Setting the record straight on Mosman house prices (and others too)!

Setting the record straight on Mosman house prices (and others too)!

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There is no doubting the volatility of home prices and this became more evident when the Reserve Bank of Australia (RBA) decided not to increase the official cash rate. The new money in our property markets is under serious threat. So too, are the financial institutions which can ill afford a reverse in property prices. These very markets were in growth mode during the global financial crisis when the established (old money) property markets went into actual decline. The RBA is now faced with a real estate conundrum as is the Australian Bureau of Statistics (ABS) with reporting accuracy.

Christopher Joye wrote in Business Spectator this week “ABS overstates house price growth” – “the ABS’s median price numbers are being artificially inflated by the fading of first timers, who are being replaced by up graders buying more expensive homes.” Which is exactly what happened in Mosman last year as the market awoke from the GFC (from June onwards) as did the majority of top-end property markets. Joye wrote “While the ABS results will no doubt trigger the inevitable media excitement, the hard empirical fact is that Australian homes have been recording consistent capital growth of about 2 – 3 per cent per quarter since the start of 2009. It is comforting to note, however, that Australian house price growth has not outpaced the growth in household disposable incomes since around 2002.”

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The building in the bottom left hand corner is the clue where Sydney Ports are located – a magnificent heritage building on Sydney Harbour identifying our rich history

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Tim Mooney Photography

Understandably the media ran amok (trying to get those rivers of gold running again) with the ABS figures – Australian house price index rose 5.6 per cent in the December quarter and the September quarter was upwardly revised to 4.4 per cent. ABS figures in the year to December identified that the house price index rose 13.6 per cent. The only problem is, that ABS figures are not considered as accurate as the other data aggregators.

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So let’s take a look at Australian Property Monitors – Domain Property Data (our preferred data aggregator given that they list the actual property addresses for all the properties contained within this report) revealed for Mosman house sales in 2009 – 2008 – 2007 a comparative analysis where you can be the judge.

    MOSMAN PROPERTIES SOLD REPORT – (House and Semi only)

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    1 JANUARY 2009 to 1 DECEMBER 2009

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  • Total number offered – 334
  • Total number of sales recorded – 303. (31 still unrecorded)
  • Total Value Sold – $668,966,377
  • Public Auction – 62 properties to a value of $94,857,000
  • Private Treaty – 241 properties to a value of $574,109,377
  • Median Price – $2,000,000
  • Average Price – $2,397,728
  • Highest Sale $13,200,000 (RWM)
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    MOSMAN PROPERTIES SOLD REPORT – (House and Semi only)

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    1 JANUARY 2008 to 31 DECEMBER 2008

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  • Total number offered – 360
  • Total number of sales recorded – 287
  • Total Value Sold – $774,865,612
  • Public Auction – 65 properties to a value of $126,645,250
  • Private Treaty – 222 properties to a value of $648,220,362
  • Median Price – $2,275,000
  • Average Price – $2,738,041
  • Highest Sale $14,700,000 (RWM)
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    MOSMAN PROPERTIES SOLD REPORT – (House and Semi only)

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    1 JANUARY 2007 to 31 DECEMBER 2007

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  • Total number offered – 456
  • Total number of sales recorded – 412
  • Total Value Sold – $1,182,372,720
  • Public Auction – 132 properties to a value of $292,042,000
  • Private Treaty – 280 properties to a value of $890,330,720
  • Median Price – $2,300,000
  • Average Price – $2,869,836
  • Highest Sale $22,500,000 (new record price)

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Next week Cremorne House and Semi sales

SUMMARY MOSMAN HOUSE PRICES FROM 2007 to 2009

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It is interesting to extrapolate data post GFC. In 2007 the number of houses offered to the marketplace was 456 and in 2008 the number offered, fell -21 per cent to 360. In 2009, we witnessed market consolidation when 334 houses were offered at a – 7 per cent decline. One must not forget that in 2008 and 2009, scuttlebutt had property voyeurs believing that more than half the houses in Mosman were available for sale (this would equate to approximately 2,500 homes as against the recorded 360 and 334 respectively). Thank goodness one Mosman agency has the technology and desire to set the record straight.

