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When Julia Gillard stealthily snatched the keys to Fort Fumble from Kevin Rudd in the dead of night, June 23 2010, her action was based on the party’s belief that he had “lost his way”. Ten months later the party is now shipwrecked on Point Rock at Hard Place.

In political speak, the compass is often called a poll, although Prime Minister Julia Gillard recently commented after disastrous polling, “I don’t comment on the polls, and I don’t spend much time wondering about them.” The polls were close to one hundred per cent correct long before Fort Fumble was decimated at last month’s NSW election. Polls come and go, and so do leaders as was the case in NSW where it become a simple choice of either ditch the policies or ditch the leader.  It’s now Julia Gillard versus the carbon tax, NBN Co, East Timor solution and a budget deficit that’s getting worse, not better.

Infrastructure is without a doubt the greatest problem facing modern day Australia today. NSW firms get crumbs as workers flee – almost half of NSW businesses are having difficulty finding skilled employees as they compete with the higher pay packets being offered in the mining sector.  NSW faces a skilled worker shortage given the reconstruction work in Queensland and the ever expanding mining sectors which will drive wages to dangerous levels as the shortages multiply each month and inflation will follow as inflation on a knife – edge.

BUY PRINT

I asked Tim Mooney if (by chance) he would be flying over Westminster Abbey to get an aerial shot of today’s Royal Wedding.  Unfortunately, due to budget restrictions, we settled on The Abbey in Glebe, Sydney

New home starts in 2011 are fast tracking the weakest declines since the mid 1990’s with property prices remaining subdued and many will say this is a good thing. Although on the flip side, it means that the circular flow of income (which is the oxygen for the economy) stalls, with the lack of economic growth and confidence. Home prices declined nationally in March quarter: APM we expect the same results once the June quarter figures are announced given housing credit growth remains fragile.

This week’s inflation numbers certainly point to higher interest rates by year’s end as Australia’s consumer price index rose 1.6 per cent in the March quarter (its largest quarterly jump in almost five years). The housing group is up from the 0.6 per cent level of the December quarter, with the annual rate of increase, the lowest since the September quarter of 2007. Contributing to the annual increase of 4.8 per cent for the housing group, were substantial increases in the price of utilities – 11.7 per cent for electricity, 12.8 per cent for water and sewerage and 6.2 per cent for property rates and charges. Rents increased by 4.5 per cent for the year on a weighted average, over eight capital cities and the cost of house purchase increased 2.6 per cent.

Source: The Australian, Bill Leak

Show us the money Mr Swan: it’s time to stop squandering our future by Malcolm Turnbull :Well, one thing to be said for Swan’s latest excuse is that it makes a change from the past three years of using the global financial crisis to justify failed programs and irresponsible choices.

Of course Wayne Swan nails it, when it comes to explaining the economic machinations of our economy.  Petrol jumped 8.8 per cent, vegetables increased by 16 per cent following the Queensland and Victorian floods and Cyclone Yasi and fruit increased by 14.5 per cent.  Surprise and further surprise, almost forty (40) per cent of retail spending by Australian households now lands in the cash registers of either Coles or Woolworths, according to exclusive new research by Commonwealth Bank grocery giants in 40% grab. For example: bananas cost $2.99 a kilo prior to Cyclone Yasi and jumped to $16.00 a kilo in March.

CBA’s analysis conducted for The Sunday Telegraph shows that of the $242 billion in retail sales last year, $94.3 billion or 38.9 per cent, is taken by one of the corporate giants (Coles or Woolworths) who command $46.7bn and $47.5bn respectively.

Just can’t resist another dig at the Carbon tax battle: bureaucracy v business which is an interesting debate although it should be noted that a politician will always place his/her very own job security way  ahead of endorsing a tax that threatens the length of their careers . The Carbon tax will destroy the Gillard government as the people sit in poll position and the Government is on the way to the panel beaters. Liar, liar – hair on fire!

Thousands to be stuck in NBN ‘limbo’ which is another amazing example of incompetence as thousands of Australians (many in regional areas think of the Independents) can now expect years of worse, not better, internet services as the NBN rolls out across Australia. Well it is currently stalled and facing huge cost blow–outs NBN Co housing forecasts deemed unrealistic.  Oh dear, here we go again!

To give a better understanding of the Rudd/Gillard management style of running Australia, former Finance Minister Lindsay Tanner will release his book next week titled “SIDESHOW” Ex-minister unloads on Rudd govt.

Lindsay Tanner – on the 2010 Campaign – “The worst in living memory. Banal slogans, robotic delivery, and trivial policy announcement deployed by both major parties.”

Lindsay Tanner – on Federal politics –  “Modern politics now resembles a Hollywood blockbuster: all special effects and no plot.

