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In the Aussie vernacular we call it “dumber and dumber” – The Emperor (Kevin Rudd) prefers to call it “shaking his sauce bottle”. What this really means, is that he instigates a plan, turns it into  a huge economic catastrophe  and leaves it for someone else to sort out! .  The cracks are starting to appear everywhere so let’s look at them.  Political polyfilla is not the answer, as Fort Fumble (Federal Government) experiments and fails miserably with untested, bad policies – their learning curve.

Ross Gittins wrote in The Sydney Morning Herald Rudd ominously silent on climate change. “We know Kevin Rudd has what it takes to win elections and it would be amazing to see him lose this year. So we know he can survive as prime minister. A much harder question is whether he has what it takes to be a good prime minister.” The Emperor has transformed himself from a Yes Minister to a Guess Minister! Or possibly a Guest Minister!  He can’t differentiate between ‘politically correct’ and ‘policy correct’ – The Emperor’s scorecard is displaying the letter “F” (Fail or F#$@ – up).

“Rudd has been frenetically active since Day 1. So it’s truer to say he doesn’t have a lot to show for all his activity. And some of what he has to show isn’t very impressive. His notorious attention to detail doesn’t seem to be paying off.” I would challenge the words paying off – as Australia will be paying – off these bad policies (on the run) for many years to come and with nothing to show for it.

BUY PRINT

Tim Mooney is developing a cult following here and this Paddington capture shows why – maybe one of our Eastern Suburbs real estate agent subscribers can identify which street this is? A timely photograph given last weekend’s ‘Super Saturday’ which is also addressed in this week’s edition.  Maybe the” Mosman Word Smith” can add some light given skylight sales are obviously very popular in Paddington – let there be light and insight! Over to you Billy boy – I’m sure you can’t identify it.

.Back to Ross Gittins “This is true of their reporting of the insulation scheme and the school building program. Even so, you get the feeling we’re seeing an instance of Rudd’s inexperience as a leader – his belief that, by thumping the table, he could make things happen.” Now for another crack – “I think it was veteran journalist Laurie Oakes who said that in Howard’s first term he made every mistake in the book – but he only made them once. Has Rudd got such a steep learning curve? I hope so, but I’m beginning to wonder.” The great moral challenge of our time, climate change, is no longer great and it’s no longer a challenge for The Emperor who has buried this along with his double dissolution threats. Rudd’s home insulation scheme caves in more than $1.500 billion has been spent and there are now concerns that the repair bill for roof inspections and the replacement of botched insulation will consume what money is left in the scheme – an estimated $800 million. Hospitals -next?

High clearance rate makes a Super Saturday wrote Jonathan Chancellor from The Sydney Morning Herald. “Given the weight of auction listings, the 680 weekend vendors did rather well on Super Saturday, the second biggest auction day in the state’s history.” From the 680 weekend auctions Mosman conducted 11, for a clearance rate of 78 per cent according to Domain Property Data. The highest Mosman auction house sale was $3.600 million. “The inner west remains the red – hot epicentre in Sydney, with an 83 per cent success rate from the 100 listings – at an average of $955,000.” Now another crack “the south west – with only a 50 per cent clearance rate – was the weekend’s poorest auction district.” When the First Home Buyers Grant was running this was the strongest region – although this demographic property dashboard is a major concern when interest rates start increasing.  Just like 2006, when property prices dropped significantly. House sales going, going gone for a record and families camping out for land in new ‘town’. Housing shortage set to get worse yet house sales fall in February: HIA report.

Here is why – property market may be overheated, RBA Governor Glenn Stevens says reaffirmed that interest rates were on the way up, countering a belief held by some that rates would remain low after the global financial crisis. Economists are now calibrating a 60 per cent likelihood of a +0.25 per cent cash rate increase when our Reserve Bank of Australia board meets next Tuesday, to share cucumber sandwiches and croissants washed down with copious amounts of herbal teas.

Of course the bull in our property china shop will be discussed. The Emperor, for unknown reasons, lifted foreign ownership restrictions which previously were set in stone. Chinese buyers underpin housing prices prompting RBA governor to request data from the Foreign Investment Review Board in order to ascertain and pinpoint their exact participation – good luck!