Sold properties in 2007 came in at 412 and dropped -30 per cent in 2008 to 287 then in latter 2009 we saw an interesting turnaround where sales increased to 303 – a +5.5 per cent increase. The same patterns can be observed in ‘total value sold’ statistics when the total in 2007 was $1,182,372,720. This fell -34.5 per cent in 2008 to record $774,865,612. In 2009 we started to see the recovery when total sales were $668,966,377 (this represents a -14 per cent decline). We expect these figures to move back into the black in 2010.

THE AUCTION v PRIVATE TREATY DEBATE IN MOSMAN

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This is amazing data and before we move further, I must advise that every suburb reports different rates of success. The Eastern Suburbs have very strong auction markets and Mosman is one of the worst performing auction markets in Sydney.

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    Mosman – 2007

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  • Total sales – 412
  • Auction – 132 (32 per cent)
  • Private Treaty – 280 (68 per cent)
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    Mosman – 2008

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  • Total sales – 287
  • Auction – 65 (23 per cent)
  • Private Treaty – 222 (77 per cent)
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    Mosman – 2009

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  • Total sales – 303
  • Auction – 62 (20 per cent)
  • Private Treaty – 241 (80 per cent)

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Makes you wonder why so many Mosman agents keep recommending auction? I know that regular blogger Patricia will find these statistics of great interest.

So where to in 2010 and what will happen to Mosman house prices? I asked Steve Patrick, one of the most respected agents in Mosman what would happen and here is his response. “After a twenty (20) per cent fall in our market from the highs of 2007 to the end of 2009 (actual registered sales on several properties substantiate this figure), I believe the market bounced back somewhat in the order of five (5) to ten (10) per cent.) The last few months of 2009 confirmed this trend where house prices have now stabilised.

There is renewed confidence in the local property markets from buyers, albeit with caution, where I see our market moving steadily over the next six months with small (but more importantly), steady upward growth. Supply and demand will be the key factor going forward as it always has been. Rarely in my past twenty plus years working in Mosman, have I seen an over -supply, even when the GFC was at its historic peak.”

So there you have it! The Mosman online real estate bible has spoken. This weekend marks our first 2010 experience of buyer reaction/response at our upcoming open houses.

We trust that the data contained within this edition of Virtual Realty News will greatly assist you with your market determination. Rest assured, you will read it first with only one Mosman Agency!

See you on our blog where the Mosman debate continues.

Cheers ^__^

For this week’s recorded Balmoral real estate, Mosman real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate and Cammeray real estate sales www.rwm.com.au/news/

14 Responses to “Setting the record straight on Mosman house prices (and others too)!”

  • Mark says:

    Hi Robert,

    Very interesting analysis, great to see the market has stabilised and that albeit average value are only slighly down over the three full years.

    Best regards

    Mark

  • Patricia says:

    Happy 2010, Robert…You lured me in with the bait! I nodded my head in agreement with you about the auction vs private treaty debate in Mosman. The Eastern Suburbs collectively (as you note is a strong auction market) is a larger geographic/property market than Mosman and also has a large proportion of units which, by virtue of their lower price-point, induce a level of buyer competition suited to auctions. I note and scoff at the area agents who put Mosman family homes to auction – no-one wants to buy a $2+million house standing in a backyard on a hot Saturday afternoon, or waiting (with frustration and annoyance) at an off-site auction venue for an opening bid to be called for House #12. Both scenarios are demeaning and a waste of time for the prospective buyers. More important, it’s an agent’s JOB to estimate and promote the value of a property. If an agent does not recommend a method of sale that requires skilled application of their market knowledge and strong negotiating skills, and merely recommends a method where all they do is turn up with the keys to unlock the property two times per week, then vendors should keep looking until they find one.

