Welcome back to Mosman’s number one real estate blog and it just happens to be our twelfth year of market critiquing and reporting!   It is imperative to note that as an agency we don’t deal the cards – we play the hands that we are dealt.

With so much happening, it is somewhat difficult to know where to start unpopularity contest has Abbott as winner with Julia Gillard and Tony Abbott neck- and–neck as Australia’s most unpopular leader. Will Julia Gillard survive the year? Unlikely !  My guess is that she’ll be out by June 30 which  mirrors the image of NSW Labor who played ‘pass the leader’ before the March 2011 annihilation.

Two economic lunatics unleashed their opinions Jordan Wirsz: Bloodbath to hit Australian real estate when he predicted Australian property could crash by more than 60 per cent. This was quickly followed up by perennial house cellar dweller property prices to fall 20% by 2013 year’s end: Steve Keen. I will get onto these two later: suffice to say they are not the only ones who have absolutely no idea.

Enter the “World’s Greatest Treasurer”, Wayne Swan, who constantly contradicts economic common sense to the extent that he is embarrassing every time he adds a commentary.  Stephen Bartholomeusz summed it up quite eloquently when he wrote on Business Spectator – Swan’s blind bank bashing “already a chorus of like-minded bashers is forming behind him and taking pre – emptive pot shots at the banks even before there is a anything to shoot at.”

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Welcome back -Mr Mooney at his brilliant best again – 2012 will be a cocktail of sunny skies and inclement business/consumer sentiment. I see more skies of blue for the Mosman markets and in our opinion prices have well and truly bottomed.

The Reserve Bank of Australia (RBA) is well aware that the funding by Australian banks is under great pressure as a result of the global financial crisis. Wayne Swan obviously believes that money grows on trees Bartholomeusz wrote “while the majority have, with the help of risk – averse depositors, done a very credible job since the onset of the global financial crisis of reducing their dependence on offshore sources of funds, and short term funding from offshore in particular, they still have an offshore term funding requirement of about $100 billion this year. About 20 per cent of their overall funding is sourced offshore.”

So how low will the RBA cash rate go in 2012? My tip? Three rate reductions that will see the cash rate sit at 3.25 per cent by the end of the year.  On April 9 2009, the RBA dropped the cash rate to 3.00 per cent so I can’t see it dropping below that. We need to remember that in Australia, approximately one third of households rent, the other third have a mortgage and the final third own without a mortgage.

So let’s look at what interest rates are doing in the USA and the United Kingdom – the answer is simple zero.

I laughed when I read Jordan Wirsz’ critique of the Australian real estate market which predicted a 60 per cent home value capitulation.  It just can’t happen (unless we have a nuclear war). Three years ago the American property market was so weak, the US Federal Reserve cut the official interest rate to zero. This week it announced that it plans to keep interest rates at near zero until the end of 2014.

Then we have the United Kingdom which will host the 2012 Olympics. It should be noted that every country that hosts an Olympics goes into recession. The exceptions to the rule have been Atlanta, USA, Sydney, Australia and Beijing, China.  I can’t see the United Kingdom joining this elite club when it too, has a zero interest rate and even more debt thanks to an Olympics. Barcelona, Spain and Greece have never recovered from when they hosted the Olympics.

At this juncture, I have Steve Keen and Jordan Wirsz leading the Australian real estate markets Dumb and Dumber Award and this is just our first edition for 2012. Nothing more than a cry for attention.

So how did the Mosman market fare in 2011? We will cover that in next week’s edition.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market December– 107
• Number of houses on the market this week – 102
• Number of apartments on the market December – 100
• Number of apartments on the market this week – 112

CREMORNE – 2090

• Number of houses on the market December – 15
• Number of houses on the market this week – 18
• Number of apartments on the market December – 20
• Number of apartments on the market this week – 17

NEUTRAL BAY – 2089

• Number of houses on the market December – 12
• Number of houses on the market this week – 13
• Number of apartments on the market December – 79
• Number of apartments on the market this week – 66

Over the break the number of Mosman houses on the market dropped to 83 and peaked on November 10 with 168. We don’t expect to see the number of houses on the market go much higher than 120 in February – it will be a very tight trading market in the first quarter of 2012.

For this week’s sales in 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

For this week’s open for inspections – Click Here

Dysfunctional politicians will share the limelight in 2012.  As well, we have a Carbon and Mining Tax being introduced from July 1. The Poker Machine pre-commitment has been axed which should not come as any great surprise.  It was never going to see the light of day!

The polls will be fascinating, with many wondering just how low the Prime Minister’s approval rating can fall.   I’ll have a go and tip 24!

Great to be back and we’ll  go all the way to December 14.  Thanks for joining us again.

Cheers ^__^

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3.02.12Robert Simeon4 Comments »

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2011 has been a year of ‘follow the bouncing ball’ and for some it has become an obsession. Our fixation and theories on things beyond our control has lead to short term paralysis! As a result, our long-term judgment is clouded. Our economy continues to track well with miners and households drive recovery as GDP growth exceeds Treasury forecasts. It actually grew 1 per cent in the September quarter and is recording near Asian rates of economic growth on the back of massive resource projects and strong household spending.

This week, we also had valid arguments as to why the Reserve Bank of Australia (RBA) should not cut rates although it makes better sense to read the October RBA – Monetary Policy Decision where the cash rate remained unchanged at 4.75 per cent. Next read the December RBA – Monetary Policy Decision where the cash rate was lowered another 25 basis points from November to now sit at 4.25 per cent. It is quite amusing that the RBA announced it would be effective from 7 December 2011. A bit of trivia: since December 18 1990 – the RBA has cut the cash rate five times and increased it four times at its December meetings.

Silence from our four big banks was deafening until one day after the effective date of 7 December NAB joins ANZ in matching RBA rate cut when (reluctantly) Westpac and the CBA brought up the tail. The reason why? It’s simple: by delaying the announcement to pass on the full interest rate cut, they receive an extra $5.6 million in pre–tax profit for every day of silence. A purely commercial decision (albeit short term) that gives journalists and social media a field day of ‘bank bashing’ that over time, can cause customer revolt.

