NSW – NOW ETERNALLY INDEBTED TO DEBT !!

NSW – NOW ETERNALLY INDEBTED TO DEBT !!

It was Fudget 2005 this week and once again it was confirmed that each year, to deliver this mathematical debacle, all that is necessary is to make old mistakes in a new way.

With Mike ‘Tax-hike’ Egan preferring a different scale these days as he learns to bait a hook, enter the new boy ‘Andy Reassure-me’ who clearly confirmed, that to manage our economy, one must continually fan the smoke and have an abundance of mirrors. Whilst many were hoping that we would see refreshing tax reform, the ‘State of Decay’ continues on its path of economic destruction as ‘Andy Reassure-me’ plunders the NSW economy into a new debt, with its ‘beg, borrow and steal’ economic platform. When the Howard Government seized the reigns of the economy in 1996, it was presented with a net debt of $96 billion and it claims that by June 30 next, this debt will be reduced to $6 billion. It is very hard to save (actually impossible) when you are heavily in debt. The landscape of our economy has changed. The projections of operating surpluses from the property industry simply can’t be met today, as the property market continues to downsize its volume trades. This is a direct result of the NSW government’s tax policies today where it has sent a clear message to investors that they are no longer encouraged to invest in bricks and mortar. Rents will now skyrocket as investors recoup the losses from the removal of the threshold (which has now been re-introduced, to reduce heartland Labor voting backlash).

Further clues were left this week, when the Real Estate Institute of NSW announced “a dramatic fall in the number of houses and unit sales over the last three months”. March figures identified that the number of houses sold, reduced by more than 27 per cent, while unit sales fell by more than 30 per cent. So, on the strength of those demoralising statistics, it was off to our faithful ‘deal book’ to see how RWM performed. By comparing February/March/April 2004 with February/March/April 2005, it is obvious that the latter 12 month period was much tougher! The total volume of residential sales ‘in dollar terms’ for houses and apartments sold by RWM was up by 56 per cent. House sales as compared to the same period, were up 38.46 per cent and apartment sales were up 42.85 per cent. So we see no need to radically alter our business model in the near future. This week, we posted a further $8,185,000 in sales which over a three week period totalled $22,835,000. Ours is clearly a different message compared to other agencies. Maybe, ‘Andy Reassure-me’ will send us a gold star for keeping the pulse of the State’s coffers in (slow) motion.

Our internal data on the market indicates that over the next few months, the house market will be extremely tight (we predict the tightest market in ten years for houses). Furthermore, we very much doubt that the overall property market will see increased volume until September at the earliest. The same can’t be said for our Apartment Division which on average is listing five new apartments per week (and selling them). One must remember however, that the Division’s marketing campaigns are eighty per cent online and twenty per cent offline. Today, when the market contracts, it immediately moves online. So for the next three months, we will have a much greater concentration of online marketing for obvious reasons. The prominent offline colour advertisements are on the decline as the house market prepares for the Winter chill. For many, this comes as a major concern as they don’t rely on online marketing. Our online traffic continues to exceed expectations and May 2005 will deliver our second highest recorded month for online traffic.

It is all about timing and recently a new company has evolved on the horizon. It is driven by three of the smartest minds in real estate today. True Real Estate Solutions is the name. Given the difficulties that many in the industry face today, one would think that more than a few agencies will be asking for its assistance in coming months. Barney McGrath, Warren Bright and Bob Walters are the names behind TRES. Have a look at their website www.tres.com.au. They launched their first newsletter this week and it is a great read about our industry. More importantly, tips on how to stay ahead in troubled times will capture the attention of more than a few agents.

With just 363 more sleeps until Fudget 2006, it will be a riveting wait. In big business today, if you make the big mistakes they disqualify you from holding a managerial position for a considerable period of time. In comparison to private enterprise, politicians receive a fat pension! There is one good thing about politics – it beats working for a living !! The real estate industry will soldier on, however casualties will be high. Governments change, however many will never recover from their over-regulated imposts. Cheers ^__^

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