Property Is Now Properly Positioned!

Property Is Now Properly Positioned!

Observers of financial markets may have been fascinated by the mayhem over the past week only to see the ASX200 rebound above the 4100 level. However, it has come at a cost. Investors have moved cash from the ‘shock’ market into bank deposits, where twenty nine banks have slashed term deposit rates since our last edition. Deposit rates fall amid global jitters where Australian Prudential Regulation Authority data showed that banks at the end of June held just under $500 billion of cash deposits which is up seven percent from a year ago. That was June, so one would well imagine that this figure is now much higher given the events of the past few weeks.

If history is any indication, this means that real estate markets can now expect a consumer rejuvenation. This is already happening in Mosman real estate (albeit in prices up to $5,000,000) where we can now say with confidence, that prices have bottomed. Yes, I have the statistics to prove it.

Despite what is happening in the US and Europe if things go bad, we have wriggle room which explains why the global turmoil led to rates pause: RBA. The movement by investors back into bank deposits is all about maintaining a tight ship the best strategy to survive market mayhem so don’t bet your house on a rate cut. The current mayhem no repeat of global crisis given Australian banks are not faced with a liquidity freeze, considering that they are now drowning in a consumer and business saving tsunami. The biggest challenge facing the Reserve Bank of Australia (RBA) is to keep consumers spending where more importantly we must be careful not to save ourselves into a recession.

BUY PRINT

The latest survey by Boston Consulting revealed that one in two Australians plan to reduce discretionary spending over the next twelve months. Aussie housing market outperforms shares, with significantly less risk where we observed no better example of this than the “shock market” last week which led investors back to the safe sanctuary of bank deposits. A natural response when investors seek to protect their nest eggs in times of uncertainty.

As a result I spent some time in our RWM Research Department this week where we extrapolated sales data for Mosman house/semi house sales from 2001 to 2011.  Our findings were fascinating.

Source: Domain Property Data

From 2001 to 2011 not once has the Mosman house/semi adjusted clearance rate for auctions broken 50 per cent.

  • 2001 – 229 auctioned, 121 sold with an adjusted clearance rate of 47%
  • 2002 – 201 auctioned, 104 sold with an adjusted clearance rate of 46%
  • 2003 – 204 auctioned, 80 sold with an adjusted clearance rate of 34%
  • 2004 – 122 auctioned, 30 sold with an adjusted clearance rate of 18%
  • 2005 – 137 auctioned, 45 sold with an adjusted clearance rate of 26%
  • 2006 – 140 auctioned, 51 sold with an adjusted clearance rate of 27%
  • 2007 – 126 auctioned, 63 sold with an adjusted clearance rate of 39%
  • 2008 – 122 auctioned, 35 sold with an adjusted clearance rate of 19%
  • 2009 – 73 auctioned, 34 sold with an adjusted clearance rate of 21%
  • 2010 – 105 auctioned, 37 sold with an adjusted clearance rate of 26%
  • 2011 – 69 auctioned, 24 sold with an adjusted clearance rate of 24%

Which brings me to why I believe that the Mosman house/semi market to $5,000,000 has bottomed and its now capital appreciation time. In 2011 Mosman has recorded 148 house/semi sales thus far – with 98 sales recorded under $5,000,000, 10 sales above $5,000,000 and another 40 sales yet to record a sale price. The highest price recorded thus far in 2011 is $15,250,000 and bear in mind that only 10 properties sold this year above $5,000,000. So let’s look at what RWM Research Department found is happening to average prices from 2001 to 2011 for houses/semis.

  • 2001 – Average price $1,724,390 with a total value sold $738,039,118
  • 2002 – Problems with the data as the average price $7,339,508?
  • 2003 – Average price $2,229,044 with a total value sold $818,059,432
  • 2004 – Average price $2,107,566 with a total value sold $655,453,257
  • 2005 – Average price $2,332,095 with a total value sold $699,628,500
  • 2006 – Average price $2,509,087 with a total value sold $1,003,635,130
  • 2007 – Average price $2,823,931 with a total value sold $1,169,107,720
  • 2008 – Average price $2,721,844 with a total value sold $724,010,612
  • 2009 – Average price $2,582,570 with a total value sold $813,509,751
  • 2010 – Average price $2,740,500 with a total value sold $920,808,149
  • 2011 – Average price $2,865,692 with a total value sold $298,032,000

More on the home front Mosmanites playing property pick a box with caution and Mosman Bridgepoint shopping centre sells to Chinese investor.

MOSMAN – 2088

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• Number of houses on the market July 13 – 88

• Number of houses on the market this week – 103

• Number of apartments on the market July 13 – 95

• Number of apartments on the market this week – 98

CREMORNE – 2090

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• Number of houses on the market July 13 – 15

• Number of houses on the market this week – 17

• Number of apartments on the market July 13 – 25

• Number of apartments on the market this week – 26

NEUTRAL BAY – 2089

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• Number of houses on the market July 13 – 6

• Number of houses on the market this week – 9

• Number of apartments on the market July 13 – 65

• Number of apartments on the market this week – 70

On July 13, Mosman recorded its lowest number of available houses when that week it recorded just 80 houses this week it broke the 100 mark for the first time since June 16 when it recorded 104 so we can expect to see available volumes for house now increase through to Christmas. Bearing in mind that Mosman has one of the lowest delinquency rates in Australia it should come as very little surprise that vendors decided that their respective front gates will remain shut until they see anecdotal evidence that property prices were well on the road to recovery. I must admit that they have played a very smart hand indeed.

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

Cheers ^__^

11 Responses to “Property Is Now Properly Positioned!”

  • Hotly Spiced says:

    I spoke to Andrew Blaxland from your office earlier this week. He said he has sold 3 properties this month that were all on the market for only about a week. I’d agree with you that we would have to have seen the bottom.

  • Julia!! says:

    Dear Robert,

    Thanks for taking a week off (politics) and not highlighting my performance or that of my colleagues, and one in particular at that!!

  • Ann says:

    Wow, interesting how poor the auction rates are for houses and semi’s over 11 years. The Agents who spruik them must be red faced.

  • I thought this week’s photo by Tim Mooney is simply outstanding – never seen Sydney from this angle before. The man is a genius!

  • Tim Mooney says:

    Well thank you Robert. I took this on Tuesday morning racing out to do a waterfront in the right morning halh-light (that’s the only clue you’ll get). I haven’t seen this set of conditions before. Almost surreal. Maybe the scene for part of the next Mad Max movie (hint!).

  • Tim Mooney says:

    That’s spelt ‘half’-light

  • Ann says:

    Yes great shot Tim.

  • Ann says:

    There are a lot of shops in the area that have sold to Chinese Investors, including the building on Corner of Raglan and Military Road (Portmans – who are moving out!!) and a line of 5 shops across the road near ANZ Bank.

    Perhaps Robert, we need an analysis of this? I know its not residential, but still relevant to area.

    Is it the 88 postcode they like?

  • I spoke with a few of the local commercial agents and they advised that Chinese ownership is much stronger in Cremorne and Neutral Bay. They consider Mosman commercial prices too expensive.

    So there you have it – absolutely nothing in the 88 postcode.

  • Ann says:

    Aparently they are jacking rents and shops are closing. Giallo closed after 30 years in Mosman (in two locations), Postmans are going, Seafood at Mosman gone, plus a whole lot of shops opposite Council.

    They purchased the KFC at Hurstville on a 4.2% yield with a 20 year lease to KFC. Scratching my head on that one.

  • We will never know just how many shops are under reduced weekly rents as the commercial agents keep that well and truly hidden. Times are definitely changing – like it or not.

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