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We are all well acquainted with the phrase ‘policy on the run’ and in 2011,we are already seeing politicians on the run! Has all this spin left our pollies dizzy?

Welcome to our first edition of Virtual Realty News for 2011 where we start the year with a levy, a tax or a necessary evil and what does this say for future natural disasters if this sets a precedent? Will Australians be as generous with their donations of money, clothes, furniture and time? Of course they will. It’s just that immediate fund raising efforts will be severely affected. Is this announcement a smart initiative or just plain dumb? The levy is expected to raise $1.8 billion, but in all probability, the fund raising events that are and have been organised across the country, would easily surpass this figure. Australians love to give – just not to incompetent governments. If there is a shortfall then bring in yet another tax (such an ugly word.)

Gillard’s spinning in a straightjacket – “to put the economic significance of the $1.8 billion that will be raised by the “one – off” levy in perspective, it represents less than 0.5 per cent of the government’s $362 billion of budgeted spending for this year.” Another public spending programme that goes pear shaped, with nobody in the government being held to account. Building projects are not exactly a strong point at Fort Fumble BER bungle is uncool for school. It has now been revealed that eight out of ten new classrooms (1284 out of 1639) built in NSW have no air-conditioning. A smart initiative or just plain dumb?

BUY PRINT

We celebrated Australia Day this week and surprise surprise, Tim Mooney coaxed the seaweed at Castle Rock, Clontarf to join in the celebrations.

Julia Gillard backs FOI exemption for taxpayer – funded NBN to avoid public scrutiny. I can think of 36 billion reasons why this roll out should not be exempt. A smart initiative or just plain dumb?

Moving on to Fort Crumble which is now on life support and given less than two months to live, the voter support system has been turned off. Not exactly a “say it loud, say it proud” endorsement Deputy Premier leaves ‘Labor’ off campaign leaflet given it is too late to sack Premier Kristina Keneally. The 7.30 Report this week ran its views on the Power struggle. “The NSW Labor Government’s fire sale of the state’s electricity assets may prove to be New South Wales Labor’s most diabolical scandal yet – just two months before it heads towards electoral abyss after 16 years in government.”

In a nutshell – Andrew Clennell, State Political Editor, Daily Telegraph, “It’s burning the villages on the way out. It’s a scorched earth policy. They didn’t want Barry O’Farrell to come in a position where he could sell the electricity assets for $15 billion; then have all that money to spend to keep himself in office for 12 years. They wanted to trash it. I mean, they deny it absolutely, but the NSW Labor right machine is the most ruthless political machine in the country without a doubt.” Now that is just plain dumb. This election can’t come soon enough and explains why the Deputy Premier (wife of federal infrastructure minister) left all mention of Labor off her pamphlets.

Now to property – interest rate hikes are on the way – it’s just a matter of when. The Reserve Bank of Australia (RBA) won’t do anything until the end of the June quarter at the very earliest, despite worsening business conditions.

Inflation outlook surges and it will only get worse given the flooding in Queensland where food prices will jump immediately inflation fears at highest level in 2.5 years. Petrol prices are already on the way up and predicted to climb above $100.00 a barrel in the first quarter of 2011 and $120.00 in the second quarter as millions fear cost of living increases.

Which is why I agree that property prices won’t be doing much in 2011 and this not really not a bad thing. Already in Mosman it appears that we will see modest offerings and that is unlikely to change throughout the year. It appears that households are consolidating and economy’s growth prospects dim. To put this into perspective Sydney prices higher than NY, London and more importantly Aussies turn their backs on credit cards where in the December quarter of 2010, credit card debt was slashed 14 per cent, from 2.1 per cent to 1.9 per cent.

Mosman house prices will be competitive given fewer offerings (at the start anyway). Here is our review of Mosman house/semi sales for 2008, 2009 and 2010.

Total Value Sold

• 2008 – $774,865,612
• 2009 – $668,966,377
• 2010 – $777,865,158*

*Still being compiled

Total Number Sold

• 2008 – 360
• 2009 – 334
• 2010 – 334*

*Still being compiled

Median Mosman Price

• 2008 – $2,275,000
• 2009 – $2,000,000
• 2010 – $2,100,000*

*Still being compiled

Average Mosman Price

• 2008 – $2,738,041
• 2009 – $2,397,728
• 2010 – $2,483,864*

*Still being compiled

Source: Australian Property Monitors

Interesting to note the average price falling and I attribute this to the fewer numbers of merchant bankers in the market (especially at the top – end). More on this in future editions, when we break the markets down further.

