.

The global financial crisis (GFC) has been a fascinating turn of events where businesses and households tweaked, sleeked and critiqued their respective currency flows in a battle for survival. So now we hear that as the good times roll, expect the cost of living to rise exponentially. With interest, I was reading another blog on Business2 which intrigued me.

“While you are talking to Glenn Stevens ask him how come the inflation rate is around 3% when everything we use or consume is rising at a much faster rate than that, and also – how come home mortgage rates in the rest of the world are SO much lower than here. And how come the banks are crying about the cost of funds – and making multi BILLION profits. And why won’t we let some other banks into this country to compete with the Big 4. Also – how come the homeowners of this country have to carry the burden of government stuff ups via monetary policy every time?”  Poignant questions to those residents living on Recovery Road, Australia!

Sydney real estate markets this year have been in a somewhat chill mode, although recent sales results are sending strong indications that the tide is turning and sentiment is starting to heat up. This week’s Mosman real estate sales are the strongest recorded this year as the results show here. Source: Domain Property Data

BUY PRINT

I was consumed by this week’s announcements to the residents on Recovery Road, Australia – starting with The GFC saved Australia. “As an aside, the realities of what really happened at our Big Four banks over the past three years makes CEOs’ extreme pay packets all the more obscene. Remember that the CBA’s $16 million man this year, Ralph Norris, took the top job in 2005 – his latest bonus bonanza supposedly recognises his responsibility for the bank coming out of the GFC in such rude good health. Haven’t seen much impact of his presumed matching responsibility for the bank’s financial and reputational exposure to Storm Financial, ABC Learning, Babcock & Brown et all reaching their crescendo on his watch. Similar remuneration report follies are on the way from ANZ, NAB and Westpac.”

Plain old economic growth is good for society as inflation expectations of 3.1 per cent in September quarter – survey as the RBA beats the inflation war drums. The mining boom will push interest rates up, Reserve Bank’s Glenn Stevens says as the odds shorten for October rate rise. Let the speculation begin when former RBA economist tips 5.75 per cent cash rate which in real terms equates to a 125 basis point increase over the next fifteen months. This would place Australia’s first ever female prime minister at Fort Fumble under increasing pressure, given 2011 could very well be another election year? Which bank? CBA joins calls for an October rate rise despite the release of data this week that household savings fall signals money woes as home loan customers told to brace for $90 – a – month increase in repayments. On top of this the Reserve Bank of Australia revealed this week that the big banks increase penalty charges take 9 per cent to $536 million after more customers fell behind in payments.

Electricity charges have gone through the roof as power bills force big firms to flee from NSW as Fort Crumble continues to mismanage NSW’s power supply where price rises put power to 138,000 people in jeopardy. Opposition energy spokesman Duncan Gay said he would not be surprised if big businesses fled NSW after being forced to bankroll an overdue energy infrastructure upgrade. “NSW Labor has ripped $14 billion out of the state’s energy retailers in dividends and taxes and failed to re-invest in our ageing infrastructure.”

Fort Crumble is encouraging Sydneysiders urged to shift inland as they drown mentally in addressing infrastructure collapses in NSW. The problem with Fort Crumble is that with just six months in power, it doesn’t have a single plan – as public loses all faith with planning process. For example:

Taking the low road to disaster where Fort Crumble has delayed 60 major road projects by at least five years (some longer) because  it can no longer fund urgent road works. No wonder Fort Crumble, hopelessly and embarrassingly broke, is trying to push residents into the bush. There is no greater example of how the present state governments mismanage debt than as state’s debt binge to top $240 billion as private sector faces squeeze. Analysis by The Australian of state (fake) budget round has found that borrowing is forecast to soar 52 per cent from $159.6 billion this year to $243.2 billion in 2014 to help fund upgrades to rundown transport, electricity and water infrastructure. The analysis found NSW and Queensland had the highest level of borrowings and both face re-election within the next six months. Constituents are wondering whether we have state governments or fake governments?

Yes, the road to recovery is long, winding and bloody confusing where even the strings on our elected puppets have worn thin and in NSW, the show can no longer go on. No wonder there is increasing demand for property within five kilometres of the Sydney CBD.

Alas, Fort Fumble embarks on a $45 billion NBN network which will become Australia’s greatest ever white elephant. We need a Very Fast Train to link cities because road works in NSW have virtually ceased.  For the record, wireless (not cable) works very well even on very fast trains.

In answer to the earlier question, “how come homeowners of this country have to carry the burden of government stuff ups via monetary policy every time?”  What Australia needs, is a train of thought – not a broken cable car!

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

Follow Me on Twitter

24.09.10Robert Simeon3 Comments »

I well remember (some years ago) attending a real estate conference where the message was “success leaves clues”. Just one week ago we heard that Australia had avoided a technical recession. The same can be said for some real estate agencies that are individually turning market sentiment around with respective niche markets (suburbs) now moving from negative price expectations to positive sales results.

A common theme in business is judgement by individual results that resonate within the public gallery of observation and real estate markets worldwide have a massive number of adjudicators, both negative and positive.

One month ago I wrote, that in our opinion, the Mosman market had bottomed. Today, this coincides with another problem that highlights the shortage of new properties.

Tim Mooney Photography – Taronga Zoo, Mosman

www.timmooneyphotography.com

For those real estate addicts there are always interesting blogs concerning the Australian real estate industry on www.business2.com.au. There are plenty of inside real estate commentaries and debates are often heated – well worth a subscription and it’s free!