Last week we covered Mosman house sales and total value sold – 2000 to 2010. This week –

MOSMAN AVERAGE HOUSE PRICES FROM 2000 TO 2010

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Source: Domain Property Data

• 2000 – Up to $5,000,000 $1,329,677. Above $5,000,000 $5,637,500
• 2001 – Up to $5,000,000 $1,548,882. Above $5,000,000 $6,561,428
• 2002 – Up to $5,000,000 $1,862,836. Above $5,000,000 $6,587,500
• 2003 – Up to $5,000,000 $2,010,859. Above $5,000,000 $6,316,000
• 2004 – Up to $5,000,000 $1,854,568. Above $5,000,000 $6,941,722
• 2005 – Up to $5,000,000 $2,017,809. Above $5,000,000 $8,741,333
• 2006 – Up to $5,000,000 $2,110,469. Above $5,000,000 $7,115,228
• 2007 – Up to $5,000,000 $2,291,431. Above $5,000,000 $7,845,348
• 2008 – Up to $5,000,000 $2,267,210. Above $5,000,000 $7,170,000
• 2009 – Up to $5,000,000 $2,276,172. Above $5,000,000 $7,226,136
• 2010 – Up to $5,000,000 $2,355,472. Above $5,000,000 $7,212,826

Now that is a pretty consistent score card in both market demographics, especially when we take into consideration, the global financial crisis (2008 – 2010). Interesting statistics to bear in mind when the 2011 Budget is explained, given that the global financial crisis was in the northern hemisphere!

Next week, we will release the Mosman March quarter house sales for 2010, as compared to 2011.

Anyone prepared to make a prediction?

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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29.04.11Robert Simeon7 Comments »

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However, (for some) there will be strong consequences along the way – which is always the case when governments artificially inseminate markets in an attempt to prop them up in uncertain financial times. One only has to look closely at the cash rate movements at the Reserve Bank of Australia (RBA) to see the storm clouds on the horizon after the RBA slashed the cash rate to 3.00 per cent in April 2009. And bear in mind that it was 7.25 per cent in March 2008. At or about the same time, Governments at both state and federal levels were promoting the First Home Buyers Grant (FHBG). First time purchasers locked in a fixed rate as shelter from the ongoing rental increases under cover of Stamp Duty inducements in the form of grants. One does not need to be Einstein to calculate that the cash rate will be significantly higher when the fixed loan agreement expires. Yet for some strange reason, the banks are blamed.

The “Big Four” banks have recently announced the removal of the much despised exit fees so now customers have freedom of choice to shop around. Maybe Fort Fumble’s treasurer Wayne Swan would like to explain why he approved Westpac’s acquisition of St George Bank and the CBA’s acquisition of Bank West? Instead we read Treasurer Wayne Swan flags change to four – pillars policy “the government is determined to see a new pillar in the banking system, particularly based on our mutual sector.”

If St George and Bank West were still individual entities they would be pillars five and six and the building societies and credit unions would fill positions seven, eight, nine, ten etc. Instead we see Independents back Greens’ bank bill which is nothing more than a misguided attempt to overhaul banks. The bill follows weeks of debate over the size of bank chiefs’ pay packets, interest rate hikes, high fees and the power of the big four banks. Here we go again, with more political posturing and a memory vacuum, when we consider that these very same bank chiefs positioned their respective pillars to be world’s best, during the global financial crisis. Unlike other countries, Fort Fumble was not required to bail them out and ironically today, they are bailing out on them!

The double exit strategy – excuse me for laughing as I have just read The best price signaller in the land by Peter Costello.

BUY PRINT

One thing for sure with property prices, is that there will always be waves of hysteria coupled with those who like to make waves. If you can’t ride it stay on the sand – Virtual Realty News

“Now that both sides of politics have decided to crack down on the evil practice of price signalling we might as well ask who does it and why. Because some people may not be aware that the biggest price signaller is not the Commonwealth Bank or Westpac or any of the other “evil” commercial banks. The biggest price signaller in the interest rate market is the Reserve Bank, the one the government owns.” Said Peter Costello. Of course the banks need more consistency given banks slower to lift deposit than interest rates where the more money they hold as deposits, the greater the control they have over the costs of funding. Hardly an instrument to entice depositors!

Rising wages ‘outpace growth’ the warning comes as new figures show wages are increasing at their quickest rate in two years. Business groups highlighted the potential for the $43 billion National Broadband Network to “exacerbate skill shortages and drive up wages”. Personally, I am yet to meet a supporter of this broadband ‘white elephant’. I’m definitely not a supporter and believe the money could be much better spent on hospitals, rail and roads. When I look at our Google Analytics for our website which includes Virtual Realty News it reveals the Connection Speeds – 39.97 per cent use DSL, 26.16 per cent are on Cable, 24.5 per cent are Unknown, 5.92 per cent use T1 and 1.72 per cent are on Dialup (once upon a time we were all on Dialup). For the NBN project to provide a return on capital, Fort Fumble requires over 8,000,000 million Australian to sign up. Talk about ‘the impossible dream’!

