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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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Australians love acronyms although one that never applies to the real estate industry is POETS day – Pi$$ Off Early Tomorrow’s Saturday! However, for the month of July, it applies simply because (traditionally) it is seen as the month for ‘resting’ properties. Then when August arrives and the weather starts to warm, it is Game On again, for the final run through to Christmas. In July, Aussies chase the ‘S’ word – Sun, Snow and school holidays. Of course, property deals are still transacted thanks to the availability of excellent technologies.

We are at the start of a new financial year and by all accounts it will be another interesting one the fizz has gone, but it will be a wild year. ‘The past financial year has been one of contrasts. It began with such vigour and such optimism. By Christmas almost every major commentator was predicting that not only were we out of the mire, but that we were witnessing the dawn of the greatest bull run of all time. That rocky period between late 2007 and early 2009.Hah! That was merely a hiccup.”

BUY PRINT

Clear waters ahead; keep swimming between the flags or stay in the pool?

Greece and Europe face another 48 hours while the world worries about recovery as fears grow over health of the global economy. Quite fascinating given that house prices up but buyers wary of interest rates going the same way although many believe that the economy faces long grind out of crisis.

At this juncture, property markets can easily be confused with what is occurring in the share market, as was the case with red lights are flashing in fragile economy where “the end – of – quarter window dressing held the Australian stock market together yesterday but there are red lights all over the place. The market recorded its worst result for the financial year, an 11.8 per cent fall for the three months. The problems in short, are no signs of a domestic– led bounce with an election due to be called any day, weak US economic numbers, European sovereign debt and a slowing China.” So why then do property buyers wait for a booming market to pay over and above in what is otherwise known as a vendors’ market? When they find themselves in what is considered a buyers’ market, they freeze, which is probably more a casualty of economic data overload. Unless you are a property developer, the purchase of a home is considered an emotional acquisition and we all know that sometimes, our emotions can get in the way with our feelings.

Given IMF chief rules out double – dip recession one of the greatest concerns facing the Australian economy is that the Reserve Bank of Australia (RBA) is at odds with Treasury and Fort Fumble which keeps spending. Some believe that the RBA raised rates too far while others believe (with a federal election pending) the Gillard Gauntlet is borrowing and spending too much in an attempt to buy the upcoming election. Retail sales rose by a modest 0.2 per cent in May while residential building approvals fell 6.6 per cent.

Housing starts set to stall: HIA which is a leading indicator that construction is expected to jump in 2010 but drop to just 3 per cent growth in 2011. Currently Australia has a 200,000 house shortage despite an underlying growth in our population. This, of course, places enormous pressure on rental markets and yet the federal government has no strategy in place to address these concerns. Makes one question just what exactly the Housing Minister does, aside from a failing to understand basic construction economics. The combined real estate industry is the largest employer in Australia and yet, we are being told that Australia is adopting a ‘tool down’ policy. So what we are witnessing is a government attempting to stimulate votes and ignoring basic economics.

Julia Gillard insists on building classrooms (with plaques) and nobody is building Australia. The BER (Building Education Revolution) with the benefit of hindsight, should have been BAR – Building Australia Revolution. After all, who lives in a classroom?

Someone should have told them you can’t sell a classroom but you can sell a house – even in July!

Her first back-flip with the RSPT announcement today, is somewhat confusing given the tax rate dropped from forty to thirty per cent. A lot of argy bargy for just a ten per cent compromise. Either the miners are poor negotiators or Fort Fumble’s revenue estimates are incorrect – no surprise for guessing the answer.

Miners: 1 Fort Fumble: 0

Fort Fumble will call it an own goal thinking they scored too!

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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2.07.10Robert Simeon3 Comments »

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Politicians are an interesting breed where on one side we have a government that finishes nothing and on the other side, an opposition that says nothing. Would it then be fair to assume that we are expected to know nothing as that way, when we see nothing, assume that something is actually happening?

These days, The Emperor (Kevin Rudd) is better credentialled to be sales manager of Flight Centre given his vastly accruing frequent flyer points.

With respect to The Emperor, we are spending billions on schools yet the last time I looked, nobody is living in them. So why renovate at this point? (plaques aside). It is very clear that as a matter of national urgency, Australia needs to be building housing accommodation to meet demand – our elected politicians (under the stress/threat of having to make a decision) forget that the property industry is the largest employer in Australia. Maybe they should read this article written by Stephen Lunn from The Australian – Housing stress getting worse – experts.

Tim Mooney Photography – Greenwich Point, Greenwich

www.timmooneyphotography.com

No better example when The Australian and the Melbourne Institute jointly hosted a Road to Recovery conference this week. Enter Wayne Swan who said, “We’ve got to really get going when it comes to building a supply of housing or we’ll hit capacity constraints that will hurt us in the very near future.”

Wayne, we are already there as Australian Council of Social Service chief executive officer Clare Martin pointed out. “Some 850,000 Australians are now in housing stress, with rental costs gobbling up a high proportion of their income.”