BUY PRINT

It would not be a complete edition of Virtual Realty News unless we were spoilt by the brilliance of Tim Mooney who is in my opinion one of this country’s greatest photographers. He has made soaring through our skies and capturing amazing photographic images, an art form.

Australia is suffering from shark alarm syndrome. The alarm sounds and swimmers leave the water! The next day they are back swimming without a care. The difference with the economy is that the daily shark alarms are based on assumptions, not sightings.

ANZ shifts to monthly rates review where they are now set to sever the long–standing link between official interest rates set by the RBA and the rates customers pay on their mortgage. This decision questions the relevance of the RBA, if banks are to decide independently, what their cash rate will be. This has the potential to become very ugly and I see ‘bank bashing’ alive and well in 2012. On the one hand we will have bank advertising campaigns of those warm and fuzzy happy family moments and on the other, journalists and social media beating the living daylights out of their reputations. The latter will win hands down!

Funniest online fight of the week goes to Business Spectator when Alan Kohler wrote – Wake up and smell a budget stinker which brought on a reply by the ‘World’s Greatest Treasurer’ Not a shocker, not bozos. The conclusion I drew, is that what Wayne Swan says, bears absolutely no resemblance to what he writes. So Treasury must have written the response. I still believe Alan Kohler is on the money.

So let’s review the Mosman housing market for 2011 as compared to previous years. How do believe it performed, given all the adverse economic commentary. Before you read on, do you think it was up or down?

Source: Domain Property Monitors

Mosman House Results 2010

• Total Number Offered – 289
• Total Number Sold – 233
• Total Value Sold – $499,283,500
• Private Treaty – 193
• Auction – 40
• Clearance Rate – 25 per cent

Mosman House Results 2011

• Total Number Offered – 307*
• Total Number Sold – 248*
• Total Value Sold – $515,676,000
• Private Treaty – 198
• Auction – 50
• Clearance Rate – 29 per cent

*many sales yet to be recorded/registered so this will increase

Let’s now look at the median and average prices.

• 2010 Mosman House Median Price – $2,250,000
• 2011 Mosman House Median Price – $2,240,000
• 2010 Mosman Average House Price – $2,684,319
• 2011 Mosman Average House Price – $2,658,123

If we go back to the RBA December Monetary Policy Decision, the Governor Glenn Stevens, said “Growth in the global economy has moderated this year after a strong performance in 2010.” So it is interesting to read the Economic and housing predictions for 2012: Craig James. “With the benefit of hindsight it is clear that our economic and financial forecasts were overly optimistic. “ That may be the case however it is not reflective in the 2011 Mosman house sales results.

I can’t emphasise enough that the pulse of our property markets is best defined by weekly sales activity and this week, twenty properties in Mosman found new owners. In mathematical terms, that equates to just 2.2 per cent of Mosman’s 4,900 (approx) houses on the market and that number is reducing on a weekly basis.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market last week – 118
• Number of houses on the market this week – 107
• Number of apartments on the market last week – 111
• Number of apartments on the market this week – 106

CREMORNE – 2090

• Number of houses on the market last week – 14
• Number of houses on the market this week – 14
• Number of apartments on the market last week – 30
• Number of apartments on the market this week – 25

NEUTRAL BAY – 2089

• Number of houses on the market last week – 14
• Number of houses on the market this week – 13
• Number of apartments on the market last week – 93
• Number of apartments on the market this week – 89

For this week’s sales in 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

For this week’s open for inspections – Click Here

Steve, Rich, I and our brilliant RWM team, thank you for your fantastic patronage to our Richardson & Wrench Mosman & Neutral Bay (RWM) business model. Our subscriber sales sit on $1,024,767,720, the Australian record for real estate online sales. It has been our absolute pleasure to have you join us each week, in what has been a most turbulent year.

However, I don’t believe our property market can compete with the expected turbulence in Canberra in 2012, with Julia Gillard and her totally incompetent government at the forefront. Kevin Rudd will challenge, so expect some amazing theatrics where self-preservation will come to the fore!

2012 will be our twelfth year of Virtual Realty News.

Have a relaxed and fantastic Christmas and New Year.

My final Virtual Realty News thought for 2011. What a pity our economy doesn’t grow as fast as our children!

Virtual Realty News will return on January 20, 2012.

Cheers ^__^

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9.12.11Robert Simeon13 Comments »

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I’m not sure which quote will go down as the dumbest in 2011. Our Prime Minister, Julia Gillard, was the orator of the two that I believe win hands down. The first “there will be no carbon tax under the government that I lead” we all know what happened with that. The second is “the Government remains committed to returning the budget to surplus by 2012 – 13.”

The latter quote was succinctly critiqued by Future Fund chairman David Murray who hit out at the Australian government – Murray slams Gillard’s crisis response: report. Mr Murray told The Australian that the Labor government’s “surprise” carbon and mining taxes were putting Australia’s reputation with international investors at risk at a very delicate time, warning that Australia’s 20 years of continuous growth could come to an end. “I would have thought what’s going on with Europe – even what’s happened to the currency in recent times – would tell us that it can end. Yet there’s no entrenched realisation that this is a very risky position that we are in.”

The reason the Government remains committed to returning the budget to surplus by 2012 – 13 is simple. It doesn’t want the Opposition to run advertising campaigns prior to the next election in 2013, saying that the Labor government is incapable of managing our economy.