Here is why Australia can ill afford another “white elephant” as Kevin Rudd shared the blame for Labor’s errors. Addressing a business function earlier this week Mine boom biggest shock, says Treasury Ken Henry. Dr Henry said the current mining boom was between three and four times bigger than the last big boom in the 1970’s, which pushed inflation up to 17.5 per cent. Inflation is currently running at 2.80 per cent. Reserve Bank of Australia says the boom to run for 20 years as the tally of resource projects with mining firms’ commitments, soars to $133bn. At your service, our economy’s a work in progress by Ross Gittins from the Sydney Morning Herald “The structure of our economy is set to change over the 2010s, creating winners and losers and plenty of complaints. So it’s worth remembering the economy’s structure has been changing continuously since the gold rush”. Which brings us to The boom is back, and this time we may avoid the bust or will we? If we do survive we are going to need plenty of help from those banking “four pillars”.

Treasury’s move from mining to real estate during the week, was more a case of undermining the Department of Bricks and Mortar – Treasury sounds the alarm on ‘property bubble. Treasury has privately sought reassurance from its analysts that prices are not artificially high and that Australia does not face the kind of house price collapse that has hit Britain and the USA. Maybe they should read RBA intervened to avert housing slump given Aust mortgage market seen stable in third quarter. Total construction work done in Australia, fell 2.1 per cent in the September quarter. Our population is growing and building is declining!

So let’s see what is happening to Mosman prices for houses and units.

Source: Australian Property Monitors

Source: Australian Property Monitors

The Dyson Austen Top Ten Prestige Residential Survey 2010 Q3 July – September prepared for the Real Estate Institute of NSW, will be released this weekend – so here is a sneak preview for our Virtual Realty News subscribers. We thank Simon Feilich from Dyson Austen for the early scoop (being a subscriber has advantages).

The total value of the survey has increased forty two (42) per cent from the previous quarter thanks to the record breaking $52 million sale at 100 Wolseley Road Point Piper. The Eastern Suburbs dominate the results, recording ninety per cent of the recorded sales – a phenomenal effort. The graph that I always look forward to viewing is the highest value and total value of Top Ten transactions per quarter from 2004 to 2010 to see how our markets are aiming up. “Quarter 3 2010 recorded the fourth highest quarter on record – the main driver in this quarter is the almost ten (10) per cent increase in the equity market in July 2010” said Simon Feilich. All in all a very strong message for our top-end property markets.

So for those who are huffing and puffing about property prices, don’t forget that in every back garden you will always find swings and roundabouts.

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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26.11.10Robert Simeon7 Comments »

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Actually not that different with the three P’s that pertain to property – position, position and position. Throw in politicians and bankers and what we have is the 2010 equivalent of economic soup that is murky and far from palatable. During the global financial crisis (GFC) Westpac and the Commonwealth banks wrote approximately eighty (80) per cent of all mortgages which explains why today, collectively, they own the largest mortgage books. Alan Kohler wrote on The Drum that banks only have themselves to blame which has caused a stir given many consumers are losing faith in our pillars of society. Of course, there has been plenty of gratuitous PR advice for our friends in banking although the politics of banking was intelligently addressed when Janet Albrechtsen wrote in The Australian – Let’s hear the positive story from the banks.

Plenty of rhetoric this week as home owners angered by increases in interest rates then news broke that the Big Four banks to dump exit fees as backlash grows against lenders. Then late this week ANZ raises rates, scraps exit fees at or about the same time as ASIC bans banks from double – dip mortgage exit fees which means banks that charge customers to establish a mortgage, will no longer be able to apply contentious exit fees. Too early to say who will get the last laugh with this announcement – possibly bank establishment fees will rise? Certainly the four new P’s won’t change.

BUY PRINT

Is the landscape at Circular Quay about to change? Special deal on city skyscraper as a giant residential tower, double the size of any other building in Circular Quay, is expected to be approved soon. The site Gold Fields House is set to become a luxury apartment block that will tower 191 m above Circular Quay making it Sydney’s eighth tallest building. Sydney has only one of the top 10 tallest buildings in Australia – which prompts the discussion for progress of our capital city.

Australian Property Monitors released its House Price Report for September 2010 and here are the key findings:

• National median house prices remain effectively unchanged at +0.1 per cent for the quarter with annual house price growth slowing to +11.5%
• Most capital cities experienced falls in prices over the quarter; however the major markets of Melbourne and Sydney bucked the trend recording positive quarterly house price growth
• National price units (excluding Tasmania) have fallen slightly, down -0.4% for the quarter, with annual growth falling sharply to +6.5%
• Unit prices have fallen in all cities except Melbourne, with Brisbane experiencing the largest price decline, falling -2.8% for the quarter

Source: Australian Property Monitors

SYDNEY

• House prices increased slightly by +0.7% in the September quarter, which is the third consecutive quarter of slowing growth.
• Unit prices have started falling for the first time since 2008, recording -0.1% for the quarter.
• Sydney’s median house price is now $634,346 and the median unit price has fallen slightly to $436,714.
• Annual house price growth sits at +11.3% and unit price growth is at +7.3%, both trending downwards.

Weak demand made for rate surprise all things considered the clearance rates are positive, although the most important conclusion would be that prices are flat lining. It is only natural that auction clearance rates fall on rate rise and we are seeing anecdotal sales evidence. One interesting observation in Mosman at present, is that private treaty sales are producing the highest volume.