Australia has the highest interest rates in the western world and now the highest levy (tax) ever imposed by a federal government in its history.

Ironic that our new big tax is heavily weighted at those who didn’t vote Labor! A smart initiative, or just plain dumb?

Labor’s big bill for poll research as the Gillard government increased spending on market research by 42 per cent to $31 million in the year preceding the election.

With the latest new tax/ levy, I believe that Julia Gillard has completely misread the Aussie ethos and should watch the NSW Labor right machine whose members are about to have plenty of time on their hands.

Ask one Kevin Rudd? I predict yet another PM spill in 2011.

Let’s finish the edition with a great story – the official launch of our Richardson & Wrench Mosman & Neutral Bay Corporate video for 2011.

Video by Visual Domain

Cheers ^__^

This week’s sales 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

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28.01.11Robert Simeon6 Comments »

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Somewhat dejected your Virtual Realty News scribe  (again) did not receive an invitation to Fort Fumble’s (Federal Government) budget lock down. Bugger!  Ten years of delivery and yet again we are ignored as a  non – political friendly identity.

A three ingredient budget (sounds like a cook book) red, being iron ore, black being coal and smoke meaning cigarettes, with  these two big new  taxes  (cigarettes and mining)  both less than one month old. Again, more economic policies consistently on the run.  It definitely looked that way when The Emperor (Kevin Rudd) threw a hissy fit on the 7.30 Report – Here (scroll down to you see The Emperor)

The Super Profits Rent Tax (SPRT) is subject to Senate approval yet it remains the nucleus of the budget. We know in real estate, that ‘subject to approval’ means absolutely nothing as Alan Jones reminded Wayne Swan on Wednesday here is the audio – a beauty.  Rudd may be the blip in selling mining tax given Rudd in freefall: voters lose faith. What a difference a year makes. Last year, Wayne Swan refused to mention the budget  ‘D’ word and kept muttering 58 without mention of the next word, namely ‘deficit’. Kevin07 stages election comeback although he is on notice given his party warns PM Kevin Rudd: no more U – turns.

It won’t be easy as Anna Bligh warns of super tax threat to LNG industry as each day goes by it is looking highly likely that the mining companies will lead a massive capital strike in the lead up to this year’s  Federal election.  As well,  the inflation genie is now growing at a rapid rate. The twenty five per cent increase on cigarettes will reap havoc on inflation. A massive mineral shut down would bring Australia to its knees so The Emperor has picked a fight well above his fighting weight. Knock out?

BUY PRINT

Who’s next to cop a super tax? A question that needs to be asked should the SPRT be blocked in the Senate. Don’t forget Europe on the brink: the web of debt that threatens the world although we should note that Wayne Swan apparently now considers himself as the leading global economic treasurer. On an economic roll Wayne Swan boasts economic management gave Australia greater clout in G20 so rest easy Australia to withstand Greek crisis – Wayne Swan when he stopped short or serving up his special (Moussaka) economic recipe. A strong possibility that Greece’s debt problems could spread throughout the continent which would significantly increase global borrowing costs – higher interest rates? Europe debt could hurt growth: Lowe.

Market turmoil sparks rates cut talk although the cash rate is significantly based on what is happening to the consumer price index which was 1.3 per cent for the September quarter 2009/10, 2.1 per cent for the December quarter 2009/10 and 2.9 per cent for the March quarter 2009/10.

Follow the bouncing ball where inflation is growing rapidly and don’t forget the new Rudd tobacco tax where in all probability, inflation should currently be around 3.5 per cent. Bear in mind that the Reserve Bank of Australia has an inflation comfort zone of between 2.00 and 3.00 per cent. I would also add that in this week’s Federal Budget – Wayne Swan has factored inflation at being 2.5 per cent next year.  The bouncing ball shows that CPI keeps jumping 0.08 per cent each quarter so June would come in at 3.7 per cent and December at 4.5 per cent. We need to reduce spending although The Emperor has a different view on that Greek crisis bolsters need for stimulus spending. The Emperor knows a thing or two about building when insulation clean – up cost hits $430 million and we have asylum refugees residing in four star hotels and costly exercise: asylum seekers’ private jet flights cost $5.6 million.