BUY PRINT

Budget predictions turned from bad to worse when the ‘World’s Greatest Treasurer’, Wayne Swan, released his Mid Year Economic and Fiscal Outlook (MYEFO) where the forecasts of a $22.600 billion blister predicted in May had blown out to $37.100 billion in November. This prompted an avalanche of attacks (understandably) at the government’s economic credibility. Swan’s pursuit of surplus branded ‘madness’ to put this into perspective after the May budget Alan Kohler wrote on his Business Spectator website BUDGET 2011: On a wing and a prayer. As quick as a flash I eagerly awaited Mr Kohler’s response to the MYEFO: Budget for a fool’s paradise and Wake up for a budget stinker – I loved this observation “Economic growth for 2012 – 13, about which nobody has the faintest clue, has been reduced by 13 per cent to 3.25 per cent. Revenue for that year has been reduced by just 1.7 per cent.”

Over to the ‘World’s Greatest Treasurer’ – Surplus sends message to world: Swan “At a time of heightened global instability, our fiscal discipline here needs to send a message to the world” – the treasurer is now delusional. What is missing is that if the budget is not in surplus by 2012 -13 a resignation will be immediately tendered – no chance of that happening. The graph below identifies Wayne Swan’s bread and surpluses trick I take exception to being treated like a fool.

Stephen Koukoulas wrote on his economics, financial markets and politics blog: Fascinating Fiscal Facts – Who’s addicted to spending and taxing?

• Total government receipts (tax, dividends, fees and the like) was 21.6 % of GDP in 2010 – 11, the lowest since 1973 – 74 when Frank Crean was Treasurer.
• The tax to GDP[ ratio fell to 20.0% in 2010 – 11, the lowest since 1978 – 79 and is a whopping 4.2% of GDP below the record tax to GDP ratio raked in by the Howard government in 2004 – 05 and 2005 – 06. That’s a lesser tax take of around that was taken tax payers during the peak period of the Howard government. As mentioned elsewhere, it is easy to register a budget surplus when you tax the living daylights out of the population.
• Real government payments> (spending) will rise by an average of less than 0.1% per annum in the 3 years to 2012 – 13, the weakest 3 yearly spending growth since the mid to late 1980’s under the Hawke/Keating Government. Never once did the Howard Government deliver a cut in real government spending – in fact real spending grew by a thumping 3.5% per annum for the last five years of the Howard government.
• Payments ( spending> will be 23.6% of GDP in 2012 – 13 around 1.5% of GDP below the average of the last 30 years. In the 12 Howard Government Budgets, spending to GDP averaged 24.2% of GDP: and only in 3 years out of 12 of the Howard Government was the spending to GDP ratio lower than the Gillard Government is projecting for 2012 – 13.
• The 4.3% of GDP turnaround in the Budget balance in the 3 years to 2012 – 13 (from a deficit of 4.2% to a surplus of 0.1%) is the most rapid turn in the fiscal position on record.

We keep reading house prices at risk from Europe crisis so no relief for the 8 biggest losses on Mermaid Beach’s Millionaire’s Row show no post – GFC recovery in sight. A home in Hedges Avenue (sold in 2007 for $17.500 million) has resold for $7.700 million, meaning the price dropped by about $50,000 each week over the four year ownership. In Mosman Billionaire Oatley wine family snaps up Kahala for the best of Balmoral’s boating facilities. The owner paid $22.500 million for the home in 2007 and we estimate it would have re – sold for approximately $18.500 million.

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In the boom (n) times the top – end properties show the fastest price appreciation where today – It’s an affluent housing correction: Christopher Joye. Mosman is no exception to this rule although we are observing some interesting property market machinations. Another very strong week of sales evidence in Mosman and we can expect this momentum to continue through to Christmas. If we then look at the number of houses in Mosman on the market there is an interesting pattern emerging.

On September 29 2011, there were 106 houses on the market, so watch the weekly pattern since then. 115, 133, 147, 147, 168, 136, 134 and this week 118.

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This shows finally, that demand is meeting supply which, in my humble opinion, is a most positive sign. Prices can’t go down if stock levels continue to decline. That can only happen when supply far exceeds demand and we are not seeing that as the numbers indicate.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market last week – 134
• Number of houses on the market this week – 118
• Number of apartments on the market last week – 118
• Number of apartments on the market this week – 111

CREMORNE – 2090

• Number of houses on the market last week – 15
• Number of houses on the market this week – 14
• Number of apartments on the market last week – 31
• Number of apartments on the market this week – 30

NEUTRAL BAY – 2089

• Number of houses on the market last week – 15
• Number of houses on the market this week – 14
• Number of apartments on the market last week – 100
• Number of apartments on the market this week – 93

For this week’s sales in 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

For this week’s open for inspections – Click Here

It’s been a brilliant year for our Members of Parliament – massive pay rise for MP’s, but travel perks on way out. Last week the ‘shock market’ identified a losing streak shaves $80b off shares only to see on Thursday Australian stocks soar in global rally.

Somewhat reminiscent of the ‘World’s Greatest Treasurer’s’ – Fudge –it 2011.

Next week –our final edition for 2011.

Cheers ^__^

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2.12.11Robert Simeon1 Comment »

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Another strange week where the policy makers in reality, would struggle to run a school fete. So step right up, it’s all about hoopla and hostilities. It started with the peculiar (rhymes with Julia) announcement that America was taking out marina space so that it can play battleships and soldiers in the Pacific. So it did not take long for announcements to take front and centre – Obama needs to confront Chinese rather than niggle from the sidelines.

Then surprise, surprise China issues economic warning over US ties in Asia where it became pretty obvious that cosying up to the US is fine, but our economic destiny lies with China. Indonesia was not that happy either with this announcement so as quick as a flash Hercules to the rescue as Gillard’s peace offering over US troop build up concerns four C – 130 Hercules worth an estimated $30,000,000 are donated to the Indonesian government as a softener. Australia will now have to replace them and it will cost a lot more than $30,000,000. Hey money’s no object!

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Then we had to endure a messy mining tax deal sealed in the early hours when it became most apparent that the mining tax outcomes: everyone’s a loser. With many left shaking their heads in total disbelief, Alan Kohler wrote in Business Spectator – mourning Gillard’s mining disaster. “Australia’s effort to levy extra taxes on mining companies has been an unmitigated debacle, capped by the passage early this morning of the Minerals Resource Rent Tax with a further last – minute compromise. It is one of the great lose – lose outcomes. We can only hope the Senate knocks it back.”