Here is the comparative analysis for Mosman houses:

Mosman Houses 2009 – 1 January 2009 to 31 December 2009

• Total sold – 322
• Private Treaty – 281
• Public Auction – 41
• Total Value Sold – $815,649,751
• Median price – $2,094,000
• Average price – $2,564,936
• Highest price – $13,200,000 (RWM)

Mosman Houses 2010 – 1 January 2010 to 10 November 2010

• Total sold – 292
• Private Treaty – 219
• Public Auction – 73
• Total Value Sold – $639,048,555
• Median price – $2,100,000
• Average price – $2,468,570
• Highest price – $12,600,000 (RWM)

It should be noted that with the 2010 house sales, that the vast majority of sale prices are yet to be recorded, so we expect this year’s total value for houses sold, to be considerably higher $750,000,000 approximately. For example, this week, RWM recorded the second highest house sale for Mosman in 2010 which is yet to be recorded. Here is the Macquarie Research Economics Forecast where it should be noted that the banks have already moved the cash rate to the Reserve Bank of Australia (RBA) Macquarie Research Forecast for Quarter 1 – 2011. So what we now have is an official cash rate and a real cash rate, which I will call the “real, official cash rate” – ROCR!

So to the four new P’s – polls, populism, performance and of course profits which continue to stymie our Forts Fumble and Crumble. The politician who should have been Premier of NSW, Blacktown MP Paul Gibson ‘Fed up’ NSW Labor MP quits so now thirteen (13) Labor MP’s have announced their retirement in the past two months. Paul Gibson “we’ve moved from platform and policy and pursued a poll driven agenda.” Fort Crumble is shambolic and an embarrassment where Transport Minister John Robertson has already called his transport removalists to grab the now vacated seat. Thirteen, with more to come as powerbroker Joe Tripodi quits. Premier Kristina “Bambi” Keneally has (unofficially now) been placed on the endangered species list due to a lack of interest – polls, populism, performance and no profit.

A perfect dismount from the strangest election ever – You can say that again! The four new P’s continue to dominate as Julia Gillard losing ground to Tony Abbott, News poll shows given the continuance of Labor’s policy woes pile up. No doubt we will be hearing and reading plenty more about this in the months to come. Fort Crumble continues to disintegrate – polls and populism shape public perceptions. Fort Fumble relies on the hope factor – Swan’s numbers looking rubbery when more ‘courage’ needed in spending cuts, says Access Economics. Polls, populism, performance and of course profits continue to threaten the capability of Fort Fumble.

Back in 2000, Virtual Realty News subscriber sales sat at zero when we launched our online platform. Today, they sit at $998,770,220 so we are now $1,229,780 from breaking the $1,000,000,000 mark.

Unfortunately, this week’s $10.000 million plus Balmoral sale did not qualify – another big week of local sales which suggests a strong run of property transactions through to Christmas.

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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12.11.10Robert Simeon5 Comments »

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Ask any business owner what the key to business longevity is and nine times out of ten the answer will always be – customer service. It all started just before the running of the 150^th Melbourne Cup when the Reserve Bank of Australia (RBA) announced its Statement by Glenn Stevens, Governor: Monetary Policy decision.  The punters were shocked with this rate rise shock – the fourth increase in 2010. The cash rate increase was later to be described as the RBA makes pre-emptive strike, economists say. Then as quick as Americain down the Flemington track the Commonwealth Bank adds 45bp to home loan rate effective from today, citing “overall wholesale funding costs continue to increase as cheaper funding expires and is replaced with more expensive funding”. The banking stewards (otherwise known as politicians) were quick to saddle – up although opposition Treasurer Joe Hockey was already in a somewhat awkward and lonely canter.

A graph that has figured prominently in Virtual Realty News is the Household Estimates of 2007 – 08 which is the last Australian Bureau of Statistics (ABS) measure of Australian households that rent, own with a mortgage and own without a mortgage – which I call The Big Third Theory.

• The number that rent – 2,399,900 which equates to thirty (30) per cent.
• The number that own with a mortgage – 2,835,200 which equates to thirty six (36) per cent.
• The number that own without a mortgage – 2,679,200 which equates to thirty four (34) per cent.

Based on this anecdotal data where with each and every cash rate increase the impact affects sixty six (66) per cent or 5,079,100 Australian households. Politicians need to cease being statues.

BUY PRINT

Another Tim Mooney brilliant capture that would make a great front cover for Eastern Suburbs real estate agents’ Christmas cards – nothing beats a sensational aerial shot.

Credit card debt more common than mortgage debt and we all know that the Big Gang Theory of increased funding does not apply when they are already charging consumers around twenty (20) per cent. When the Melbourne Institute revealed their June quarter 2010 results they announced that for the first time since November 2006, credit card debt is the most common form of debt among Australian households, rather than mortgage debt. The number of households with credit card debt was 36.6 per cent, while 33.9 per cent had mortgage debt. Credit card rates should be at the very same rate as home mortgage rates.

Customer service is all about meaning business not being a mean business – The Big Gang Theory.