Stop the reckless spending The Emperor demanded in 2007 – no budget cuts for Kevin Rudd’s own department. Then sham budget built on two great fiddles Terry McCrann in full flight “The Government’s claim to fiscal rectitude is an utter sham. Wayne Swan’s budget is built on two great fiddles.” Then Peter Costello responded to the 2010 Fudge – it Swan’s balancing act won’t add up which was more like ‘ liar, liar – pants on fire’.

The tradition continues – Hit by another sneaky fee NSW Labor (Fort Crumble) introduced yet another property tax on top of the other countless property taxes that continue to retard property investment /development in NSW. Another day, another property tax where our latest property tax took aim at Australia’s most incompetent government new tax on property under fire which was announced immediately after the Federal Budget – ‘hide n seek? Our NSW government is hopelessly bankrupt and even more hopeless with astute economic policy.

A government in total disarray where the Sydney Sunday newspapers reported Premier Pristine (Kristina Keneally) is headed off to Canberra and Joe Tripodi and Eddie Obeid retiring which suggests that there is no more milk in the NSW cash cow. Time to mooo – ve on it would appear. Then ALP braces for ‘massive flogging ‘in disgraced MP’s seat where Fort Crumble is bracing for a massive 30 per cent swing against them. Not exactly a great platform for The Emperor as he maps his election announcement strategy in 2010. At the next election we could see a Guinness Book of Records entry for a government that records the highest swing against it by the electorates – both Forts Fumble and Crumble.

Whilst on swings – I did a comparative analysis with our March quarter 2009 and March 2010 sales results which draws some interesting conclusions. March 2009 Mosman’s highest recorded sale for the year 6 Buena Vista Avenue Mosman and March 2010, Mosman highest recorded sale (thus far) 19 Morella Road Mosman both subscribers too. Subscriber sales to Virtual Realty News now sit at $949,404,220. Our average house sale value in March quarter 2009 was $4,637,000 and whilst we increased turnover by 89 per cent in March quarter 2010, our average sale price came in at $4,610,937. For apartments, we averaged $653,611 in March 2009 and in March 2010 it jumped to $1,242,000. Apartment sales increased by 18 per cent from March quarter 2009 to March quarter 2010 and apartment sales volume increased by 188 per cent over the same period.

Also on the increase is our population as Marize and Michael Bellomo delivered their first child, Chanel Helena Bellomo and Jacqui and Mike Rowland Smith delivered a brother to Will – Riley Rowland Smith. Marize and Jacqui are doing well as are their beautiful babies (who I will soon subscribe,once they connect to the internet).

Thoughts on the Federal budget or, was it a fudge – it? My concerns are directed to the Consumer Price Index as inflation is sky rocketing. Forget Fort Crumble as everyone appears to be abandoning that sinking ship. Someone should tell Kevin Rudd to stop spending  rate rises in doubt as markets melt down and more importantly arrears rise as rates climb. Spare a thought for mortgage stress hits hundreds of tenants and Fort Crumble’s latest property tax will dampen property market sentiment. Leading data points to housing lull: economists – batten down the hatches the Moussaka economics are showing signs of double dipping – no stimulus this time either.

Inflation is much like a politician’s ego – although this economic measure could also result in their downfall. Should inflation climb to greater than 3.5 per cent during the June quarter 2010 then it could be at 5.00 per cent by the end of the December quarter which then, will create havoc with interest rates. To put this into greater perspective, in the September quarter 2008/09 the CPI hit 5.00 per cent and the cash rate target was 7.00 per cent – today the cash rate is 4.50 per cent.

So it is just not the cigarette tax that went up in smoke and Wayne Swan’s prediction that inflation will be 2.5 per cent in 2011,has as much chance as the Melbourne Storm winning the NRL premiership in 2010.

Cheers ^__^

This week’s sales 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

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14.05.10Robert Simeon10 Comments »

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I’m not talking about the de-throning of the Minister for Pink Batts (Peter Garrett) debacle either! Rather, just exactly what went wrong with their misguided Nation Building spend fest that has now resonated into a property boom (in some areas). History shows such market movements can be contagious, as was subprime, which brought about the global financial crisis (GFC). Fort Fumble (Federal Government) reacted by directing its spending obsession into schools (with plaques) when in fact, it should have taken aim at our housing, transport and health debacles. What Messrs. Rudd and Swan missed, was that all Australians live in houses, use transport, and do require hospital assistance.  By comparison, a much smaller percentage attends school – another no brainer!