Which then became personal NSW’s $900 million mine shaft – Julia Gillard punishes for Barry O’Farrell’s carbon tax offsets. So NSW now appears to be the only state set to be punished after Barry O’Farrell raised royalties by $900 million over three years to offset the cost of the carbon tax. The “world’s greatest treasurer “, Wayne Swan, wrote to Mike Baird warning that he will also be excluded from future infrastructure funding if he does not back down.

Little wonder consumer confidence is down and this resonates through the property markets.

No doubt the Reserve Bank of Australia (RBA) is monitoring this closely and my school of thought is that the cash rate will be further reduced by -0.25 per cent when it meets next month, with another drop in February 2012. This weekend will be the greatest Litmus Test with Melbourne and Sydney ready for spring’s only super Saturday. During the global financial crisis (GFC) Melbourne and Sydney still managed to present three or four super Saturday’s so it will be interesting to monitor the 1,000 auctions in Melbourne and 650 in Sydney this coming weekend. That four letter word SOLD (at best) may be heard 825 times.

Housing recovery to begin in first quarter of 2012, but headlines won’t tell us until later: Christopher Joye given first – home buyers to drive 2012 housing recovery: BIS Shrapnel’s Angie Zigomanis.

Why house prices should recover in 2012: Craig James which is a sound argument that I have been presenting all year. “The housing market is constantly in a tug – o – war between two factors – demand and supply. And really it doesn’t get simpler than that. If there is a limited number of properties for sale and plenty of keen, cashed – up buyers then prices are almost certainly going to be bid up. Similarly if there is an abundance of property on the market and buyers are cautious – preferring to take time to find the ‘right’ home – then prices are more likely to ease.”

We publish the Mosman housing barometer each week so, bearing in mind that Mosman has approximately 4,900 houses ,it is abundantly clear that prices are about to go up given that just 2.7 per cent of available Mosman houses are on the market today.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market last week – 136
• Number of houses on the market this week – 134
• Number of apartments on the market last week – 118
• Number of apartments on the market this week – 118

CREMORNE – 2090

• Number of houses on the market last week – 16
• Number of houses on the market this week – 15
• Number of apartments on the market last week – 34
• Number of apartments on the market this week – 31

NEUTRAL BAY – 2089

• Number of houses on the market last week – 15
• Number of houses on the market this week – 15
• Number of apartments on the market last week – 101
• Number of apartments on the market this week – 100

For this week’s sales in 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

For this week’s open for inspections – Click Here

I did chuckle this week when I read Europe’s $287bn carbon ‘waste’: UBS report “Swiss banking giant UBS says European Union’s emissions trading scheme has cost the continent’s consumers $287 billion for “almost zero impact” on cutting carbon emissions, and has warned that the EU’s carbon pricing is on the verge of a crash next year.” Shock horror – Labor dismisses UBS emissions report.

So our Parliament in shock as Speaker resigns which did not come as a great surprise given Speaker deal boosts Labor’s position but tarnishes PM.

The problem for the Gillard government is that it can’t count – Govt’s budget surplus hope over: Deloitte. The reality being “in his latest Budget Monitor, Deloitte Access Economics director Chris Richardson said while that outcome would be politically “horrendous”, a surplus next year was a line drawn in the sand drawn by politicians not economists.” So it will be a case of no Labor surplus delivered since 1989/90 again.

Rest assured, Wayne Swan is the “world’s greatest Treasurer”. I will leave you with this:

If Australia is the lucky country, how come Spain, Italy and Greece are getting a new Prime Minister?

Cheers ^__^

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25.11.11Robert Simeon7 Comments »

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Albeit a brief visit (28 hours), it is not that often that the world’s most powerful identity lands on our shores where by the sounds of things Australia is set to become the fifty third State of America. With America’s future lies with Asia – Pacific region, Obama says where in an historic address to the Australian Parliament “As President, I have therefore made a deliberate and strategic decision – as a Pacific nation, the United States will play a larger role and long – term role in shaping this region and its future – by upholding core principles and in close partnership with our allies and friends”. He went on to say the region was crucial to US interests, as the world’s fastest growing region – Obama takes aim at China in new Asian world order.

For those who missed the live speech here is the text of Obama’s speech to Parliament I watched it live and I must admit that it was most impressive as he provided an insightful vision as to what lies ahead. Although Australia’s most irrelevant political party didn’t agree as Greens fury at US build – up which should not come as a great surprise. They should stick to just planting trees.

It has not been a great week for the Greens with Julia Gillard’s backflip on uranium exports to India announcement. Although it will be interesting to watch if this fractures the Greens/ALP relationship?

BUY PRINT

Storm clouds over Europe, but sun is shining elsewhere “The media’s great strength is the speed with which they can bring us myriad details about the latest happening in Greece, Italy or anywhere else. Unfortunately, their great weakness is their inability to digest all that information and summarise what it means. The closest they go is in relaying the opinions of 101 supposed experts from Greece, Britain, America or anywhere else. Listen to more than one or two and you’re soon none the wiser.”  The long and the short of this is that consumer sentiments in Australia have adopted a short trem positioning and not a long term outlook.

Euro crash will scatter debris far and wide – we need to watch the road which prompted “The World’s Greatest Treasurer” to declare ‘Get your act together’, Swan tells Europe. When it became reality that Eurozone third quarter GDP suggests bloc is sliding into recession. Gross domestic product in the 17 – nation eurozone grew 0.6 per cent at an annualised rate during the third quarter, according to figures from the European Union’s statistics agency Eurostat. The weakest expansion since the region exited recession more than two years ago and well below growth rates registered in the US and Japan. The eurozone was spared no favours when the Greek economy fell 5.2 per cent in the third quarter.

The problem is quite simple: French banks are among the largest holders of Italian debt.