Joe Hockey has good idea, no – one takes notice given banks showing no rates restraint, despite massive profits so out came Joe Hockey’s Nine – Point Plan when he addressed the AIG Annual National Forum in Canberra on October 25 in Canberra – “It’s time to talk banking.” Banks, rates and regulations: who’s in charge here? As Westpac chief Gail Kelly calls for calm as anger builds over bank rate rises given the banks are wary of Hockey bandwagon. The irony being that just only last week it was Hockey who was copping the bashing when he suggested that he’d re – regulate interest rates. As Dennis Shanahan wrote in The Australian – It’s Hockey’s turn to bash Swan. “In just a few moments yesterday, Joe Hockey and the Coalition went from being buffoons to heroes. And Wayne Swan went from being economically and politically superior to being populist, ineffective and trailing the opposition Treasury spokesman on banking policy.” Out from the gates then jumped Wayne Swan flags banking reforms declaring the federal government would now announce banking reforms next month prompting Hockey “The Jockey” to demand release reform plan now – the “Big Fella” was now on a roll dining out on roasted swan.

There was still plenty happening within Fort Fumble’s home economics kitchen when Phillip Coorey from the Sydney Morning Herald revealed – Out in the cold: Rudd held fake budget meetings to stop leaks not to be confused with steamed leeks. “Kevin Rudd and his senior ministers were so suspicious of Lindsay Tanner that they used to hold fake pre – budget meetings to ensure their plans did not leak. According to accounts of meetings of the now abandoned Strategic Priorities and Budget Committee, nicknamed the gang of four, some meetings with Mr Tanner would deliberately be light on detail. After the meeting concluded and the then finance minister had left, the other three members of the committee – Mr Rudd, Julia Gillard and Wayne Swan – would reconvene and discuss their budget plans in detail.”

Lindsay Tanner is writing a book and I can’t wait to read that given the revelations say very little for Kevin Rudd’s schoolyard games amid financial crisis. I can’t ever remember reading a more damaging report about an elected Australian government’s economic credibility. I must admit that I have always been a Lindsay Tanner admirer – he was smart, to the point and definitely not a populist policy proponent.  Kevin Rudd denies holding fake budget meetings … why am I not the least surprised.

In the meantime, Australia is bathing in a budget surplus (not) as Labor racks up $25.2 billion deficit in just three months shadow minister for finance and debt reduction Andrew Robb reported. The latest government financial statement reveals a staggering budget deficit of $25.2 billion for the first three months of the financial year. “The government is banking on improvements in revenue to bring the budget back to surplus, yet this statement shows no signs of the level of improvement that will be required and therefore spending must be cut.” CommSec chief economist Craig James estimates that the underlying budget deficit in the year to September was a record $63.3 billion. “The main concern is that revenues are still tending sideways rather than showing signs of repair. Meanwhile, government spending is at record highs and showing no signs of stabilising.”

Without a doubt one of the smartest economic reports that I have read is Economic reform will curb pressure on rates which lays much of the blame for increased interest rates on inept government policies. “But while rate rises are a blunt instrument, they are just about the only way the RBA can suppress demand. With a rising dollar, which will depress exports other than minerals and energy production, it is an automatic stabiliser that will slow the economy. A far better solution would be for government to have invested in infrastructure – railways and ports – to increase the efficiency of exports and to have improved productivity in southeast Australia, which is not benefiting directly from the boom. But the Howard government spent the taxes raised by energy exports on its watch on welfare payments and Kevin Rudd threw money at unproductive job programs, as Julia Gillard is still doing.”

“In the current circumstances, the price of stalling economic reform will be more painful than interest rate rises”. Hence, building approvals slide more than expected in September with a 6.6 per cent fall – in the year to September building approvals were down 11.6 per cent.

So figures confirm building weak which is understandable given the Gillard government still has more than $6 billion to be spent with her Building Education Revolution. Don’t blame the Big Gang Theory entirely as we all know they suffer on compassionate grounds. The answer should not be directed to angry customers should switch banks: Gillard rather economic reform, and we all know what happened to the Henry Tax Review.

No wonder Australians want an election – now given both forms of government continue to ignore economic reform. It is becoming increasingly obvious that economics is not a strong point for either party of choice – hence the ongoing and growing budget deficit.

When it comes to Nation Building – Fort Fumble (Gillard) has lost the plot!

Subscriber sales jumped to $986,510,220 so we are closing in on the magic $1 billion in subscriber sales.

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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5.11.10Robert Simeon6 Comments »

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After all, we are in the greatest performing economy on the planet. Having sailed through and mostly ahead of the global financial crisis (GFC), our property markets once again find themselves positioned at the business–end, following a term of prolonged holding patterns. Ground conditions are perfect for take–off, with clear skies ahead and very little turbulence on the radar. Although what remains unclear, is who will be playing and who will be staying? The buzz word during the GFC was stimulus and it was merchant bankers who stimulated top–end property markets. There was no better example than Mosman, which remains the most expensive municipality (not suburb) in Australia. Bankers’ bonuses have been ‘rivers of gold’ for our bricks and mortar markets (merchant bankers remain our single largest subscribers) although their market engagement appears to have peaked in early 2008.

