Property Prices Are Determined By Influence

Property Prices Are Determined By Influence

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This week Louis Christopher from SQM Research declared “Sydney though is turning into a beast unto itself. We have a strong conviction that the ABS will record 15% to 20% house price rises next year for that city. Such a rise will create a large dilemma for the Reserve Bank of Australia (RBA), especially if the national economy is running below average growth.”

What a bold announcement given he left out what will influence this price proliferation? Even more remarkable is that Sydney consists of approximately 650 suburbs – so what a huge call! This then prompted the dialogue to move to the words “boom and bubble.” Personally, I believe the word bubble is best left to describing champagne given the Sydney property market has been defying analysts for decades. Over the global financial crisis Mosman property prices fell up to 30 per cent – smaller at the lower end and much greater at the top – end. So projected increases of 15 to 20 per cent would realign the market back to where it was in 2007.

If you really want to look when Sydney had its last (what I call property boom) cast your mind back to 1988 – when the bubbles were really popping as Australia celebrated its Bicentenary – in that case under the influence. Prices rocketed by 75 per cent to 100 per cent which then led to the “recession we had to have”. When I look back to 1988 I can identify just five agents in Mosman who were selling back then of which Steve and I, nearly make up half. The cash rate back in 1988 varied from 13.50 per cent to 15.00 per cent. In 2004, we had another buoyant market with the cash rate remaining stable at 7.50 per cent and again in 2007 where the cash rate bounced from 6.25 per cent to 6.75 per cent. One would not need to be a genius to see that with a cash rate of 2.50 per cent eventually (despite ongoing conflicting global influences) we will see a stronger return back to bricks and mortar.

BondiJunction---SydneyAerialPhotogarphy

SYDNEY AERIAL PHOTOGRAPHY 

BUY PRINT

Alan Kohler from Business Spectator wrote this week A housing bubble? Bewdy! “Investing in property is a no – brainer at the moment. Prices have bottomed, auction clearance rates are on fire, especially in Sydney, and you can get a fixed rate of 4.8 per cent with 100 per cent gearing, 70 per cent in your super fund.” The dominant players in the current market are definitely the investors with an insatiable diet for apartments.

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This week marked the Fifth anniversary of The day Lehman Brothers hit the canvas and stayed down which destroyed the modern theory and influence that banks can’t go broke. Of greater influence 5 Years Later, We’ve Learned Nothing From The Financial Crisis which then fuels speculation – why the financial crisis could return.

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When we look at what’s influencing the Mosman top – end market our RWM Research can reveal that over the last twelve months there have been twenty sales over $5.000 million. Of those twenty sales Chinese buyers have acquired 40 per cent and growing. Richardson & Wrench Mosman (RWM) posted 7 of the 20 sales including the top three sales. The Chinese buyers purchased five properties in Beauty Point and three in Balmoral.

A strong week’s activity for sales in Mosman with house volumes still down 33 per cent on this time last year and apartments down 40 per cent. If you are looking by what barometer to determine the market look no further than these statistics.

MOSMAN – 2088

• Number of houses on the market this time 2012 – 120
• Number of houses on the market last week – 77
.Number of houses on the market this week – 81
• Number of apartments on the market this time 2012 – 92
• Number of apartments on the market last week – 56
.Number of apartments on the market this week – 55

CREMORNE – 2090

• Number of houses on the market this time 2012 – 17
• Number of houses on the market last week – 7
.Number of houses on the market this week – 4
• Number of apartments on the market this time 2012 – 18
• Number of apartments on the market last week – 14
.Number of apartments on the market this week – 14

NEUTRAL BAY – 2089

• Number of houses on the market this time 2012 – 17
• Number of houses on the market last week – 10
.Number of houses on the market this week – 7
• Number of apartments on the market this time 2012 – 45
• Number of apartments on the market last week – 28
. Number of apartments on the market this week – 33

Source: Australian Property Monitors

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
Click Here

For this week’s opens for inspection
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The RBA stepped into the ‘bubble and boom” debate this week RBA deflates talk of housing bubble although it was also quick to point out RBA issues warning on cheap credit and Reserve worried about SMSF property gearing given investors are by far the biggest players in the current property run. Just as interesting was momentum building for home loan limits so it would be fair to say that this time around our regulators have their respective eyes – wide open.

What I would add is that the vast majority who keep pushing the “bubble and boom” are more than likely under the influence.

Cheers ^__^

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