On the home front consumer confidence revives after rate cut which would explain the recent spring surge blooms as home buyers dive in. So it is not new money in our property markets when a press release from the Mortgage & Finance Association of Australia announced “first home buyers” have little confidence in the Australian economy, as they baulk at property purchases and hoard their cash.”

Reasons for delaying their entry into the housing market were:

• 72.1 per cent said they were worried about the level of debt home ownership would require
• 44 Per cent said they were delaying purchasing a first home due to economic conditions
• 20.5 per cent of first home buyers felt that property prices are too high

So the Reserve Bank of Australia (RBA) keeps mum on future rate moves although I believe the RBA will cut the cash rate again next month so that they can separate Australia from the Euro crisis and set a solid consumer platform going into 2012. I’m not that concerned by all the rhetoric emanating from our central bank when RBA takes negative line on multiple rate cuts and RBA board split on rate cut. The reality is that the RBA sees housing market as subdued not should we dismiss Economists and traders fighting a false forecasting war: Christopher Joye.

Was it the ‘Obama Factor’ that triggered the greatest trade volumes seen in 2011 this week for our demographic markets? There is not a single market in the world economy that does not fall under the economic equation of Demand V Supply.

So closely examine these figures we extrapolate each week for our readership.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market last week – 168
• Number of houses on the market this week – 136
• Number of apartments on the market last week – 138
• Number of apartments on the market this week – 118

CREMORNE – 2090

• Number of houses on the market last week – 21
• Number of houses on the market this week – 16
• Number of apartments on the market last week – 44
• Number of apartments on the market this week – 34

NEUTRAL BAY – 2089

• Number of houses on the market last week – 21
• Number of houses on the market this week – 15
• Number of apartments on the market last week – 136
• Number of apartments on the market this week – 101

For this week’s sales in 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

For this week’s open for inspections – Click Here

This is anecdotal evidence that all of our property markets are engaging again and these statistics which are the most conclusive in 2011, prove that our property markets have turned. It will be fascinating to see next week’s results to see if this trending continues – I believe it will. What we are identifying is that our expats are now returning it ain’t working: Aussies abandon the ailing UK job market.

So Julia Gillard closing gap on Abbott: poll although her days are numbered given Bill Shorten firms as PM’s successor. Although the greatest problem they face is over those one – armed bandits ALP carries pokie burden – which won’t go away anytime soon. On a funnier side SLASH AND BURN: Swan plans to cut billions in spending so I assume he is referring to focus groups where the Gillard government spent $33 million last year on market research. They should be reading newspapers although that premise is quickly dismissed given Gillard looking to blame media: Hartigan.

Whilst on the media I have long argued here that newspapers can’t charge readers for online content so I was not surprised to read in Business Spectator when Alan Kohler wrote Will Fairfax break the paywall. As you would be aware you have to register to now read (The Australian) online as Rupert Murdoch proposes that Australian’s should pay a subscription to read his papers online. Online is based on the premise of eyeballs and third party advertising where the more eyeballs the more revenue. The Australian behind a paywall, and so far the three month trial has seen its page impressions decline by 25 per cent – far less than might have been expected. Actually, and certainly less than its traffic will decline once it starts charging.”

No wonder Fairfax Media is reconsidering its online position. The problem for News Ltd and Fairfax Media is that they are still “newspaper thinkers” who believe (incorrectly) that you can still double – dip with advertisers and the readership.

Goes to show you can never assume.

Cheers ^__^

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18.11.11Robert Simeon8 Comments »

How come Italians don’t like Jehovah witnesses? They don’t like any witnesses!

Well they have plenty of witnesses now with Italy at breaking point, Greece in chaos prompting another global financial meltdown as Australian stocks plunge on Italy gloom. Again Ringing The Bell best summed it up when Charlie Aitken wrote “Italian equities intraday reversed sharply, while Italian bonds also came down in yield on well sourced stories about Italian Prime Minister Berlusconi stepping down in the near future. Berlusconi’s resignation would be the single best development that could happen to risk assets globally (and the single worst thing that could happen to 18yr old Italian women), with the fear that Italian default (third highest bond market in the world) being the only fear holding back equities globally from what could be a stellar Christmas rally. The Bunga Bunga rally”.

Here in Australia, we constantly hear and read about illegal arrivals on our shores so I was gobsmacked when I read Migrants blamed amid Greek debt crisis “Imagine an Australia where one in every 12 people on the streets was an asylum seeker or undocumented migrant. Some 6,879 people landed on our shores last year, but how would Australia border protection forces cope if 128,000 appeared over the horizon. This is precisely the situation now facing Greece. With an official population of just over 11 million (half that of Australia), Greece now hosts a staggering 1 million illegal immigrants and asylum seekers.”

So it would come as little surprise that IMF warns world economy at risk when European leaders called on China, which has the world’s largest foreign exchange reserves at $US3.2 trillion ($A3.09 trillion), to invest in the fund. Time will tell if China comes to that party!

One of your best Mr Mooney – shot yesterday afternoon The Lakes GC in all its glory and it looks absolutely sensational too!

BUY PRINT

Given Asia’s pace of growth slows, says RBA’s Lowe which should not come as a great surprise (unless you are in mining) that businesses should be bracing for a slowdown. In Australia, it is most evident today how corporate strategies for a slowing economy are now a very simple fact of life.

The attention in Australia has now shifted to the Reserve Bank of Australia (RBA) as our financial lifeguard in these stormy and turbulent waters. The cash rate was dropped on November 2 to 4.50 per cent so will the RBA match the February 4, 2009 rate of 3.00 per cent?

More rate cuts needed following lacklustre mortgage lending figures: HIA given the Westpac/Melbourne Institute Index of Consumer Sentiment increased by 6.3 per cent in November from 97.2 in October to 103.4 in November. So I was interested to note one rate cut not enough to help economy, but watch employment data: Macquarie the employment data sent a succinct message Australia’s jobless rate down to 5.2 per cent in October this showed a stark contrast to employment outlook in other countries.