The 7.30 Report ran an interesting piece this week Australian houses amongst least affordable in the world. Its working paper was the latest release of the 6^th Annual Demographia International Housing Affordability Survey: 2010 which is always an interesting read. As Kerry O’Brien stated “There is some concern that this latest property boom again raises the spectre of an unhealthy bubble; but there’s a range of contradictory elements at work that potentially pose a profound challenge for Australian authorities.” In 2009, Australia constructed around 130,000 homes nationally when we needed to build 190,000 to meet population growth. In 2010 it is projected that Australia will construct just 152,000 homes – so Fort Fumble has builders working on schools? Home prices will continue to rise as will rents too! Supply is not even close to meeting demand.

It was Nude Opera this week when renowned photographer Spencer Tunick enticed approximately 5,200 Australians to bare all on the forecourt. A case of love the one you’re with or maybe a case of I spy with my little eye someone beginning with…? The shoot has been called Mardi Gras: The Base.

Tim Mooney Photography

It was another tough week for The Emperor who fronted The 7.30 Report Kevin the confessor and said  “We are taking a whacking in the polls now. I’m sure we’ll take an even bigger whacking in the period ahead, and the bottom line is I think we deserve it, both – not just in terms of recent events, but more broadly.” True, when The Daily Telegraph ran “Prime Minister Kevin Rudd losing support in western Sydney” the Mad Monk seized the moment “Rudd rattled, says Abbott” then The Emperor (later to morph as Dr. Emperor) faced an attack from within “Rudd mea culpas have shot party in foot, say ministers”. Never one to miss an opportunity, I grabbed this comment on The 7.30 Report – Kevin the confessor.

The Emperor “One of the problems that we have had as a government, for which I accept responsibility, is we didn’t anticipate how hard it was going to be delivering things.” PM, this is otherwise known as business acumen. The Mad Monk responded “Kevin Rudd thinks he’s the economic genius who saved Australia from a recession but the public might conclude he’s just won the gold medal for waste.”

With his new policies on the run, now Dr. Emperor is taking a scalpel to our hospitals. Amazing what a difference a week makes. This political operation long overdue and Kevin Rudd to cut away the dead tissue of our ailing health care system Dr. Emperor moved into a totally different theatre, that being the operating theatre – Rudd announces $30.9 funding takeover of the public hospitals where just a week from the Pink batt debacle  Rudd’s hospital reform more radical than 1984 Medicare revamp. So how is The Emperor going to doctor our hospitals? Rudd takes $50 bn from states for hospitals. Not bad, given they are already in deficit with a growing interest payment of nearly $20 billion per annum. We found two great articles that critiqued Dr. Emperor’s health announcement Graphs galore but answers to big hospital reform questions are scarce by Lenore Taylor of the Sydney Morning Herald and Steve Murphy from Business Spectator Balance of Power. Australian states and territories are currently drowning in debt to the tune of approximately $133 billion which is about the equivalent of what Fort Fumble now owes (both increasing not decreasing)

Fort Crumble (NSW government) would be ‘champing at the bit’ given, NSW takes the biggest slice in GST handouts. This no doubt  assisted their  mortgagee – in – possession sale of “NSW Lotteries sold in $1 billion deal”where a confused Treasurer Eric Roozendaal said, “That means total proceeds of the sale of NSW Lotteries for NSW taxpayers of more than $1 billion – money that will go straight into funding frontline services for the families of NSW like teachers, police and nurses, and strengthening the state’s balance sheet.” He later said the sale proceeds would go directly into paying down the state’s debt – a margin call?

Pulling plenty of strings, our “Puppet Premier” then embarked on an estimated $750,000 television campaign in an attempt to convince constituents just how Australian she really is. No mention of NSW Labor just her website Kristina Keneally – although I did notice that our Puppet Premier forgot that when any Premier runs an advertorial they always have our Australian flag in the background – another massive blunder! It keeps getting worse “NSW fails to secure funding for infrastructure” in a staggering admission (not really) Fort Crumble announced that it was awaiting an invitation. Infrastructure Australia then advised that submissions were not by invitation only – Fort Crumble consistently hopeless. Yes Minister!
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So let’s look at what has happened in our Mosman market compared to same time in 2009. Bearing mind that in 2010 some sales are yet to be recorded at Domain Property Data.

Houses – I January 2009 to 1 March 2009 compared to 1 January 2010 to 1 March 2010

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As you can see, it is line ball where we will be monitoring results throughout 2010 and calling it as it is. The Reserve Bank of Australia (RBA) moved the cash rate upwards this week by 0.25 per cent to 4.00 per cent and here is (what the economists said) about this week’s increase. Certainly when the Australian Bureau of Statistics revealed that Australians spent $20.100 billion on a shopping spree in January this did not help the RBA’s decision.