Last week, the Australian Bureau of Statistics revealed that Australia’s population reached 22,066,000 on September 30, 2009. 66 per cent of population growth was due to overseas migration and 34 per cent was due to births over deaths. Let’s get real on population and The Emperor cracks a century 100^th asylum boat intercepts navy patrol where our latest arrivals sailed in undetected at Flying Fish Cove then called Australian authorities to advise that they were ready to book in – room service? Of course not, the island is not, named after Father Christmas for nothing. Fort Fumble has been forced to run a series of advertisements in Indonesian newspapers – ‘No Vacancies presently at our Australian island resorts on our west coast yet vacancies remain on Hayman and Hamilton Island. Please take a minute to observe this video Queensland beautiful one day – perfect the next.’

Cap no solution to Australia’s population challenges said Wayne Swan “that is why we are investing so heavily in our infrastructure.” Reserve Bank governor Glenn Stevens says Sydney property boom will make it hard for his children to buy home then the Mad Monk – Tony Abbott ran in and said Rudd has presided over rip off after rip off yet our Australian population growth is double the world average. So what we need is more policy when Julia Gillard announced that Tony Abbott should be making policy, not running. Julia, he did announce policy when, prior to commencing the Iron Man competition, he said he would break 14 hours!  Well he delivered 13:57:01 and that is a political announcement that came within time! Home insulation, schools, border protection and population are sensational policies too, as is the demoting of (the human headline) Barnaby Joyce.

I agree with Ms. Gillard that the Mad Monk should concentrate on policy not running (although Julia’s policies are fast becoming a national embarrassment). However, we must give credit where it is due and our Fort Fumble is addicted to buying credit (apparently endemic within the teachings at the School of Economic Conservatism).  Plenty to report next week on that.

Have a fantastic and safe Easter (just a bit of trivia) it was six years ago when Sydney last had a totally dry Easter and I’m not talking about alcohol! To the Virtual Realty News blog we go.

Cheers ^__^

Note: this is the strongest sales evidence we have seen since the global financial crisis entered our lives. 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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1.04.10Robert Simeon6 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 »

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Please tell the Australian voting public that we made the correct call. The Emperor (Kevin Rudd) is a worried man, given that when interest rates start rising the Government of the day (historically) receives all the blame. Monash University political analyst Nick Economou was more succinct “The Reserve Bank of Australia (RBA) is a game – changer” (where this time around nobody will be able to keep them low). “With the indicators being that the bank is starting to ratchet up the rates, the Labor Party would be thinking ‘we ought to go to a poll sooner rather than later, because if we go as scheduled in November next year, there might be three or four interest rises by then’,” Mr Economou said.

It needs to be immediately recognised that the Global Financial Crisis (GFC) was a direct result of failed business/consumer transactions that occurred outside of Australia which furthermore, explains why Australia was first country out of the crisis. Other than Australia, ( thus far) no other Central bank has raised its cash rate – which begs the question, just what makes Australia different from the rest of the world? Is it a direct result of the Federal and State/Territories artificial insemination of our property markets when they introduced the (combined) First Home Buyers Grant Scheme (FHBGS)?

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Were the property debutantes advised that there remains a strong possibility that the RBA cash rate will move from 3.00 per cent to 5.00 per cent over the course of the next two years? The RBA described last week’s cash rate of 3.00 per cent as its “emergency rate” so what then becomes the first home buyers’ emergency exit rate? Were they simply pawns to keep property transactions ticking over during the GFC? Fort Fumble (federal government) did extend the FHBGS . It has happened before – and it is set to happen again, although this time around the consequences will be dire especially for those debutantes now caught in an interest rate upward spiral.

Cast you mind back to when the cash rate hit 4.25 per cent on December 5, 2001 where South/West Sydney went into a property boom. Then the unimaginable happened two +0.25 per cent rate increases in 2002, another two +0.25 per cent rate increases in 2003 (a property boom year), no increases in 2004, one +0.25 per cent increase in 2005, three + 0.25 per cent increases in 2006 and another two +0.25 increases in 2007. In 2007 South/West Sydney property prices fell by as much as 40 per cent, otherwise known as bank sales (10 +0.25 per cent rate increases). Here are the interest rate movements from July 31, 1996 – October 7, 2009 Cash Rate Target.