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Home loans continue to rise which represents the number of home loans having risen for six straight months. This should come as no great surprise given these days we appear to focus more on the negative sentiment which more often than not, clouds judgement. A classic example is strong dollar not chasing foreigners away so let’s look at the Australian Bureau of Statistics (ABS) data.

• Sept 01 – 403,600
• Sept 02 – 405,100
• Sept 03 – 425,000
• Sept 04 – 439.500
• Sept 05 – 458,900
• Sept 06 – 462,500
• Sept 07 – 471,700
• Sept 08 – 454,700
• Sept 09 – 466,300
• Sept 10 – 500,200
• Sept 11 – 500,600

In September the $AUD dollar dropped to $US 0.94 and in 2001, it was $US0.48. Today, in Australia, it is more a case of the basic fundamentals of our economy remaining strong – for most obvious reasons.

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You will note that our rate cut and unemployment data point to housing recovery. This is evident with data this week revealing that for the first time in 2011, our home owners have finally come out to play. The number of houses on offer in Mosman jumped this week from 147 to 168 (the highest number recorded in 2011) and up over 100 per cent from the July 13, 2011 number of 80 houses.

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Apartments are also up significantly which would be based on the furphy that the NSW government will abolish the First Home Buyers Grant from January 1, 2012 – no legislation has been passed so it won’t happen!

MOSMAN – 2088

• Number of houses on the market last week – 147
• Number of houses on the market this week – 168
• Number of apartments on the market last week – 110
• Number of apartments on the market this week – 138

CREMORNE – 2090

• Number of houses on the market last week – 16
• Number of houses on the market this week – 21
• Number of apartments on the market last week – 35
• Number of apartments on the market this week – 44

NEUTRAL BAY – 2089

• Number of houses on the market last week – 18
• Number of houses on the market this week – 21
• Number of apartments on the market last week – 98
• Number of apartments on the market this week – 136

For this week’s sales in 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

For this week’s open for inspections – Click Here

So back to Mamma Mia – the volume is turned up and to Greece and Italy the lyrics say “I’ve been cheated by you since I don’t know when. So I made up my mind, it must come to an end”.

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Look at me now – and I’m not talking about the Bunga Bunga parties either!

By the way, we also had the carbon tax passes the Senate this week so Socialism is alive and well in Australia. Just imagine the promises at the next election: no income tax payable and the national anthem will be Mamma Mia.

Cheers ^__^

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11.11.11Robert Simeon3 Comments »

Another mad week in Australia with Qantas (Queer And Nasty Try Another Service) shutting down all operations to create a massive spat with allegations that the government ignored warnings about Qantas grounding: Alan Joyce. We then heard that Qantas CEO Alan Joyce made a phone call to PM Julia Gillard but was ignored. This became all the more ironic when the PM made an urgent call recently to a fourteen year old boy who was arrested recently for buying marijuana in Bali. So Labor’s Fair Work Act has sent a signal that unions are on the way back prompting a savage rebuke with business to fight union Fair Work ‘wishlist’. Now we shall watch and see whether Qantas should compete or die – I think the latter.

Then we had news of a Greek referendum plan plunges markets into chaos prompting European leaders confront Greek PM. It will take Greece more than a few generations to recover from its debt debacle so it makes sense to see them booted from the Eurozone. I thought Charlie Aitken best summed it up when he wrote this week on his blog Ringing The Bell – “The Greeks need to remember they lied their way into the EU, they cheated with the help of Goldman’s to stay in the EU, and now the world is helping them stay in the EU. I strongly suspect the rest of the world won’t put up with any more rubbish from them and hopefully in six months time we won’t have a peripheral fishing hamlet running daily global financial market sentiment.” Touché!

BUY PRINT

It must have been a full moon this week with a November coup plotted on Julia Gillard – pressure on Kevin Rudd to push for top job. This gained further momentum with Kevin Rudd fuels leadership talk by failing to voice support for planned pokies reforms which has the federal Labor on another a hiding to nothing. Australians were then aghast to learn that Julia Gillard vows to double money to IMF – Ms Gillard will tell a session on reform of the IMF that Australia will double its special drawing rights (SDRs) quota – from SDR 3.3 billion (about $5.3 billion) to SDR 6.6 billion (about $10.6 billion). Australia has the most notorious government that thrives on giving other people’s money away.

Then we had some good news as the Reserve Bank of Australia (RBA) cuts interest rates to brace economy facing global headwinds with the cash rate dropping from 4.75 per cent to 4.50 per cent. This was the first cut in official interest rates since the global financial crisis (GFC) 2 ½ years ago and follows rises in unemployment and sharp falls in the prices of key resource exports. In 2012, I predict that the cash rate will end up at around 3.50 per cent so the RBA still has another 1.00 per cent to play with – which is great news for our property markets. For our top end markets to start punching above their weight again, we would need to see our ASX All Ordinaries Index at greater than 5,000 today it is 4,267.6.

The September update for Australia’s official house price index was released this week, indicating that house prices in Australia have continued to fall for nine consecutive months. The weighted average of the eight capital cities fell 1.2 per cent in the last quarter according to the Australian Bureau of Statistics (ABS).

It’s a very hard property market to pinpoint at the moment, with conditions appearing more reminiscent of the housing market in the early 1990’s (better known as “the recession we had to have”). From the above graph you will observe that for the last thirty years, Australian households have recorded record debt. It is somewhat ironic that in the recession of the early 1990’s, the cash rate was at 17.5 per cent where today it stands at 4.50 per cent. There is a dramatic upward trending from 2001 to 2010 although it should be noted the significant debt pay down during the GFC.

The great Australian rental inflation: Christopher Joye “There is a lot of talk about house prices in Australia. We hear much less about rental costs. Importantly for the inflation debate, house prices, which tell us the cost of buying an asset (namely a home), are not included in the ABS measures of inflation. However, the costs of securing accommodation in this country – that is, rents – are naturally a key component of the inflation data. Indeed, rents alone make up 6.7 per cent of the overall inflation index.” This can be explained by the data release that NSW leads revival of first – home buyer market – and the fix is on: AFG. The first home buyer market, compared to one year ago, is up 40 per cent, with NSW leading the charge. Rental escalations are driving the surge into property ownership.

