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We all love it when a plan comes together, so spare a thought for those at Fort Crumble (NSW government) who still fail to understand a plan that actually works. We all know what happens next (as you will see) and it does not look pretty for this once proud state. A decade later those horrific and planned bureaucratic bungles are now taking a major toll – (one Fort Crumble can’t collect either). Ongoing bungles at Fort Crumble are considered to be “having a real hard go”.

Just as ironic is that in NSW, infrastructure has moved into economic decline and as with all declines, they have a habit of gaining momentum that ends in a huge crash. On the other hand, when a government drives constituents to other states, it could be construed as its very own plan to fight housing affordability – better known as reducing demand. In a nutshell, no plan works when you apply the supply v demand economic theory, without applying the basic principles of meeting supply first. Housing in Australia is facing an interesting twist, because when the tools to meet supply are down, prices will keep rising – more a result of failed government forces.

Pulpit Point, Hunters Hill (a planned estate to meet supply) photographed by Tim Mooney. The vacant marina berths may well be a result of the global financial crisis. Or was this photo taken on a weekend when the residents were out relaxing on picturesque Sydney Harbour ? (Sounds like a smart plan).

www.timmooneyphotography.com

In past editions I have referred to the ‘thirty something factor’ in Australian housing – one third rent, the other third own with a mortgage and the final third own without a mortgage. RP Data published its Weekly Property Pulse. “Housing finance data released by the Australian Bureau of Statistics (ABS) this week showed that finance commitments surged during September. In particularly there was a strong bounce back in first home buyer loans which was not surprising given that it was the last month in which the First Home Buyers Grant Boost was available in full.” Bear in mind that interest rates are also increasing so here is Household Estimates 2007 – 2008 graph which makes one wonder what it will resemble after the impact of the first home buyers grants in 2009.

This is how it looked (prior to First Home Buyers Grant Boost) when the Reserve Bank of Australia (RBA) was sitting around 7.25 per cent (RBA rates) and in September the cash rate was at 3.00 per cent. Currently, the cash rate is 3.50 per cent. Are the property debutantes who grabbed the grant, aware that post – global financial crisis, we are headed back to the future market? In 2010 – 11 the economy will pick up by 2.75 per cent rather than the suggested 2.25 per cent.

Whilst yet to be evaluated, rental property vacancy rates remain at record lows which in all probability forced many in rental markets to purchase property – the Sydney vacancy rate in October remained at 1.3 per cent. It is supposed to be 2.50 per cent to 3.00 per cent. According to RP Data, over the twelve month period, the weekly rents for houses (nationally) increased by 3.4 per cent (that was in a downturn). So why is The Emperor (Kevin Rudd) wasting money on renovating school halls when there is an obvious need to increase housing? (I will get to that shortly). However, this rental graph is simply scary.

In pursuit of answers, I found that the culprit (surprise – surprise) was our very own Fort Crumble when I read in the Sydney Morning Herald – “NSW not a developer’s nirvana … it’s planning hell” by Aaron Gadiel. “if you were to accept everything that has been said about development in NSW, you might think it was open slather; a developer’s heaven – that planning was out of control or that, development was running rampant.”

“Nothing could be further from the truth.”

“It is time for a reality check.”

“Developers are not fond of NSW. Not at all.” Based on the graph above I would suggest that those in rental accommodation would feel the same, given that when it comes to ‘bricks and mortar’ Fort Crumble is ‘as thick as a brick’ with absolutely no intellectual mortar between the layers.

“In development terms, NSW is neither one, nor even number two. After decades of more building activity than any other state in Australia, we lost our first place ranking to Victoria in 2008. To compound the indignity, in the same year we also fell behind Queensland.” What a plan!

“Victoria and Queensland have stolen a disproportionate share of Australia’s building investment. In the financial year ending in June, NSW accounted for only 23 per cent of Australia’s building activity, while we made up 32 per cent of Australia’s population. The Australian Bureau of Statistics only records one other occasion where NSW was anything but first – and that was in 1977.”

So let’s look at our esteemed Premier Nathan Rees who (as he keeps telling us) is “having a real hard go.” Not sure exactly what is going in NSW aside from the government. “The economic damage to NSW from its poor performance is dramatic. The construction activity made possible by developers contributes $78 billion to the national economy each year. For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy. When we lose development dollars to other states, we’re losing income and jobs that rightfully belong to NSW residents.”

I refer you again to the above graph, “Sydneysiders have already been feeling the pinch of housing shortage. Rents in outer suburban Sydney have gone up by more than 20 per cent in the past two years. In the middle ring suburbs rents have jumped near to 30 per cent “. What a business plan.

For our Mosman residents I jumped over to Australian Property Monitors to access the Mosman occupancy data.

Fort Crumble is in total decay and Fort Fumble has absolutely NFI (No Financial Idea) as to exactly what is happening in the Australian property demographic markets. And my mantra is not to castigate – abuse or criticise our elected politicians on the astounding execution of their Nation Building expertise.