As quick as a flash, the banks jumped on the increase where the standard variable rates are;

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Of greater concern is The Emperor’s move into hospitals and his threat to call a referendum should the broke states and territories not agree. Since Federation, there have been 44 referendums and just 8 have been successful. Success of late, has not been one of The Emperors strong points. Then again it is an election year so anything goes. Policy on the run can have dire consequences. Just look at Fort Crumble selling off state assets.

Our Puppet Premier in white – another clue! That flag was raised years ago so (the Fort has some continuity), what assets are next? What do you think about Dr. Rudd’s hospital announcement? Obviously one week’s work and better known as “policy on the run” to stop his poll haemorrhaging voter dissent.

Cheers ^__^

This week’s sales Mosman real estate, Cremorne real estate, Cremorne Point real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate Click Here

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5.03.10Robert Simeon8 Comments »

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Much has been written and spoken about the Global Financial Crisis (GFC) where it now appears that the ‘Global’ has been superseded by Governments in crisis. In Australia it is a calamity at both Federal and State levels – (all will be explained later). In modern day speak, our elected governments are now on margin calls where debt ratios have fast exceeded income streams – political policies without pertinent planning? Rolling back budget deficits will inevitably lead to increased new taxes – but then again The Emperor (Kevin Rudd) told us that after all, he is an “economic conservative”.

At the very heart, we have the much publicised economic stoush between the Reserve Bank of Australia (RBA) and Treasury. It should also be noted that the major banks will now override RBA economic policy and collectively set their cash rates. This fundamentally diminishes the once integral role of our central bank. Watch the argy bargy in coming months although it has become blatantly obvious that the banks will outpace RBA cash rate increases – our political piggies will go screaming all the way to the (electoral) markets.

Mosman’s maritime marina captured by Tim Mooney Photography

www.timmooneyphotography.com

The Emperor – our economic Master Chef was at odds with his Apprentice Chef (Wayne Swan) – not to be confused with The Apprentice (different television stations). The Apprentice Chef was busily watering down suggestions that the RBA was at odds with Treasury over the correct economic recipe for Australia. Highlighting a nutritious recipe of economic ingredients, the Apprentice Chef described the tensions as “healthy debate”. The Emperor weighed in and advised that his fiscal stimulus was actually on Auto Chef, as it has an in-built accelerator and a decelerator to cope with shifts in the economy. Whilst nobody on the planet has ever heard of such ingenious economic rationale – one can only hope that this is not a recipe for disaster – as we all know who then foots the bill!

Our real estate markets are now Fort Fumble’s (Federal Government) other recipe for disaster as the 7.30 Report pointed out this week “Australia’s population rising steeply”. Australia’s population is up 2.1 per cent in the year to March, the greatest growth in almost 40 years. To meet demand, we have to build a minimum of 200,000 houses by Christmas next year – and that won’t happen (especially if Fort Fumble increases taxes). Although I did have a chuckle when I read yesterday that Treasury Secretary, Ken Henry, said that reduced budget surpluses due to the global financial crisis could limit the implementation of some reforms to the tax structure. No doubt the growing interest payments on his stimulus (now deficit) are now a major concern. So the Head Teller at the RBA is at loggerheads with the Head Spender over at Treasury. This was always going to happen with the stimulus progressively moving into an upwardly spiralling budget deficit.

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Macquarie Economics Research market notes this week “Understating undersupply” breaks down the mechanics of our housing market. “To understand why there is such a chronic undersupply of housing, we first consider the market for homes from the perspective of first – home buyers. As shown in the chart above, in the short term, the supply of homes is fixed. Thus, when interest rates fall and affordability improves, the demand curve shifts to the right. In our terminology, the level of actual demand rises to the level of underlying demand. In fact, as pent-up demand is unleashed, the actual demand may considerably exceed the underlying demand for a period. But with the supply fixed, in the short term, this would simply be reflected in higher house prices.”

Australia was indeed a different participant in the GFC simply because, unlike other advanced economies, we continued to ‘under – supply’ housing while other comparable countries were in over supply mode.

No better example than this week, when rental prices recorded their slowest growth rate in four years. No reason why, was offered. I believe the reason was the First Home Buyers Grant (money for honey) – now the participants face the banks and probable increased taxes to wind back Fort Fumble’s budget deficit.