Interesting to observe that new listings for Mosman houses (may) have peaked for 2011, with the number of houses on the market increasing by just one, from last week. More importantly, will the RBA’s cash rate move resonate with purchasers that the cash rate is on the way down and property prices have now technically bottomed? It would be refreshing to think so, although I hasten to add that real estate has never been an exact science. Residential real estate is an emotional acquisition although many have confused the transaction by applying a commercial formula with price determination.

MOSMAN – 2088

• Number of houses on the market last week – 148
• Number of houses on the market this week – 147
• Number of apartments on the market last week – 103
• Number of apartments on the market this week – 110

CREMORNE – 2090

• Number of houses on the market last week – 18
• Number of houses on the market this week – 16
• Number of apartments on the market last week – 34
• Number of apartments on the market this week – 35

NEUTRAL BAY – 2089

• Number of houses on the market last week – 18
• Number of houses on the market this week – 18
• Number of apartments on the market last week – 92
• Number of apartments on the market this week – 98

For this week’s sales in 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 For this weeks open for inspections – Click Here

So has the tide turned? When will the All Ords climb back over 5,000 again? It will happen and we all know what happens to property prices then. Buyers are knocking opportunity instead of seeing that opportunity knocks!

What confuses the issue further is that everyone, for some strange reason, wants to buy in a vendor’s market yet are reluctant to engage in a purchaser’s market. Go figure?

Cheers ^__^

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4.11.11Robert Simeon1 Comment »

Finally the EU leaders reach deal on bailout fund where the big banks will be forced to take a fifty per cent haircut on Greek Bond holdings. The Eurozone bailout fund will be leveraged to 1 trillion euros under deals thrashed out by the continent’s leaders during all night talks in Brussels. We are now nearing the end of October 2011, yet European leaders registered their concerns on the rise of sovereign debt in France, Ireland and Greece in April 2009. That’s 31 months ago!! Greece currently has a debt of 350 billion euro ($466 billion) and this deal will allow Greece to reduce its debt by 100 billion euros ($133 billion).

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One blog comment I read summed up the European crisis “The countries that have suffered do have one thing in common (Iceland, Italy, Greece, The US all have this): a desire to have first – world services and a first – world infrastructure, but without paying first – world taxes for them. Consequently, it’s been politically unviable to either raise taxes because people think they can maintain their current levels of govt service and infrastructure by cutting around the edges in welfare. Or, accept a lower grade of service/infrastructure because they’ve been told that they can have a low tax without actually cutting any serious expenditure. Hence, irreversible deficit and exploding debt. I’m not a fan of the GST, but I’ll agree that it did the job it was supposed to do – it created a large body of tax revenue that isn’t under constant political pressure to be cut, protecting Australia from the disastrous belief that you can have something for nothing and just cut taxes each election without harming the national infrastructure.”

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.BUY PRINT

The world’s greatest treasurer Wayne Swan says households still doing it tough– the man is a genius! The consumer price index (CPI) rose by 0.6 per cent in the September quarter, for an annual rate of 3.5 per cent. The average of the Reserve Bank of Australia (RBA) trimmed mean and weighted median inflation measure was a 0.3 per cent rise in the quarter for an annual rate of 2.45 per cent.

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Macquarie Economics Research offered the following commentary.

• Headline consumer prices rose by 0.6% in Q3, but the Reserve Bank‘s preferred measure of underlying increased by just 0.3%QoQ.
• Looking in more detail at the sectoral drivers of inflation in Q3 it is now clear that we are starting to see the sharp rise in fresh food prices after the Queensland and Victoria floods. Overall, food prices fell by 0.2% in Q33, but are still 6.4% higher than a year ago. Fruit prices are still 64% higher than a year ago. Clearly, food prices will fall much further in 4Q11 and 1Q12. Health care prices were the other broad category to record a decline in prices, but this was consistent with similar falls in Q3 in 2010 and 2009.
• On the flipside, the much discussed surge in utilities bills certainly came through as expected. Together with the lift in local government rates and another solid rise in rents (up 1.2%QoQ and 4.6%YoY) this meant that overall housing costs increased by 1.9%. Of course, as utility bills only increase once a year, this component should record a much more modest rise in Q4.

This would explain carbon tax opposition grows: Newspoll where opposition to the tax jumped six per cent to 59 per cent and support for the tax has fallen four points, to 32 per cent.

More Sydney home owners and renters in housing stress than any other capital – Sydney has the highest number of renters as well as the highest percentage of mortgage holders at risk of falling into poverty. More than 106,000 people who rent in Sydney face difficulties meeting the basic cost of living, according to Housing Costs through the Roof a report compiled by the National Centre for Social and Economic Modelling at the University of Canberra on behalf of Australians for Affordable Housing.

Brisbane wins housing race to the bottom as the national medium home price has now fallen for five successive quarters. Grey clouds gather over housing market although the good news is that Sydney house prices to recover from next year: ANZ.

Property buyers should factor in – it’s a boom, baby, as births hit a new record Australian women have rewritten the history books by giving birth to 297,900 babies last year, a new national record, the Australian Bureau of Statistics (ABS) reports. On the flipside we have apartment construction to slump in 2012: Industry survey. Turnover generated from the construction of new apartments grew by 2% for the 2010-11 year, but forecasts to fall by 1.2% over 2011-12 before picking up by 4.8% over 2012-13. So rents will continue to climb through the roof which explains why the Gillard government refuses point blank to address housing affordability.

NSW in slow lane of new economy a study by the National Centre for Social and Economic Modelling shows that one in ten Australian households – 850,000 – spend so much on rent or mortgage payments they have little left over for other bills. A rate cut won’t rescue the market so I (yes a real estate agent) don’t believe that the RBA should cut the cash rate when they meet on Melbourne Cup day. Such a move would send a negative message that our economy is trending downwards and that would severely impact consumer confidence. We have to toughen up and not rely on artificial stimulation.

