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An extraordinary week in Australian politics that resembled the “Battle of Sydney Harbour” or maybe “Battleships in the Big Bathtub” – where part of all contestants’ boundaries (by coincidence) were the high water marks of Sydney Harbour. The “Mad Monk” won line honours and yet, as with any race (fluid spill motions) there are always protests and on the very same day, the Reserve Bank of Australia (RBA) broke tradition and raised the cash rate (+0.25%) for the third consecutive month – a day of threes!

The cash rate, now at 3.75 per cent, keeps heading north and whilst on north, rumours that “The Emperor” Kevin Rudd is auditioning for Getaway, remain totally unsubstantiated. We can however, be sure that somewhere, he is up – up – and away and if he does call a double dissolution, will have to return to our shores sooner rather than later.

Gerard Henderson wrote an interesting article that appeared in the Sydney Morning Herald – Lodge is a long way off, but the new man will shore up base. “Since its formation in 1944, the Liberal Party has won office from Labor on three occasions, Robert Menzies defeated Ben Chifley in 1949, Malcolm Fraser prevailed over Gough Whitlam in December 1975 and John Howard vanquished Paul Keating in March 1996.” What I did find amazing was this “It is most unlikely that Abbott can lead the Coalition to victory in next year’s election. No government has been defeated in its first election since 1931, when Labor prime minister, James Scullin, faced not only the impact of the Great Depression but also splits within his own party.”

Was the Mad Monk bunkered down at his Mosman headquarters – whilst observing troop movements at the harbour bunkers of Turnbull and Hockey? Loose lips sink ships. We asked Tim Mooney to fly over Tony Abbott’s Mosman bunker.

www.timmooneyphotography.com

Westpac has jumped the starting gun where as quick as a flash it raised its standard variable home loan by 45 basis points to 6.76 per cent which comes into effect today. On November 5, 2009 John Rolfe from The Daily Telegraph wrote Cut Government taxes on savings, says Westpac boss Gail Kelly. It would appear to some, that raising rates has nothing to do with household savings. National Australia Bank (NAB) increased its home loan rates by +0.25 per cent and then attacked Westpac with this announcement “We are determined to be competitive, to offer our customers a better deal and attract new customers to NAB. Today we are sending a message to customers at Westpac, and the other banks, that NAB can offer them a better deal.”

“Westpac CEO Gail Kelly argued yesterday (November 4, 2009) that if we all had more money salted away the country could have ducked the global financial crisis.” So in the aftermath now that the crisis has passed one can only then assume that Westpac is quickly making up for lost opportunities. Business Spectator – THE DISTILLERY: Waving Westpac through John Durie of The Australian concludes that the bank “is acting entirely rationally by extending the duration of its loans, chasing deposits aggressively as evidenced by its present campaign offering 6.8 per cent for 12 – month money and raising the cost of loans to protect profits. Its deposits now offer 130 basis points more than its closest competitors and 145 basis points more than the ANZ. This is a bank demonstrating its market strength emphatically, unworried by the potential for either market or political downside.” Or “roughly in simpatico is Matthew Stevens of The Australian who reasons that “Westpac’s decision to confront its customers with the nasty realities of our national funding dilemma serves to, once again, demonstrate the shaping dislocation of the Australian banking system triggered by the GFC. The latest credit growth numbers, for example, confirm the widening schism of the Four Pillars into a two – and – two – configuration. The data shows that the Commonwealth and Westpac now dominate the system growth like never before, speaking for 80 per cent of loan growth over October.” Wayne Swan approved the acquisition St George Bank by Westpac.

Market share of the big four banks, including BankWest and St George as at September 30 / Source: The Australian

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Macquarie Economics Research wrote Interest Rate Outlook – Gradual gets quicker

• “The RBA lifted the cash rate by 25bps in December. While the RBA’s view of the world has changed little since November, the news over the past month has reinforced their view that the recovery in train is on stable ground. We expect the cash rate to reach 4.50 % by the end of 2010.”

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Reserve Bank Deputy Governor Ric Battellino is indeed very upbeat about the Australian economy in that we can expect and look forward to years of economic growth on the back of booming resources, escalating population growth with rising household incomes. The RBA is predicting a strong escalation of house prices because Australia had entered “a new upswing” that would extend its record 18 years of continuous economic expansion.