These are the graphs that explain it all, and forecast double digit house price growth from June 2009 to June 2012. Sydney with 21 per cent growth, according to mortgage insurer QBE’s Housing Outlook.
If you are hoping for a NSW recovery (Fort Crumble) think again. Fort Crumble remains the worst performing state or territory in Australia. The rankings are – Tasmania, South Australia, Western Australia, Queensland, ACT, Northern Territory and then NSW. Surprise, surprise! In NSW in 2008 – 2009, dwelling starts collapsed to the lowest level in 56 years and the total was 43 per cent lower than the average for the last decade.

Should one simply apply economic hindsight as against economic incompetence. If you own property in NSW you will prosper, as long as you reside within 12.5 kilometres of the Sydney CBD. Beyond that point, the planning for infrastructure is archaic.

Rest assured – The Master – Chef is cooking up a storm, even though the retiring Member for Higgins, Peter Costello, announced this week that he saved Australia from global financial crisis. The Emperor (fortunately) inherited all his successful economic recipes. It will be interesting to see how The Emperor decelerates the budget deficit – which will take some cooking of the recipe books.

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Congratulations to our undefeated over – 45 Mosman rugby team, competing in the World Masters Games. The Daily Telegraph captured Peter FitzSimons in the midst of yet another of his brilliant team motivational speeches. I am not sure about the team mascot though – must have been a ring in from the Eastern Suburbs.

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Cheers ^__^

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

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16.10.09Robert Simeon3 Comments »

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Coincidentally, Sydney this week experienced a once in a lifetime (so they say) dust – up which as it turns out was both physical and personal. One was delivered by Mother Nature and the other is the mother of all property taxes and by all reports (leaked thus far) it will take some time for the dust to settle. Since GST was introduced in 2000 on an electoral platform that taxes would come down (only to see them increased) – nine years on, Fort Fumble (Federal government) and every state and territory government is now drowning in budget deficits.

Briefly, there was a ‘red’ lining to the clouds when former US president Bill Clinton (give the man a cigar) said Kevin Rudd (The Emperor) was one of the world’s smartest leaders. Clinton said “his friend was well – read, well – informed and an expert on China.” Well Slick Willy that’s why we call him The Emperor, because just like China everything is now in the red!

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Tim Mooney Photography

www.timmooneyphotography.com

My tax rules: the Ken Henry way by Peter Martin from The Sydney Morning Herald was certainly an eye opener or as Ken Henry puts it “a-once-in-a-generation game changer.” We have heard that before (twice this week too).
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NO RELIEF FOR HOMEBUYERS

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“But the Henry review has come to the conclusion that other state taxes, much complained about, aren’t actually that bad. Stamp duties on conveyancing and land transactions are changed at a time when people are already borrowing and can afford to pay them. “(Yes every Australian loves making a Stamp duty donation for nothing because in the backyard of the property they are purchasing money actually grows on trees they are purchasing.) “They don’t seem to be much slowing our relentless desire to trade up and they help claw back the untaxed profits we make from capital gains tax exemption for the family home. The review won’t recommend an end to real estate stamp duties for as long as the capital gains tax exemption remains, and even it is unlikely to have courage to recommend an end to the exemption.” You call that a once-in-a-generation game changer?

The Henry Report should be called the Titanic as there are leaks everywhere and unlike ‘leeks’, I see no green-shoots.

PAYROLL TAX TO STAY

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“Payroll tax is also widely abhorred but from the review’s standpoint is pretty harmless.” Brilliant this comes from a person who has never paid it! “Not only will it stay in defiance of the bulk of submissions on the topic but the review will recommend it be extended by withdrawing a range of exemptions. There are taxes that genuinely hurt employment, the review believes – those that discourage foreign firms from setting up shop and staying here.”

A tarot card economic review (in my opinion) where an “abhorred tax that is pretty harmless despite bulk submissions against this” for simply employing people – now what point is he missing? The Australian Bureau of Statistics (ABS) labour figures for August identified that Australia’s unemployment rate remained at 5.8 per cent; however the economy shed 27,100 jobs which was more than expected. How many would have been saved if we did not have Payroll Tax? We will never know! But we do know that Ken Henry predicted that Australia’s unemployment would peak at 8.5 per cent.