Macquarie Economics Research went a step further by predicting (and they are usually spot – on with interest rate predictions) that it expects the cash rate to rise by a further 25bp (basis points) before the end of the year, and to reach 4.00 per cent by 2010. In this week’s edition of Australian Economics Interest Rate Outlook “The RBA decided to raise rates sooner rather than later, and the 25bp increase in October was the first step “towards more normal levels.” With the economic data consistently stronger than expected and downside risks dissipating, the RBA now expects growth to be at trend levels in 2010. Consequently, the “basis for such a low interest rate setting has now passed.” No doubt Australia’s weekly clearance rates are being closely monitored on the RBA radar where our recession if you want to call it that was mild when compared to other advanced economies. From September 3, 2008 to April 8, 2009 (seven months) the RBA slashed the cash rate target by 4.25 per cent which still remained the highest when compared to other advanced economies – hardly a Great Depression.

If you look at Sydney’s clearance rate (74.2 per cent) this is a very strong result. There were 811 public auctions conducted and many more would have subsequently sold after auction. A combination of record low interest rates, our fastest growing population explosion in forty years and grants to first home buyers – what a cocktail! A report compiled by Access Economics found that Australia’s population grew by 1.9 per cent in the past year, helped by the highest birth rate since 1971. But let’s not forget one other major initiative (if I can call it that) that was introduced by The Emperor in December 2008.

Adam Schwab wrote in Crikey Foreign buyers blow out the housing bubble “ The causes of Australia’s ever-inflating housing bubble are many – artificially low interest rates, government stimulus and a real estate industry devoted to an ever – increasing house price to name a few. However, a less well – publicised factor may also be at play, that is the influence of foreign buyers.”

“In December 2008, the federal government, whose primary goal appears to be maintaining property prices at unsustainably high levels, introduced legislation relaxing rules for foreign buyers of Australian property. The rules were especially helpful for property developers, who coincidently happen to be large donors to the Labor party.”

In search of anecdotal sales evidence I went ran an article on News ”Million – dollar sales force up property prices” Forget the “for sale” sign, the new catch – cry in Melbourne’s leafy suburbs is “duoshao qian”. Victoria’s top real estate agents have begun hiring Mandarin – speaking salesmen to cash in on the property boom. Translated, “duoshao qian” means “how much” And it’s a question being asked more than ever before, The Herald Sun reports. Leading agents say more than 30 per cent of their stock is bought by families from mainland China.

Back to Adam Schwab in “Such is the federal government’s fear that a residential property slump will be a negative at the polls, they have introduced a policy that exacerbates Australia’s housing shortage and prolongs an asset bubble. According to Foreign Investment Review Board (FIRB) data released last month, foreign investment in Australian real estate shot up by more than 30 per cent this year to $20.4 billion.” Wonder when the mirror on the wall will speak about or even repeal this legislation – especially when you look at this.

Again, on Crikey, NSW the epicentre of our housing crisis Bernard Keane wrote “NSW is the epicentre of a long – term public policy disaster in housing that will have a major impact on Australia’s recovery from recession.” Technically Fort Crumble (NSW government) has been going backwards for years technically known as government economic retreat. “This graph shows housing and other dwelling commencements in NSW over the past thirty years. Despite wide variations, in the ‘80s and ‘90s housing commencements essentially moved around a band of 6 – 7,000 a quarter. The GST caused a spike and then a sudden drop across the country, and NSW recovered like other states, but then, inexorably, began to decline. Non – house dwellings, which had been growing as a proportion of the total NSW housing stock, similarly peaked and then began falling with housing commencements. The problem lies in the lack of land released by the NSW Government and NSW’s disastrous planning regulatory system, which makes life immensely difficult for developers.”

The Emperor has much to answer – however he has not been sighted since the RBA upped the cash rate this week. I wonder what he proposes with his very own legislation that sent out a universal invitation to buy up Australia. Mirror, mirror on the wall……. our real estate markets have much reflecting ahead.

Tim Mooney will be back with his weekly photograph next week – I forgot he was on assignment this week.

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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9.10.09Robert Simeon2 Comments »