Reserve Bank Governor

Reserve Bank Governor

Whilst many waited anxiously for the Reserve Bank Governor, Ian Macfarlane to sing “Oh come all ye faithful” when he announced the December cash rate targets this week, most were left a little disappointed when it was announced that they would be the same. It was exactly twelve months ago on December 5, 2001 that the Reserve Bank dropped the rates by – 0.25, the cash rate of 4.25 was then the lowest in living memory. The Bank has been busy in 2002 increasing the rate just twice in May then June to the present rate of 4.75 per cent. It is interesting to note that in 2001 we had six rate adjustments, 2000 had four, 1999 had just one as did 1998, 1997 had two and 1996 had three. Since the property market embarked on the marathon trade in 1996 we have seen nineteen adjustments to the cash rates. Some might argue that the bank is playing a game of ‘eeney meeney miney mo’. Given that the Bank does not meet in January, the next meeting will be in February, which is two weeks after the real estate season launch on January 26. My tip, a -.050 announcement.

This week I read with interest a report from the Real Estate Institute of NSW, ‘Property Focus’. Here is an extract. “The strength of the NSW property market continued during the September quarter, 2002. Total residential sales remain at historically high levels. There were 38,442 sales of houses, units and land in NSW during the September quarter 2002. This was only marginally lower than the outcome for the record breaking June quarter and higher than the 35,744 sales recorded a year ago in September 2001”. The December quarter will in all probability paint a completely different picture, the volume of property will remain much the same, and I would think that sales evidence would be the lowest for quite some time. The market overall is struggling coming to terms with drought, fires and terrorism so it will be only a matter of time before ‘ The Pied Piper’ of property, Mr Macfarlane, starts playing a new tune.

The Real Estate industry is set for massive change next year with the introduction of the legislation that so many have been calling for. We are already seeing some agents suffering from the ignominy of their actions. Last week we read in a Sunday newspaper how one agent started bidding in front of everyone in an effort to get the price up… this is a big no no. I was amazed to read that the agency principal stated that “I don’t think this poses any ethical dilemmas. I see no problem with what the agent did”. What next? It is alright to make an honest mistake by confusing my personal cheque account with my Trust Account!! An auction last week in Mosman advertised “Bidding from $1,400,000.” Those in attendance last Saturday, were amazed when the auctioneer called for an opening bid. $1,900,000 was called and then nothing happened, except that it was passed in, so the reserve must be in excess of $2,000,000. There are two things that agents can be assured of in 2002, the new legislation will put an end to this, and if you follow this practise you can expect to see your picture in a weekend tabloid. Already there are quite a few agents up before the Department of Fair Trading, and they are not there in recognition for their excellent services to the industry.

The auctioneers are also included in the new legislation so you can be assured that many agents will be back to ‘auction school’ next year. The positive part is that it will greatly improve the ethics of the industry, the sad part is that it took so long to come to fruition.

Great to see that homes are still being sold despite what you read, this week we sold 3/16 Munro Street, McMahons Point for $2,250,000 and a few other properties are dragging their chains as they near exchange. Many agents are reporting that their properties are moving finally, so the market still continues to trade. This week we took our exchange total in three weeks to nearly $22,000,000. I predicted we would do $30,000,000 before the close of business, so it is back to work we go !! Cheers and clink…^__^

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