Now I am getting confused, so allow me to elaborate. This week, Treasury Secretary Ken Henry advised the Australian Institute of Company Directors that the Australian economy would have contracted during the global financial crisis if the government (on his recommendation) had not introduced its stimulus measures. What a no brainer, when his report promotes Fort Crumble wastage disguised as a stimulus (tax payer expense) yet rejects on the other hand, individual and business stimulus that otherwise generates and absorbs unemployment.

The Henry Report is a no -no- no report where the stimulus packages only resulted in credit card debt reductions which now brings me to our banks. Well two of them anyway. Where once upon a time (you know the fairy tale) our four banking institutions Westpac, NAB, ANZ and CBA were known as the Four Pillars. Have a look at this to see how the World banking pecking order has changed from 1999 to 2009 (move your mouse at the bottom of the page on each year from 1999 to 2009 and watch the appearances and disappearances.)This is a fascinating report where Westpac and the CBA debut in 2009.

Top 20 Financial Institutions by market capitalisation, $b, 1999 – 2009

Enter Paul Keating, past prime minister. Although I never liked the man, I must admit that he is making plenty of sense. Paul Keating joins the 7.30 Report

Kerry O’Brien “Former Labor prime minister Paul Keating is concerned that as the heat starts to come out of the global financial crisis, the big four banks have corned almost the entire market for new housing loans. Before the crisis, the Commonwealth, Westpac, NAB and the ANZ had just 60 per cent of that market. But new found dominance of the big four is now starting to be reflected in their margins on housing loans.”

Paul Keating “There’s a lot of clever things to do. I mean, here we haven superannuation the third largest pool of savings in the world. $1100 billion, growing at $100 billion a year. These funds could hold Australian AA-house mortgage bonds. No trouble at all. In fact we saw all these dreadful numbers for super, people losing money, but if they had had your or my mortgage they would be getting 6 per cent solid, or 5.5 or 6 per cent.”

Paul Keating “So therefore, we have to work out how much we can have the super funds take the mortgages up. And I think one of the ways that can happen is for the central bank, the Reserve Bank, to trade in housing bonds like it trades in treasury bonds. So it makes a liquid system, a liquid market.”

Paul Keating “And that way … you saw the super funds, they lost enormously on the real estate investment trusts, average losses of 70 per cent. So in property, their portfolios in super were too narrow. If they were widened to take into account the really good mortgages of most Australians – you know, the default rate is .00001 per cent, it’s nothing.”

No doubt Mr Keating read the Bank Mergers Report “The acquisitions of St George Bank by Westpac and Bankwest by the Commonwealth Bank in 2008 increased the market share of the ‘big four’ banks, raising concerns that increasing concentration from bank mergers may be significantly reducing competition in the Australian market for financial services.”

The Housing Industry Association (HIA) survey found that in August, new home sales posted the largest monthly increase in more than three years. Sales of houses were up 11.8 per cent and apartments jumped by 7.5 per cent. It is not just property that is on the run. David Jones this week posted its highest full year profit (on record) up 6.3 per cent.

Interest rates have now bottomed which was clearly identified when the Reserve Bank of Australia (RBA) released this week their Financial Stability Review . “In summary, global financial conditions remain challenging. But, while further setbacks cannot be ruled out, the severe downside risks that loomed six months ago have significantly abated.

Interest rates set to increase and Mosman has just 66 houses advertised on Domain down by approximately 300 per cent this time last year. So if interest rates increase why increase the stimulus further? Humming to the song “I see red, I see red, I see red.”

Whilst on red – have a look at this red hot exclusive release in the Mosman market ESCARPA

Cheers ^__^

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

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25.09.09Robert Simeon3 Comments »

Sounds like the latest “add” word in political speak today, is temporary. If this week’s media spin from Ruddy Fantastic is anything to go by – where how temporary is temporary, one might ask?

Speaking at a lunch in Perth this Wednesday, Prime Minister Kevin Rudd said” this global economic recession has also dragged Australia into recession and has also produced the single biggest collapse in tax revenues in post – war Australia.” What Ruddy Fantastic failed to take into consideration was that tax revenues are down because we are all earning less, so it is not just the Federal Government feeling the pinch.

Kevin Rudd said, (here we go) a temporary budget deficit was inevitable given the current economic crisis. “In the current unprecedented global conditions a temporary deficit is not an option it is inevitable.” And, “that is why temporary deficits are necessary and temporary government borrowings are necessary as well, necessary to support businesses and support jobs until the private sector recovers.” Meaning when the private sector recovers government tax receipts then increase – however historically budget deficits in Australia have never before been temporary.