Clip of the Week

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In search, I went to YouTube – where I discovered one of the most amazing clips that signifies achievement. Unlike elected politicians, he is a man of few words yet his actions speak much louder than his few words. Backed by Delta Goodrem singing “Together We Are One” this clip should be re-played at every household and sales meeting.

Inspiration personified – Gavin’s Bridge Climb

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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20.11.09Robert Simeon4 Comments »

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The Emperor (Kevin Rudd) flew in this week with his economic warriors fresh from the Gala – Yours ‘n Plenty Spend To No End festivities, where our very own MasterChef of economic stardom was quick to see how production of his “Bronzed Aussie” school plaques were progressing. Almost immediately, The Emperor and his trusted Treasurer Wayne (“Sum Ting Wong”) Swan, were perplexed! This nearly resulted in the spilling of their traditional Chinese herbal tea (daily ceremony) when the Opening Statement to Senate Economics Reference Committee by Glenn Stevens was read then (later) explained to them.

First to spruik the findings of this report was Financial Services Minister Chris “Noh Nut Hing” Bowen who must have thought all of his Chinese fortune cookies (better known as Treasury forecasts) had come at once. Breathing fire, much like his favourite red silk Chinese dragon pyjamas, Noh Nut Hing declared “Glenn Stevens today gave a very good endorsement of the government’s actions so far.”

Sadly for Fort Fumble (Federal government) it was a peek –in and duck opening statement when it was revealed that very little had to do with Fort Fumble’s economic cooking techniques – the oil in the prized Fort Fumble economic wok was spitting and burning without the usual high – five spice powder. Puff, the magic economic dragon, was tempered with the consequences of economic chop suey – (lawyers on hold) much like each edition of Virtual Realty News.

Tim Mooney Photography

www.timmooneyphotography.com

So off to the opening statement we go. Glenn Stevens “By the standards of past recessions, however, this was a mild downturn. Although the evidence is as yet incomplete, this episode has been much less serious than those in the mid 1970’s, the early 1990’s.” What, no mention of the Great Depression? Fort Fumble revealed this week that the final outcome for the 2008-09 year was a deficit of $27.1 billion – a $5 billion improvement on the fortune cookie (Treasury) predictions of $32.9 billion.

Head economic waiter of Yum Cha proceedings Wayne “Sum Ting Wong” Swan, announced from his economic kitchen “the stronger than expected final budget outcome does not substantially diminish the fiscal challenge imposed on the Australia by the global recession, which has resulted in the largest fall in budget revenues compared with its comparable budget year forecast since 1930-31.” Obviously Sum Ting Wong was acknowledging a point that the Reserve Bank governor missed?

Glenn Stevens “So I think that it is reasonable to conclude, against the benchmarks of historical and international experience, that Australia has done quite well on this occasion.”(No mention of stimulus.)

“Why was that so?” (A Cadbury chocolate moment?)

“First, our financial system was in better shape to begin with, being relatively free of serious problems the Americans, British and Europeans have encountered. “ Umm would that allude to the collapse of HIH when the then government introduced prudential authorities? Obviously a coincidence, learned consumers of fine economic dining may think!

“China will easily achieve her 8 per cent growth target this year, led by domestic demand.” No doubt The Emperor arranged for his school plaques to be made in China.

Last but not leek, “The Commonwealth budget was in surplus and there was no debt, which meant expansionary fiscal policy measures could be afforded.” Past Prime Minister John Howard was last seen doing the cha-cha on his daily morning Kirribilli walk and was observed looking at one particular signboard.

Last Saturday, 682 Sydney properties were offered to the market – eclipsing the previous record of 571 homes and apartments set back in March 2007. Many suggest that this is a direct result of the first – home buyer’s grant which was halved this week. From October 1, the First Home Buyers Boost was reduced to $10,500 for existing homes and $14,000 for new homes – both subsidies will be scaled back to $7,000 next year. What happens to property prices at the lower end is anyone’s guess although increases in interest rates must be factored in. Already there are strong suggestions that we will see the Reserve Bank of Australia (RBA) increase the cash rate in November and again in December. This is self explanatory when you look at the following graphs which provide a compelling reason as to why lower income households will definitely be vulnerable. Given it is a long weekend, here is the RBA Housing Market Developments Report (an interesting report).

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Quite amazing! We are presently experiencing record immigration growth and a major concern is that building approvals fell 0.1 per cent in August according to Australian Bureau of Statistics (ABS) figures. Maybe a clue for the Henry Tax Retort (oops I meant Report). The RBA estimates that the underlying demand for new houses annually, is around 180,000 to 200,000 and we are not even close to meeting these consumer demands which explains the current housing patterns.

It is a very hard market to predict given the above data which identified national property values climbing by 2 per cent in August which is the highest monthly increase since RP Data – Rismark Home Value Indices began in January 2005.

Mosman is a much easier market to predict given that house volumes are at record lows and I’m not reading tea leaves either.

Richardson & Wrench Mosman & Neutral Bay was again awarded the number one sales agency in the Richardson & Wrench network last Saturday night. A fantastic team effort and special thanks to the nights major sponsor the REA Group.

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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2.10.09Robert Simeon12 Comments »