On top of that, the OECD announced this week that food prices in Australia have increased 41.3 per cent since the start of 2000, which then prompted a Government minister to call “for greater competition” (no solution offered) just a comment. For the record, Coles and Woolworths account for approximately 80 per cent of the Australian market.

Back to Clare Martin “A third are low – income households. Add to that the 105,000 Australians who are homeless and you start to get a real idea of how big the problem is.” Remember that Wayne told us “we’ve got to get going” Clare Martin announced the Government’s $6.4 billion commitment to social and community housing (recently wound back by $750 million). Wayne, that is actually going backwards, “Nation Building was going to build 20,000 new dwellings (but) the outstanding need right now is 250,000 affordable homes.” The Australian reported just 73 homes so far had been completed under the Government’s spending plan. This end of the property market needs to be wound up, not back, as the top end is doing very well (Lachlan and Sarah Murdoch purchased ‘Le Manoir’ for $23 million this week).

La Manoir – Lachlan and Sarah Murdoch’s new Eastern Suburbs home

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Economist Saul Eslake told the Road to Recovery conference, “One lingering effect of the financial crisis which is likely to exacerbate the housing shortage for some time yet to come is the difficulty which proponents of multi – unit housing developments are continuing to encounter in gaining access to finance.” So the banks lend to purchasers, yet won’t lend to developers which explains why, in Australia, multi – unit housing developments remain at historically low levels.

Alas, a Road to Recovery where Fort Fumble (Federal government) has turned the vehicle around and is attempting to drive backwards along the recovery road (with hazard lights beaming).

The Future Fund has around $60 billion in funds so why should it not enter the Australian property markets given the major banks’ reluctance to fund this emergency infrastructure market. It was built on selling government assets (Commonwealth and Telstra) so about time these funds were injected back into Australia.

Why does The Emperor still allow the Foreign Investment Review Board (FIRB) to relax regulations so that foreigners can purchase “new properties”. When “Finish Nothing” government spokesman for Assistant Treasurer Nick Sherry (he must be away too) said, despite the rule changes, the FIRB rules were designed to spur the creation of additional housing supply rather than add to affordability problems. Remember “Hogan’s Heroes”, Sgt Schultz – I know nothing!

The Australian Bureau of Statistics (ABS) smashed this “dumber and dumber” market assessment when it revealed this week, that fewer Australians own their homes outright and a greater number now rent (official data reflects worsening housing affordability). The Sydney Morning Herald journalist Chris Zappone wrote Home ownership down, renting up: ABS

“The proportion of people who owned outright by their occupants has dropped from 42 per cent in 1994 – 95 to 33 per cent in 2007 – 08. Over this same period the proportion of households renting rose to 30 per cent in 2007 – 08, from 26 per cent in 1994 -95.” Bear in mind that these figures will change significantly because First Home Buyers accepted the governments (collective) bribes to enter the property markets (casualties are yet to be determined).

Fort Fumble has wound back its boost for new and established dwellings to $3,500 from $7,000 (established) and $7,000 from $14,000 for new. At Fort Crumble (NSW government) you can collect $10,500 until the end of the year for established which then drops to $7,000 in the first half of 2010 and (steak knives) new dwellings $17,000 till the end of the year dropping to $10,000 first half of 2010.

Over to Business Spectator (free subscription) – Housing hopes which is always a fantastic daily read.

• The number of Australian home loans rose by 5.1 per cent in September, after a downward revised fall in August of 1.9 per cent and July -1.6 per cent. Annually, loans are 8.1 per cent higher. This is the highest number of loans since January 2008.
• Growth was driven by loans for construction (+8.1 per cent) and loans for established dwellings (+5.0 per cent, 85 per cent of total loans). Loans for new construction are at their highest since December 1994.
• Loans were strong across states: NSW up 7 per cent, Victoria up 3.1 per cent, QLD up 1.2 per cent, SA up 1.1 per cent and WA up 14.4 per cent.
• First home-buyers accounted for 26.1 per cent of new loans from 24.7 per cent in but still down from the May peak of 28.5 per cent. The size of a first home-buyer loan rose to $274,600 from $270,800 in August and $260,900 in September last year.
• Loans to investors (by value) fell 0.1 per cent after an 8.3 per cent gain in August and are 18.4 per cent higher annually.

Source: Crikey – Lending figures vindicate RBA’s interest rate strategy.

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Interesting to note that the Reserve Bank of Australia (RBA) increased the cash rate in October +0.25 per cent and +0.25 per cent November 2009. Consumer sentiment dropped 2.5 per cent in November (Movember) following consecutive interest rate rises. The Westpac – Melbourne Institute consumer sentiment index eased to 118.3 in November, from 121.4 in October, although it remained 38.3 per cent higher than last year’s level. The October rate increase saw the mortgage market contract for the first time in nineteen months from $2.9 billion in September to $2.6 billion.