Treasurer Wayne Swan was busy spruiking that the Australia economy will rebound faster than international forecasts predict. Alas, the meaning of temporary. He said “the consequence of that is a higher temporary deficit.” All eyes are now fixed on the May 12; budget to:

A) See just how large our temporary budget deficit is.

B) How many times the word temporary will be used in the explanation of the budget deficit.

On budget night we will also find out how temporary is the First Home Buyers Grant (FHBG) which from a real estate agency perspective has resulted in a surge of lower price range property transactions. The 7.30 Report on March 9, 2009, revealed “Encouraged by the lowest interest rates in decades and the Rudd Government’s decision to double the first home buyers grant, nearly 30,000 people have entered the property market since October. However, at the top end of the market it is a different story, an oversupply of properties for sale is driving down prices.” I would suggest that Mosman does not offer an oversupply of top end properties rather an undersupply, given the anticipated bloodbath of mortgagee sales, simply did not eventuate.

The Housing Industry Association (HIA) is proposing that the First Home Buyers Grant Boost (FHBG Boost) be increased from the current $21,000 to $30,000 for the purchase of a new home and decreased from $14,000 to $7,000 for existing homes. I would be most surprised if such a proposal came to fruition. No doubt the “Boost Package” is driven by the news that new home sales rose to their highest level in 13 months in March thanks to the FHBG (without Boost). Total new home sales rose by 4.2 per cent in March where 8,210 sales were recorded, accelerating the 3.9 per cent growth pace set in February, 2009.

A few months ago, I likened the FHBG as Australia’s mini sub-prime given that again we see identical DNA in that; too many are borrowing too much – too fast! Already in our agency, we are witnessing tenants giving notice to take up the FHBG because that it will be (possibly) removed after June 30. The irony is that before we had tenants competing against one another because of the record low vacancy rates. Now they are competing again against each other to secure a property, because of the FHBG – a legacy of record interest low rates and high rents. What they don’t take into consideration is that interest rates rise much faster than rents which raises the potential of negative equity in years to come. Why?

Access Economics published a report this week which identified that by the time the next election is due there will be close to one million unemployed. While Australia’s recession is unlikely to be as deep as those in comparable countries, the unemployment rate is set to hit 8.5 per cent late next year as the economy reels from the steep collapse in commodity prices. At no stage did Access Economics use the word temporary.

With interest this week, I read an article in The Sydney Morning Herald by Jessica Irvine titled, “It’s bricks and slaughter out there.” A brilliant article in which Irvine wrote, “But it’s not just parents egging young buyers on, it’s politicians. As preparations for this year’s budget enter their final stages, the Rudd Government must decide whether it will extend the deadline for the increased first-home owners grant past June 30. I don’t think they should, but suspect they will.

Labor has undergone an about-face on housing policy. The contrast between pre-election posturing and the reality in government is stark.

On July 27, 2007, the Labor opposition hosted a “housing affordability summit” in the main committee room in Parliament House. About 150 housing experts from all over the country braved Canberra’s winter chill to discuss solutions to the housing affordability crisis.

I was there, there was little agreement on what needed to be done, but summiteers were unanimous in what shouldn’t be done. Everyone agreed that increasing the first-home owners grant would simply result in higher house prices.

Labor seemed convinced and produced a discussion paper quoting the chief economist at ANZ, Saul Eslake, saying: “Anything which puts additional cash in the hands of buyers …results merely in more expensive houses.”

This is certainly the case today, based on the latest figures released by the HIA. The decision by Ruddy Fantastic to increase the FHBG will be judged in history as a brilliant economic decision or, a monumental massacre of young Australians where bankruptcy remains a strong possibility.

Maybe, they should learn from Nathan Rees over at Fort Crumble who recently decided to withdraw financial backing for the AFL’s plans to locate a second team in Western Sydney. The reason why Fort Crumble withdrew? They reportedly decided pumping big money into the AFL’s expansion- right in the heartland of rugby league – would risk a voter backlash. The politics of the decision making process.

I then assume that this explains the sudden surge by politicians to use the word temporary given that if their respective economic policies go pear shaped – in return they can then become the temporary government. Bankruptcy is definitely not temporary – not in Australia anyway.

Let’s hope Ruddy Fantastic changes the word temporary to exemplary. Sugar coating is not the answer in a Global Financial Crisis where unemployment and budget deficits won’t be temporary either.

Cheers ^__^

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

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1.05.09Robert Simeon4 Comments »