take note – infrastructure is not a dirty word “The irony will not be lost on anyone who lives here. Because when it comes to infrastructure, Sydney is a town that nodded off for a rest on its laurels and ended up in a 30 – year coma.”

26-10-2010 11-29-14 AM

“The nation’s biggest town is spending less on infrastructure than any other Australian capital except Darwin. Compared with major cities in Europe, Sydneysiders know they have been left behind in public transport, high – density residential planning and urban development”. Hence, the funniest story of the week harbour underwater rail option to combat gridlock which is nothing more than an election gimmick given Fort Crumble is paranoid about losing its  AAA credit rating. The last time Fort Crumble honestly embarked on genuine infrastructure was back in 1995 when it won the bid to host the Sydney Olympic Games in 2000. “NSW governments have lost their appetite for major infrastructure construction. The result for Sydney in 2020 is a sub – par rail system, gridlocked weekday traffic, a CBD that struggles to stay relevant at weekends and one of the worst rates of housing affordability in the OECD. Quite simply, Sydney is a city that has lost its ambition. Like a naturally gifted athlete who cannot be bothered to train hard, Sydney runs the risk of being left behind by hungry competitors who enjoy none of its inherent advantages.”

13-10-2010 8-48-47 PM

Bugger! Reserve Bank earnings slump to 30 – year low – wow an Australian bank not making billions. The bank blamed the loss of earnings on a slump in foreign interest rates and the surging Australian dollar. Its annual statement, shows underlying earnings last financial year were $866 million which were that low back in 1983. So this year, Fort Fumble won’t be receiving a dividend which is bummer, as  last year it collected a respectable $6 billion windfall.

This week we released our iPad website so whether you are using your mobile phone, iPad or computer, when you type in you will automatically be directed to your preferred application of use. Another real estate first, thanks to our developers Agentpoint. Infrastructure in real estate is imperative also and no other Mosman real estate agency offers its clients this unique online option of communication and information.

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

7 Responses to “Not just the horses are off and racing!”

  • The talented athlete who doesn’t train hard enough is a great metaphor for Sydney.

    The comparison with Melbourne is staggering. Melbourne got its act together under Jeff Kennett, and even their Labor politicians haven’t done a bad job since. But we always seem to be scraping the bottom of the barrel with state politicians in NSW.

    One of the most beautiful cities in the world, but what a shame we can’t live up to our potential.

  • JB says:

    Sorry Robert but I don’t agree with you on your call for interest rates to remain at 4.50% next week. As the RBA have just stated, not moving them higher in October was a very close call, and given the latest employment numbers were once again much stronger than expected, and the fact that CPI is a backward looking number, I’m fairly confident they will want to stay ahead of the curve to keep a lid on the inevitable rise in inflationary pressure that having close to full employment brings. Generally they don’t like to surprise the markets by moving in December and January is a non meeting month, meaning they would have to wait til next February before another hike. Given their recent bullish comments on the economy this will be too long a period for their comfort, in my humble opinion.

  • Thanks – Eleanor, the Kennett government is a great analogy. It would appear that Infrastructure Australia has denied NSW any pocket money simply because they know that it wont represent value for money with very little return on the investment. Having said that it may be a totally different situation after the state election next March.

    JB – you are 100 per cent correct. Maybe the RBA will resist and drop a +0.50 increase in December. What a twelve months and who would have predicted the Aussie $ to be at parity?

    I will predict that the Sydney vacancy rate will fall below 1.00 per cent next year which will have horrendous ramifications on our collective housing markets given rents are well ahead of wages. Throw in rising utilities and it does not paint a very nice picture. We will see more people moving back home to live with their parents.

  • Ann says:

    I hear Solar Companies were open until Midnight on Wednesday taking orders and they were thumped with new work

  • The subsidies have been removed so Solar is fast looking like the Home Insulation debacle given very few households will be interested in now paying the full whack to have solar power installed.

    Policies on the run and shooting from the hip.

  • Gordon says:

    Be fair, Robert, the harbour train tunnel has only been announced three times so far, so it should be good for a least one more run round the block before it gets “deferred” to 2027.

    Meanwhile Fort Crumbled continues down the gurgler, with the puppet premier insisting everything is shipshape and on course. Of course it is, though it does seem that most of the rats have announced their departure for elsewhere. Anywhere.

    Meanwhile the public service unions, who apparently are the real government, are stepping up their campaign for sweetheart deals that will lock in the bloat for the next four years, to the time when they hope that their Sussex St government will be returned to power.

  • Ann says:

    Cant wait until Frank announces his departure from all form of politics

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