What is acutely clear, is that households have been actively paying down debt, instead of rolling it over and taking on more. Not that long ago, real estate agents made diary notes as to when the big banks were paying bonuses, which translated into the annual game of house trap!

Property markets move in mysterious ways (remember when the GST was introduced in 2000?). We saw property developers in Mosman gradually withdraw (especially with houses) because the additional ten per cent impacted their returns on investment and this once popular vocation became academic.

BUY PRINT

Pittwater weekenders were also very popular in the real estate indulgence markets where these properties failed the financial reconciliation of the GFC as the owners headed back home.

Another factor that needs to be considered when house values are flat, is that when additional acquisition costs (stamp duty) and selling costs are measured, vendors find themselves at breakeven. This was the norm, when purchasers were playing with additional income streams and stimulating markets with bonuses that can no longer be taken for granted. The following three graphs show the volume of stock on the market for houses and apartments in Mosman, Cremorne and Neutral Bay, with houses showing much more consistent patterns.

MOSMAN

CREMORNE

NEUTRAL BAY

The Punch guide to our rich suburbs and big houses identifies a study conducted 2003–04 and 2007–08 which identified Mosman as having the highest average income in Australia, at $131,606 (the national average is $44,402). Considering that we are now post GFC and these results are more than two years old, it will be interesting to see if there are any significant changes to Sydney’s wealthiest the richest in the land.

Confidence has always provided the much needed oxygen to all financial markets so overseas travellers would be happy this week, to see the dollar bounces as economy worries fade. The question many are asking is ‘will confidence remain sky high’? Consumers turn cautious as outlooks clouds when the Westpac and Melbourne Institute released its index this week which showed that consumer sentiment fell 5 per cent in September to 113.2.

The consumer sentiment must have been taken before Julia Gillard announces cabinet which is just in time as parliament resumes in two weeks. The broadband debate will be riveting given Tony Abbott picks Turnbull to ‘demolish’ Gillard’s broadband plan. I wonder if he read skills shortage threatens Gillard’s NBN pledge when it was revealed the regional rollout could face a skills shortage. “The Communications Electrical and Plumbing Union estimates around 7,000 now have the competency to work on the NBN’s construction, but 25,000 technicians will be needed each year to build and operate the network over the period of its construction.” In the meantime, The Emperor is off to the USA for a sleepover at the White House and here are the other cabinet members.

The big banking announcement of the week was Basel III agreement announced. Global regulators are enforcing rules for banks to hold top–quality capital totalling seven per cent of their risk bearing assets (up from two per cent) to prevent any repeat of the recent international credit crisis. Australian banks are unfazed by tough new rules given they already qualify, with the ANZ sitting on 11.1 per cent, Commonwealth Bank 10.1 per cent, NAB 9.4 per cent and Westpac 8.6 per cent according to Deutsche Bank figures. Our banks are jumping back into the property market as lenders back throwing cash at buyers although our property bubble is too fit to burst. ‘A report last week from Moody’s Investor Service found that delinquency rates are still very low. For example 30+ days – past due delinquencies were 1.34 per cent in June compared to 1.39 per cent in May. That means that less than 2 per cent of loans are falling into arrears of 30 or more days past the due date’.

As stated previously, many Australian households are pre–paying their mortgages. Major banks report that over 55 per cent of mortgagees are ahead on their payment schedule, with 40 per cent, by more than a year. What a pity that U.S.A. banks were not in that position when subprime hit!

Here is a great one on one interview by our very own Steve Patrick with Glen Spratt from Mortgageport.

This video was produced by visualdomain

This week, we celebrated the 10th anniversary of the Sydney Olympic Games. Coincidentally, we celebrated the 10th birthday of Virtual Realty News. Ten years ago, when I sent out our first edition, it went to 38 subscribers (we still have a few of these originals) and look where we are today – $956,784,220 in online subscriber sales and Australia’s longest and most successful online newsletter. I am proud to say that over that time we have never missed a single edition. We have quite a few new initiatives in store and will be working very closely with visualdomain to produce fortnightly/monthly (still working that out) video editions of Virtual Realty News for those who don’t want to read them. Stay tuned for many more real estate industry firsts!

All will be revealed soon.

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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17.09.10Robert Simeon4 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 »

Yes – Fort Crumble (NSW government) is basically lost and now trying to turn back time. Today, it is stone motherless broke and with no idea how to turn the economy around, can conveniently lay the blame on the global financial crisis. The 2008/09 budget announcement re-winds the clock to 1996 (when NSW was last in deficit). With an estimated budget deficit of $1.3 billion for 2008/09 and net debt to rise to $12.9 billion by June 2010, it’s hard to believe that Fort Crumble can return a budget surplus again. (It could not manage NSW in economic growth – with record tax/GST receipts).

Last Sunday, editor of The Sunday Telegraph Neil Breen wrote “Labor bungling a total turn-off” where he too turned back time. Neil Breen wrote “On Tuesday, Treasurer Eric Roozendaal will deliver the 15th budget since Labor was returned to government in NSW at the 1995 election. They switched off. Long ago.”