  • Well you on the ball again Robert interesting to note when you look at the Mosman Daily this week how many agents are pushing for Auction with a success rate of 20% maybe they like wasting their clients hard earned money on pointless advertising.

  • Happy New Year to you too Patricia – always great to read your thoughts and as usual you raise so great points. I really like your last point about who is the actual salesperson. Last year we (RWM) did nine auctions so that sends out a clue although when I researching this article I was amazed at just how low auction success results in Mosman really are given – I knew they were bad.

    Cheers Mark and Peter – I have plenty more up my sleeve in 2010 🙂

  • Patricia says:

    Robert…About your point pondering who the actual salesperson is for many auction properties – readers of Domain last year would have seen ‘W’ and ‘PI’ as the majority results for Mosman auctions, so in fact there was no salesperson!

    RWM’s website and advertising, for a long time, demonstrate sales methods that are best-suited to the property or vendor’s circumstances, whereas several of your local competitors (two immediately spring to mind) funnel all to auction, often with ‘W’ and ‘PI’ results…and seemingly never ‘SP’.

  • Martyn says:

    Robert
    You’ve confused me with your numbers.
    In the 2009 report you say that 303 properties raised $668.97m.
    Surely that’s an average of $2,207,808, not the $2,397,728 you state.
    What did I miss?
    And how was such an even median of $2,000,000 calculated?

    Martyn

  • Keiran says:

    Any thoughts on the recently released Demographia International Housing
    Affordability Survey: 2010 stating that Australia has the most overvalued house prices in the world with 9 times gross annual incomes and Sydney being the second most expensive city in the world?

  • Nicholas says:

    Hi Keiran,

    Its all relative. Having been fortunate enough to see most major cities in the World, there is a perfect reason why Sydney is popular and thus expensive.

    And for Mosman. Tell me a better suburb anywhere in the World, with what Mosman has to offer.

  • Martyn, we exported the data from Australian Property Monitors so I too have no idea how they calculate this data. I did the numbers again and your calculations are correct. As they say – “never let the facts get in the way of a good story.”

  • Keiran, Demographia have recently been subjected to a fair amount of criticism pertaining to the methodology applied when arriving at some of these figures. I question the word overvalued given the market is prepared to meet these prices. What many forget is that currently Australia is just one of a few countries that doesn’t tax the principal place of residence so a school of thought exists that this is a contributing factor. I agree it makes for interesting debate.

  • Patricia, “withdrawn” was the dominant word with public auctions in 2009 yet (some) agents kept suggesting public auction! We shall watch the 2010 Mosman clearance rates with much interest where we expect the “W”, “NB” and “PI” to again be popular given that one of the major issues is overvaluing homes from the beginning.

    I also predict that the hi-tech online real estate agencies in 2010 will lead the markets as vendors/purchasers/observers all know that this is the future for our industry. Agents/agencies spare the bare minimum on online simply because it has to come out of their pocket 🙂

  • […] Bay house sales comparison for 2009 and 2008. For this week’s new subscribers, here is the Mosman and Cremorne sales data. It’s not exclusive.  All agents/agencies have access, but they don’t […]

  • cliff says:

    The next real question is rates – after every financial/sovereign bailout in economic history we see a significant rise in interest rates…forecasts are for only a few more rate rises this year….but what if we see 7 and a few more in the curve by December 2010….will it matter for Mosman….how many houses have any gearing at all ?? & it has been interesting to note the amount of recent sales being immediately listed on rental sites……investors warned off the share market after their GFC margin call experience and believe that they can’t get margin called on property…..hmmmm….things that make you go hmmmmm. DJ Cliff

  • DJ – we are writing about this very topic in tomorrows edition. You are 100 % correct in that it will be a most interesting property market in 2010. Thanks

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