Banking prediction of the week?

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NAB’s chief economist Alan Oster said growing consumer confidence and an improvement in business conditions had increased the likelihood of another 25 basis point increase before Christmas.

Interesting comment. Never before has the RBA increased cash rates beyond two months in a row. Over to Big Al at the NAB “This is a pleasing result and as such, we expect there to be a 25 basis point increase in every RBA meeting till March.”

Clip of the week?

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That would be “see nothing” – when applied to border security, housing and our road to recovery at Fort Fumble. Happy 40th Sesame Street and yes, history does repeat itself as do political episodes.

Cheers ^__^

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

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14.11.09Robert Simeon4 Comments »

The latter part of the 2008 real estate market was stymied with speculation that in 2009, it would resemble a blood bath. For obvious reasons there was limited engagement resulting in record low transactions for the calendar year, with many suggesting that this was a clear case of ‘the calm before the storm’.

Already in 2009 we have seen that the property market bears absolutely no resemblance to the one that was predicted in 2008. The general consensus is that prices have been adjusted down and these adjustments vary from ten to twenty per cent. Anecdotal sales evidence suggests that the longer the time on the market, the greater the price adjustment.

My simple daily test for the Mosman real estate market is to monitor the number of houses currently available on www.domain.com.au This applies to all suburbs for that matter. At the end of 2008, listings for Mosman houses were nudging 200 on the Domain property portal. Today, (when one deducts the properties with multiple entries and wrong demographics) the number is just over 145.

To put this into greater perspective, in 2008 it was suggested that we could expect as many as thirty per cent of Mosman’s (approximately 4,900) houses to be on the market where we would see mortgagee-in- possession carnage. The reality is that currently, the Mosman house market is offering just over two per cent – a far cry from vocal predictions of thirty (plus) per cent.

Not to forget Mosman apartments. This is a very strong market where the Queen of Mosman apartment sales (our very own Marize Bellomo) notched up five sales this week.

We are now starting to see this resonate through the property market transactions that continue to build momentum. It has taken the purchasers just two months to get a clearer positioning of real estate markets. We are not attempting to talk our property market up – rather, to share the detailed research that we engage in that differentiates our agency’s obvious point of difference over our competitors. We prefer to offer anecdotal evidence from our research, not speculative, ill-informed rants.

It is not just in real estate that this exists as Alan Kohler wrote on his www.businessspectator.com.au “Wrong Diagnosis” about the demise of Pacific Brands. “Pacific Brands immediate problem is debt, not sales and margin.” This problem is exactly the same in real estate where high debt ratios can also have devastating effects – which is exactly what we are seeing globally. Closer to home, in 2008 we saw the Sydney South – West property markets in a free fall as a direct result of high debt ratios. These markets today are in recovery mode. I did enjoy this comment by Alan Kohler in his article. “Our political leaders, when they can spare a moment from slogging each other off and engaging in the most pathetic spin, and to the extent that they are doing anything useful at all, are focusing on the symptom not the cause – on consumer spending and employment, not credit creation.”

Our brilliant Treasurer, Wayne Swan, was boasting that his December “cash splash” was spent by many, buying “jocks and socks”. Makes one wonder what Pacific Brands think of his statement (a Bonding moment)? The theatre coming out of Canberra is nothing more than a very ordinary act. With each day, the unemployment rate escalates and I am confident that the unemployment explosion would settle down if Pay Roll Tax was abolished to enable businesses to preserve jobs. Pay Roll Tax is easily the most heinous tax and it is just a shame that Wayne Swan fails to understand this simple fact – the $14 billion a year Australian business tax that State governments charge businesses in return for employing staff. Australian businesses continue to proceed with caution although no politicians (Kevin Rudd, Malcolm Turnbull or Joe Hockey) have questioned why Australia’s official interest rate has fallen from 7.25 per cent to 3.25 per cent, yet business lending rates remain closer to the 7 per cent rate. Yes – businesses that employ Australians!!

So what is it that Kevin Rudd and Wayne Swan do *not* understand? Already the theatre is calling for a Theresa Rudd encore, given that she has successfully run an Australian business.

Australia is in a fortunate position where our banks are so strong that Boston Consulting announced this week, that Westpac was the world’s most profitable bank.

A shame that Kevin Rudd and Wayne Swan keep telling Australian businesses to mind their own business which explains why unemployment will continue to rise. As Alan Kohler suggested, ‘focus on the symptom not the cause’.

Our politicians on all sides are best summed up as Dumber versus Dumber. The Rudd/Swan “cash splashes” were all about buying votes, not about shoring up businesses. I call it Incompetent Diagnosis!

Cheers ^__^

This week’s Mosman real estate sales, Cremorne real estate sales, Cremorne Point real estate sales, Neutral Bay real estate sales – http://www.rwm.com.au/news/

Oh and Mosman also posted an $8.000 million + house sale this week 

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27.02.09Robert Simeon2 Comments »