What an amazing capture by Tim Mooney – my favourite photo so far and one that illustrates just what makes Mosman so special. A natural suburb with a striking seascape where nature is preserved over housing development – be the judge? Since Tim joined our online platform, Virtual Realty News, many subscribers have contacted him to purchase his photos for their enjoyment.

Website: www.timmooneyphotography.com

Email: info@timmooneyphotography.com

Back to Neil Breen, “You need only read the following excerpt to understand why. It’s from then Treasurer Michael Egan’s first budget speech 14 years ago.

Labor was back in power and was feisty.

“For too long, we have put up with long hospital waiting lists, an understaffed police service, inadequate child protection and lack of accommodation for the disabled.”Mr Egan thundered.

“This budget delivers major improvements in hospitals, schools, police and crime prevention and community services.” Sound familiar?

Fourteen years on, everything is broken and now, our Premier ‘Nathan Please’ has listed Mosman police station for sale – indeed a backward step. If he can’t manage a surplus, how can he manage debt – by living in the past?

Thank goodness the Reserve Bank of Australia (RBA) remains on the money. This week it released board minutes from its last meeting – keeping its powder dry. As our economy manoeuvres its way through a global crisis there are obvious and escalating concerns which were highlighted when the Commonwealth Bank raised its standard variable rate last Friday (still below competitors.)

As the retiring member for Higgins announced this week, the greatest challenge facing our economy in years to come will be interest rates and yet, leading economists still maintain that borrowers should remain on variable rates. I don’t agree.

The problem with interest rates, is lack of competition as identified this week in www.crikey.com.au “Since the financial crisis first became apparent, the Government has explicitly put competition second to the need for stability within the Australian financial sector, waving through the merger of two of the five largest banks in Westpac and St George and acquiescing in the Commonwealth’s (CBA) rescue – purchase of Bankwest. The consolidation has come at a time when non- bank mortgage lenders and regional banks have either been driven from the market or badly bruised by the financial crisis, magnifying the damaging anti-competitive effects of the dominance of the Big Four.

Once competition is lost in Australian markets, it is awfully hard to regain. The ACCC has no divestiture power, so even when we are over the impacts of the financial crisis, we will not be able to regain even the limited degree of competition that applied until 2008. The only sensible course of action for most consumers is to buy bank shares, and get at least some benefit from the gouging, exploitation and bastardry that our banks can get away with.

But that’s no help to small businesses that can’t get loans, or face usurious interest rates when they do, or exporters, who face a punishingly high Australian dollar courtesy of our interest rates. Or, for that matter, to the workers who depend on them.”

Much like Michael Egan’s prediction in 1995 (it never came to fruition – only his pension evolved) BIS Shrapnel’s Residential Property Prospects report announced that house prices will rise by nearly 20 per cent over the next three years. “Green – shoots” of recovery based on the first home buyers grant and low interest rates. Green shoots can quickly become red shoots should banks up interest rates – which explains why the RBA continues to keep their powder dry.

One day later, the following graph appeared online criticising BIS Shrapnel for its forward thinking because such forecasts do not consider the x-factor and three years on so much can change. There again, fourteen years on and nothing has changed for the NSW government (other than a huge deficit). With fewer banks today, this scenario is no different from the control that Woolworths and Coles have over food and petrol prices.

Wayne Swan criticises the CBA for “selfish acts” and its rate increase of 0.10 per cent that “threatens recovery” of Australia’s economy (still the lowest). It is somehow puzzling that Ruddy Fantastic then shakes his sauce bottle to all and sundry in an effort to stimulate our economy. Not in agreement, Westpac and St George then increased fixed mortgage rates by 0.5 per cent, citing higher wholesale funding costs. Quite the opposite when the Reserve Bank of Australia (RBA) announced that our Big Four banks are currently enjoying healthier net interest margins (NIM) than before the global financial crisis. “The major banks ‘ NIM currently averages 2.27 per cent, which is a little above the level before the onset of the financial market turbulence in mid 2007.” Nation Building or Bank Gilding?

Back to the NSW budget – with a brilliant spin to kick start the housing sector. A short lived spin – where just one day later the Australian Bureau of Statistics (ABS) announced that (in the first quarter of 2009) home building fell to its lowest level in eight years. Economists then predicted that this sector would increase significantly in the second half of 2009 – this won’t happen as the banks are no longer lending to developers – fact. Re – affirmed by the latest ABS release which (alarmingly) identifies that our NSW government policy (rhetoric) is definitely not in sync with banking policy.

ABS data for the three months to March, identifies that the number of new housing starts has fallen to 5,400, down from 7,500 compared to March 2008. In the March quarter 2004, new starts were 11,000 (a fifty per cent decline). This is what then happens – the following data shows that Sydney clearance rates are now at 71 per cent and above 80 per cent, is considered a boom market.

Subscriber sales jumped this week to $892,096,219. Over the last 18 days, we have sold 16 properties to the value of $47,000,000. I might add that RWM is the only local agency reporting such great sales. As I wrote last week “better to be in the market than on it”, and that means growing your online market, not reducing it. The leaders in real estate today, are those who invested and developed successful online media platforms (years ago). Times have changed. We have and as our sales results prove, businesses need to move with the times. http://www.rwm.com.au/sales-list/sold_listing/

RIP – Paul Eastaway, a Mosman identity who will be greatly missed. A very funny and caring man who brought a smile to everyone’s dial – so many wonderful memories.