In the 2009 Mosman market (thus far), distressed vendor volumes have not eventuated, despite ongoing critical evaluations from many in the public gallery. The banking fraternity has now dismissed speculation (and expectations for that matter) that this financial crisis was a storm that simply could not weathered. How wrong was that theory?

With the passage of time, we are now starting to see our property markets stabilise and indentify upward price growth.

We publish every sale we execute http://www.rwm.com.au/sales-list/sold_listing/. Others ‘invent’ sales and make media announcements with no evidence to support such claims. Hey Presto or Pinocchio’s property announcements? Without clarification such claims remain on the nose!

Our subscriber sales climbed this week to $876,114,019 (up $17,020,020 from last week). Over the past two weeks, we have executed $27,320,009 in sales to subscribers of Virtual Realty News only. We don’t include our other sales where vendors/purchasers are not subscribers – see our recent sales pages.

It would be reckless in our opinion, for real estate agents in Mosman to suggest to vendors that prices will only get lower. Rather be on the market than just in it and for the record, RWM has transacted the highest volume of Mosman house sales in 2009 – more than any other local real estate agency.

What many forget is the simple market philosophy of meet and greet. As a vendor, you can’t greet the market if one refuses to meet it. Our recent sales successes have evolved because we found the competition instead of blaming the dark cloud of the Global Financial Recession.

This analogy also applies to advertising where ‘online’ in 2009 is the peak performer. Print media, formerly a print meat market, has lost vendor appeal. It now has to compete with the ever evolving online markets where interactive social networking is the preferred option of consumers.

They say in rugby circles “use it or lose it” and the best advice I can offer to print publications is, “if you can’t beat ‘em – join ‘em”. There is still a vital role for print to play in real estate. I believe however, that the answer is classified advertising used as a directory to point consumers to more advanced and informative online presentations.

Rupert Murdoch announced this week that he believes that within a decade (I think three – five years) that the majority of newspapers will be delivered electronically. Mr Murdoch said, “If you’ve got a newspaper with a great name and great reputation, and you are trusted, the people in that community are going to need access to your source of news.”Mr Murdoch said, “This can all be served digitally and much more cheaply than it is now in a newspaper.” In an average week RWM would send up to 100,000 (sales and rentals) emails to clients on our database.

The Westpac – Melbourne Institute index of consumer sentiment rose 12.7 per cent to 100.1 points in June as a result of the strong economic growth figures recorded in the March quarter 2009. In May, the index recorded 88.8 points so a recorded index above 100 points has happened for the first time in seventeen months. As the mature markets rebound, a large proportion of this growth can be attributed to first – home buyers who could be called ‘the crash test babies’.

There is a clear message in the following graph which identities that the average first-home loan in NSW has increased by more than $50,000 (market competition). In just over a year, the average loan has increased to $300,000, thanks to record low interest rates and government hand-outs. The cheapest home loan currently available is with the Commonwealth Bank (CBA) at 5.64 per cent. The long – term cost of funding is increasing, which explains why (since January 2008) the CBA has held on to 0.82 per cent of net official Reserve Bank of Australia cash rate reductions.

In April 2009, home loans to first – home buyers reached a 14 month high as the dash for cash handouts from Federal and State Governments reached fever-pitch. The numbers taking out first time home loans jumped to 28 per cent in April – the highest share to first home buyers since the Australian Bureau of Statistics commenced recording in 1991.

Overall, home loan approvals have risen consecutively for the last seven months. Oh dear…. artificially inseminating property markets with the probability of an early election will equate to carnage for enthusiastic and naive property market debutants.

Ross Greenwood wrote a brilliant article on Money News. “Right now the Federal Government is at pains to tell everyone – including us the mug – punters to the International Monetary Fund that it will not exceed its own, self – imposed, borrowing limits. How much? $200 billion. And here’s a worry. If you work in a bank’s money market operation; or if you are a politician; the millions turn into billions and it rolls off the tip of the tongue a bit too easily.

But every dollar that is borrowed, some time, has to be repaid. By you, by me and by the rest of the country.

Just after 5 o’clock tonight I did a bit of maths for Jason Morrison. But it’s so staggering its worth repeating now. First though … here’s what Chairman Rudd has been saying about – what he calls – these temporary borrowings. Remember those words … temporary deficit … but the total Government debt could end up around $200 billion.

So here’s a very basic calculation … I used a home loan calculator to work it out … it’s that simple.
$200 billion is $200 million. The current 10 year Government bond rate is 4.67 per cent. I worked the loan out over a period of twenty years.

Now here’s where it gets scary … really scary.

The repayments on $200 billion come to more than one and a quarter billion dollars – every month – for 20 years. It works out we – as taxpayers – will be repaying $15.4 billion in interest and principal every year … $733 for every man woman and child – every year.

The total interest bill over the 20 years is – get this – $108 billion.

And remember, this is a Government that just 18 months ago had NO debt … NO debt. In fact it had enough money to create the Future Fund to pay the future liabilities of public servants superannuation … and it had enough to stick $20 billion into the Building Australia Fund last year …” Oh dear …

The Australian Bureau of Statistics reported this week, that unemployment in Australia was up to 5.7 per cent. NSW lead the country in May, with 6.4 per cent. Of greatest concern is that with first home buyers, Ruddy Fantastic has been shaking his sauce bottle for an election party of mammoth proportions that will see heads spinning with an almighty hangover. Much like Nation Building which is being watched closely – with interest!

Then again, why do people find interest on debt interesting?

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/

Follow Me on Twitter

12.06.09Robert Simeon4 Comments »