Yesterday we saw the ASX incur four hours offline, due to a computer glitch which when resolved at 2.00pm saw our markets close up two per cent higher due to the European announcement of Greece’s bailout.

MOSMAN – 2088

• Number of houses on the market last week – 133

• Number of houses on the market this week – 148

• Number of apartments on the market last week – 86

• Number of apartments on the market this week – 103

CREMORNE – 2090

• Number of houses on the market last week – 15

• Number of houses on the market this week – 18

• Number of apartments on the market last week – 36

• Number of apartments on the market this week – 34

NEUTRAL BAY – 2089

• Number of houses on the market last week – 17

• Number of houses on the market this week – 18

• Number of apartments on the market last week – 83

• Number of apartments on the market this week – 92

For this week’s sales in 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

Listings in Mosman peaked this week and should we see this number reduce in the run up Christmas, then market forces are engaging. If not, this will definitely happen in 2012. The next six week’s will be most revealing.

Cheers ^__^

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28.10.11Robert Simeon5 Comments »

We have been waiting all year for the Mosman housing market to mount a formidable challenge to the market – this week it’s officially game – on. Three weeks ago there were 115 houses on the market, last week it increased to 133, this week on Domain it has jumped to 147 which is the highest number of houses we have seen throughout 2011. Given Mosman has (approximately) 4,900 houses,  is approximately (actually just under) 5 per cent of the total volume which is the exact target number and where the market should be under normal market trade conditions.

Next week’s inflation numbers will determine the RBA’s next rate move – The Reserve Bank of Australia (RBA) has had a difficult task in 2011 balancing the cash rate given its projections that Australia faces elevated inflation over 2011, 2012 and 2013. So a string of good data might stop RBA from cutting rates: Economists although the “subdued”state of the housing market identified that prices had fallen 3 per cent over the year to August. So our housing destiny takes shape where it should be noted that we’re the richest nation on earth, according to a Credit Suisse report.

The Credit Suisse report also notes the European sovereign debt crisis is not expected to stop a new generation of millionaires emerging in the next five years, with the greatest wealth growth likely to occur in the booming Asia – Pacific (that would be Australia.)

BUY PRINT

We sent our Virtual Realty News eye in the sky Tim Mooney to capture The Trots given Hot to trot: latest inner west housing development a ‘game changer’. The Harold Park venue for the trots is  about to become one of Sydney’s largest inner–city housing developments – 1,250 new prestige apartments and terraces that will push up property prices (great news for the property markets). Mirvac is developing the site and will also be creating a 20 – hectare green belt linking Bicentennial Park to Blackwattle Bay.

Uncertainty clouds start of spring auction season grabbed my attention when the Westpac – Melbourne Institute quarterly house price expectation index fell to 9 in October, from a reading of 15.3 in the three months to July. This was its lowest level since May 2009, with doubts about the housing market lingering. This is a national measure so with interest, I noted that 38.7 per cent see prices rising in the next twelve months and 31.5 per cent see them unchanged. Almost one – third (29.8 per cent) predicted falls over the next year, so 70.2 per cent see prices increasing or remaining steady over the next twelve months. Quite funny that real estate is a long term hold not a short term play which was recently evidenced with the reality price failures of The Block and The Renovators on television.

Even the ‘World’s Greatest Treasurer’ was drawn into the debate with Wayne Swan telling the ABC that he doesn’t agree with the International Monetary Fund (IMF) report which indicates Australia’s house prices are overvalued by ten to fifteen per cent. The RBA has plenty of room to move on Australia’s cash rate which presently sits at 4.75 per cent. Last week SQM Research disclosed that Australia has 362,793 houses for sale – Mosman contributed just 133 which was an increase of 24.3 per cent on the same time last year.

The last Census report in 2007 identified that in Australia, thirty per cent rent, so it was interesting to read the Australian Property Monitors – Rental Report where only Sydney recorded growth in unit median weekly asking prices for the quarter of 2.2 per cent.

Lower North Shore has it all for renters – but at a cost as rents soar in major cities as Sydney rents rocket by 13 per cent: report.We have a population in the fastest growth mode yet residential building down 5.3 per cent in June in  quarter. So do the mathematics about supply V demand.  It’s simple and a no – brainer. So Australia’s greatest property pest Steve Keen is back at it again – Property prices to fall 20% by 2013 yer’s end: Steve Keen. A property guru who sold his $500,000 (plus a bit) apartment on South Dowling Street based on his global financial crisis predictions that property prices would fall by 40 per cent back on September 2008.   In my opinion, in Australia, he is the court jester of real estate, but given the Sydney rental data we have published, he has in all probability decided to buy back in?

MOSMAN – 2088

• Number of houses on the market last week – 115
• Number of houses on the market this week – 133
• Number of apartments on the market last week – 78
• Number of apartments on the market this week – 86

CREMORNE – 2090

• Number of houses on the market last week – 16
• Number of houses on the market this week – 15
• Number of apartments on the market last week – 34
• Number of apartments on the market this week – 36

NEUTRAL BAY – 2089

• Number of houses on the market last week – 15
• Number of houses on the market this week – 17
• Number of apartments on the market last week – 80
• Number of apartments on the market this week – 83

For this week’s sales in 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

I have gone easy on Julia Gillard’s Fort Fumble or should that read Fort F*&! – up as the political hit has been arranged – it’s a Right mess for Julia Gillard as Labor factions fight. The powerful NSW Right which also destroyed NSW has allegedly activated another political assassination. Ironic they had the terminal finger on the trigger to remove Kevin Rudd and they now intend to do the same to their anointed replacement.

History shows that Australia’s property markets respond much better under the alternate government – maybe property buyers should read into that?

Cheers ^__^

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21.10.11Robert Simeon2 Comments »

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