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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19.06.09Robert Simeon3 Comments »

First and foremost when economic markets fall into decline the key performance indicator (KPI) is unemployment. Six months ago the focus was on inflation – better remembered as Wayne Swan’s “inflation genie” that vanished as quickly as his government’s “cash splash” – poof!

Just as disturbing is that the current Global Financial Crisis (GFC) remains without definition. We know that first symptoms emerged in the United States (US) and the current prognosis is that its economy is now on life support. The simple fact that the US is now faced with an unemployment rate that last week rose to a 25 – year high, sends a sobering message – as at February 2009, 12.500 million Americans were unemployed. This figure equates to just over half of Australia’s total population.

A glimmer of hope was the announcement this week that US housing starts and permits changed direction in February (following 10 months of declines). This is viewed (psychologically) as an improvement although it should be noted that some houses in the US are for sale at just $1.50. It was also revealed this week that US credit card defaults increased in February to the highest level in twenty years.

At home, economists are suggesting that we adopt a new measure that indicates when a country is actually in recession. As quick as Margaret Fulton’s recipe for scrambled eggs, Saul Eslake, ANZ senior economist, advised muffin munchers at a recent breakfast that it “was silly” to say an economy was in recession based on two consecutive quarters of economic growth. So the norm is replaced with a modern day definition even though in economic growth years, such a proposition was never considered? Mr Eslake suggested that the definition was “beloved of the media but not of most economists” and should be replaced by a measure of unemployment.

Is anybody prepared to announce that Australia’s economy is not in recession? Australia’s unemployment rate jumped to 5.2 per cent in February and it’s growing. In all probability it will hit 10 per cent (if what is happening in America is any indication). For example, businesses are not going for a knife or a machete – their weapon for survival is a chainsaw . Much like pruning a tree, businesses all over the planet are engaged in a selective pruning process – exacerbated by a Federal government that can’t see the “forest for the trees”.

The US is not alone, with the Westpac Bank – Melbourne Institute announcing this week that (wait for it) Australia is on the brink of recession. The index for economic activity noted that growth rates fell further in January to -3.1 per cent down from December’s index of -2.8 per cent. It would take a very brave individual to suggest that February and March results will not reveal further downturns. We are in recession – just that this word appears to be forbidden by institutions (I’m thinking share price = bonus?).

As Professor Stephen Sedgwick (Director of the Melbourne Institute of Applied Economics and Social Research) recently wrote “THE ECONOMY – Planning for surprising times. POLICYMAKERS and forecasters have been unpleasantly and powerfully surprised several times as the global financial crisis has unfolded. But downturns don’t last forever and history suggests that policymakers can also be surprised on the upside.”

Unlike the USA, Mosman is not offering any properties for $1.50 (the agent’s commission would equate to $0.03 cents at 2 per cent). Just as interesting is what is happening in the Sydney property market where last week, the auction clearance rate was 63 per cent, up from 47 per cent same weekend last year. The clue – the number of properties sold fell from 229 last year to 127 last weekend. This pattern has resonated throughout the Mosman market in 2009 where volume is declining, not increasing. Mortgagee sales in 2009 are all but non – existent (just the one in Mosman at the moment).

The latter stage of the 2008 property market was an absolute debacle, based on the public perception that 2009 would be a bloodbath. It is interesting to note that this week, the perception is that the second half of 2009 will be the bloodbath. Does this mean that 2010 will be a ‘property price Armageddon?’ The reality is, nobody knows!

The Mosman real estate market in 2009 is simply minding its own business and getting on with the job at hand. I did laugh this week when a Mosman/Neutral Bay agency posted online, it’s very impressive (recent) auction results – with plenty of positive spin. Just amazing what happens when the withdrawn properties somehow miss the cut – hey presto!

Spare a thought for Fort Fumble’s esteemed leader Kevin Rudd, who would have been simply devastated to learn that the British Government relegated Australia to a “low priority” for April’s G20 summit. Could this be pay back for Kevin’s indiscretion when he announced that he (allegedly) had to explain to George Bush what G20 was all about? Oh well, Kev at this summit you can tell other attendees that you are sitting in economy class (no pun intended). Makes one wonder if his alleged comments may have seen him upgraded although it would be fair to assume he does not have enough points on the World podium.

Now his (neo – nothing) G20 speech can be written on the back of a postage stamp.

No doubt Commonwealth Bank supremo Ralph Norris read last week’s edition of “Virtual Realty News”. This week, he warned that the Rudd government’s first home buyer grant could (as I suggested) lead to a residential property bubble. Too late it has already happened!

Perish the thought – our esteemed Prime Minister is struggling to come to terms with the fact that he is on the “B list” for the G20 summit. Hey presto! I always tag the names of our Prime Minister and Treasurer to give them the opportunity to read each edition of “Virtual Realty News” – maybe one day they will post on our blog?

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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20.03.09Robert Simeon1 Comment »