Property debate is barking up the wrong tree

Property debate is barking up the wrong tree

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It is only when politicians enter the property debate that we get a clear position on just how very little they actually know about this topic. Whilst encouraging that they want to participate in this highly contentious debate one would expect that they also may do some research. The real reason why they are now jumping (or falling) into this debate is that internal polling has clearly identified this as becoming a significant electoral issue.

Yes, one of the remedies is supply, as the politicians have identified, although they are comprehensively wrong on this issue. The real reason as to why we are witnessing record property prices is because we have a major fail with the supply of transport infrastructure.

Sydney is bursting at the seams simply due to the inability of politicians to recognise the all-important transition from the Sydney we know into the creation of the Greater Sydney that we need to know. What is happening today, is the approvals for new housing across Australia is booming with no real announcements to meet these approvals with transport infrastructure reforms.

As I have written on countless occasions the only way to combat this urban sprawl is to connect Sydney with Wollongong, the southern highlands, the Hunter Valley, Gosford and Newcastle. That can only be achieved with very fast trains that will enable commuters to get to Sydney within a 30-minute time frame. We are not talking rocket science here as most advanced countries have already addressed these issues.

construction-sydney-aerial-photography

SYDNEY AERIAL PHOTOGRAPHY

It is all very well for the treasurer Scott Morrison to wield his big treasury stick, although I did note in his recent running commentaries that he failed to mention addressing new construction off – the – plan selling ratios. Yes, the ratio where 100 per cent of all new developments can be sold directly offshore. Why is this ratio not returned to the December 2008 ratio of 50 per cent only sales to off – shore buyers? Surely such an initiative would slow down demand.

Eighteen months ago, I started ringing the alarm bells that this newly created investor market of new apartments would only have one ending – a crash. Since then we have seen our banks tighten and then block all loans to offshore buyers who now look like they will walk away from these contracts.

The Australian Taxation Office has entered this debate by announcing that “Under subsections 15(4) and (5) of the Foreign Acquisitions and Takeovers Act 1975, a dwelling is considered to be sold when an agreement becomes binding.” Meaning “If a property is on sold after the contract becomes binding, and prior to settlement, then this is considered to be an established dwelling.”

Developers are now up in arms over this announcement with many offshore buyers trying to flip their existing contracts to other buyers.

We know that the clear majority of these sales came from offshore buyers so will the treasurer intervene in this? I seriously doubt it as his fingerprints are all over these offshore sales as he is the sole person who regulates the offshore buyers legislation. Although to soften the landing he could reduce the selling ratio back to 50 per cent where most (except developers) would argue that this requires urgent attention.

Fascinating to see this week discussions regarding stamp duty being abolished in NSW with broad – based land taxes to be introduced, in an attempt (as they say) to relieve chronic pressures on the market. What another load of rubbish – we all know that the real reason is that the NSW government is now recognising what I have been forecasting for years – a significant decline in stamp duty revenues. Data from the NSW Office of State Review identified that for July, August and September 2016 both the number of land related transactions and total stamp duty collected from those transactions is less than for that period last financial year. I’m surprised that the NSW government hasn’t imposed a renovation tax for all those households who opted to renovate over paying stamp duty on their replacement property. The NSW government is being punished by households who simply refuse to pay exorbitant property purchase fines (stamp duty).

In the meantime, Sydney house prices are on the upward move again where Sydney’s median house price now sits at a record $1,068,303 according to the September quarter Domain Group data. I am most sure that this will climb even higher over the December quarter. To identify just how much prices have climbed in 2003 the Sydney median house sat at $454,250.

There is no road to recovery unless the federal and state governments formulate a transport blueprint for the new Greater Sydney. The only problem being is that our elected politicians can’t see the forest for the trees – which explains why they have not the slightest idea on where to start. To remedy the property markets high demand will require tens of billions of dollars not to mention that it would take some considerable time in planning to make sure they get it right.

MOSMAN – 2088

Number of houses on the market this time last year – 70
Number of houses on the market last week – 59
Number of houses on the market this week – 63
Number of apartments on the market this time last year – 63
Number of apartments on the market last week – 46
Number of apartments on the market this week – 47

CREMORNE – 2090

Number of houses on the market this time last year – 14
Number of houses on the market last week – 9
Number of houses on the market this week – 9
Number of apartments on the market this time last year – 16
Number of apartments on the market last week – 16
Number of apartments on the market this week – 23

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 8
Number of houses on the market last week – 9
Number of houses on the market this week – 8
Number of apartments on the market this time last year – 31
Number of apartments on the market last week – 24
Number of apartments on the market this week – 23

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.

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Source: pricefinder

2 Responses to “Property debate is barking up the wrong tree”

  • Brian Wilder says:

    Excellent analysis Robert in my opinion. This is just another of many areas where our Govts, both Federal and State, just don’t ‘get it’. If they don’t understand the problem, how will they come up with a solution that works ?

  • Gordon says:

    Yes, Brian, no doubt Robert has hit the nail well, as he always does.
    Though there’s a no-doubt-scurrilous rumour circulating that politicians do mostly ‘get it’ on housing – but are too complacent about the present system, and susceptible to lobbyists, to make the changes vitally needed.

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