NOW IT STARTS TO FIGURE !!

NOW IT STARTS TO FIGURE !!

Here we go again in what for some, will be a year of living dangerously. Not so if you are a vendor living in Mosman and surrounding suburbs, or if you are an agent and for a number of reasons.

Since 2002/2003 the total number of houses sold in Mosman has been on the decline with just 291 house sales recorded in 2005. Thus far the total number of recorded sales in 2006 is currently at 354 and given the “hopeless” way that property sales are recorded this would not yet include sales made in October, November and December. The total number which will not be available for a few months yet should be up there with 2002 – 392 sales and 2003 – 376 sales which was also when the market was booming. In 2002/2003 the median sale price was $1,690,000 and in 2006 it is $1,850,000. This should climb even higher to be the highest ever recorded, median sale price.

December 2006 was a great trading month as we posted seventeen sales, the last being on December 22. To date, in 2007, we have exchanged eight properties – yes the investors are back buying up the apartments to take advantage of a very over-heated rental market.

The news for those renting goes from bad to worse as like dams, it will take a significant time to replenish stock levels. On average, leases are granted for a period of twelve months and on expiry, tenants can now expect another rent review and it won’t be going down! With just nine weeks to the polls, the major political parties continue to dodge tax reductions and/or removals. The vacancy rate within a ten kilometre radius of Sydney CBD was 2.5 per cent in 2004, 2.5 per cent in 2005 and in 2006 it crashed to 1.4 per cent.

Housing Industry Association Executive Director of Housing and Economics, Mr Simon Tennent said “that it is a sobering thought when you think that on average $5.6 billion worth of rental properties were added to the stock in the six months to July 2006 yet vacancy rates fell in Sydney, Melbourne and Brisbane”. The only reason we are seeing investors buying back, is because they believe apartment prices have bottomed.

A report released this week, showed that housing affordability had fallen to at least a 22 – year low. Acting Treasurer, Peter Dutton, said that in 2005/2006 the states collected $10.8 billion in stamp duties. “This is more than double the amount collected in 2000/01 and comes despite record amounts of GST going to the states and territories,” Mr Dutton said “property taxes, such as stamp duty and land tax, now make up, on average 32.5 per cent of the total revenue raised by the states from imposed taxes. This is up from 22.6 per cent in 2000/01.”

The federal government introduced GST on the platform that it would result in reduced taxes. They are now being increased so, in fairness, it should now hold off on GST payments to the states until it is satisfied that this is happening. Then we would see some results although the states prefer to see cents not sense.

Already in 2007, we have unsolicited reports of an offer on a Mosman home for $50,000,000 and we expect to see a very strong trading market this year. We are seeing vendors withdrawing properties from early 2007 campaigns as they are frightened that once they sell, the market could kick and they could then be left out. Based on this we do expect to see a strong trading year in both houses and apartments with prices back over the 2003 price points.

In 2002 Mosman traded 725 apartments with a median price of $452,000 and in 2006 it traded just 412 (will improve slightly when November/December figures are released) with a median price of $499,500. This is a classic example of missing investors and whilst a school of thought is to replace the government in NSW, problem is, that the replacement could be just as hopeless! If the federal government can do it with water there is a very strong argument that it should follow suit with state taxes.

Cheers and we are glad to be back ^__^

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