RP Data revealed this week that house prices have doubled to an average $600,000 over the past ten years – the average Sydney house price was $300,000 back in 1999. The average price for an apartment in 1999 was $270,000 today it is $457,274.

The latest BIS Shrapnel Residential Property Prospects report identified that residential rent are expected to rise by an average 5.8 per cent a year over the next three years. This compares with a 5.7 per cent increase in 2009 and an average annual rate of 4.4 per cent between 2002 and 2008. Throw in an electricity bill expected to rise by 60 per cent over the next three years (according to an IPART report).

Fort Crumble was at it again and we now have our fourth premier in four years – recruitment companies would be well justified in opening up a sacked premier’s division. Now we have our first female premier – Kristina Keneally (no strings attached)! Can’t wait to see who makes up her front bench? Not that she will have any say in it! The Daily Telegraph is running a petition for an early election (To Sign)

Last edition of Virtual Realty News for 2009 next week – the chaos of this week would be very hard to beat. Thankfully it is controlled – however we all know that elected politicians make great puppeteers.

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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4.12.09Robert Simeon1 Comment »

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The global financial crisis (GFC) in Australia was short and quick and now Australia has to manage its inherited financial flu, courtesy of inexperienced politicians shooting from the hip (your hip pocket).

With the benefit of hindsight, the global financial crisis (GFC) was not equal (or even close) to the Great Depression (Rudd/Swan analogies via Fort Fumble (Federal government), where, rash/panic policy decisions have sent our national recovery back decades. I stand convinced that businesses have led the road to recovery – not cash splashes. Just one negative quarter of economic growth (March quarter) does not (and should not) equate to over $300 billion of debt.

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Tim Mooney Photography – Palm Beach & Palm Beach Lighthouse

www.timmooneyphotography.com

The Reserve Bank of Australia (RBA) took a totally different read on our economy and massaged the cash rate down, opting for measured reductions over panic policy. RBA – “In contrast to most other developed economies, indicators of household activity in Australia have been fairly resilient over the past year. Retail sales and the housing market have been quite buoyant since late 2008 and there has been a significant rebound in consumer sentiment, particularly over the last few months.” With the recession now abating, the next move with interest rates will be up not down.

Given that the vast majority of businesses received absolutely no financial benefit from Fort Fumble’s financial based recovery plan, the question now is, when will an Australian Federal government next return a budget surplus? In all probability 2020. That means eleven years of lost opportunities to build a better and stronger economy.

A recession (March quarter) is no excuse for the embarrassing rhetoric from elected politicians when in front of a camera. If the majority of those running businesses had listened to Fort Fumble’s predictions of doom and gloom (Great Depression 2) unemployment would have been closer to ten per cent. Fort Fumble panicked but fortunately, business managers relied on their own aptitude, intelligence and readings of their respective business markets. Then again, they are not playing with and wasting other people’s money.

Just as interesting are journalists who don’t ask elected politicians if they still stand by their previous predictions regarding the GFC, which prompted unprecedented national debt levels. Just as interesting again, is that the Westpac-Melbourne Institute consumer sentiment index rose 4.0 per cent in August to 113.4 points which lifts the index to its highest level since October 2007, when it recorded 115.3 points.

Much like the innuendo that half of Mosman’s houses (Mosman has 4,900 houses approximately) were secretly on the market when anecdotal sales evidence could only identify 275 (November 2008) that were actually for sale. Today, when I look at www.domain.com.au Mosman has just 75 houses for sale which leads us to predict that house prices will jump by a ten per cent minimum in the run through to Christmas. Of the 75 houses currently available, 24 have been on the market for less than one month, 10 have been on the market for less than two months and 41 have been on the market for over three months.

The real estate industry is quickly moving into overdrive with the leading online agencies (those who invested in the future with their own money) becoming the preferred option for vendors).

PricewaterhouseCoopers recently released its Entertainment & Media Outlook 2009-2013 report which predicts growth at just 1.7 per cent as against the previous average annual spend of 5.5 per cent. It will be very difficult for traditional media to bounce back when vendors are opting for online campaigns over more expensive print campaigns. Everything points to the internet. This is exactly how agents are increasing their online presence with database client communications. I will make a prediction that over the next 24 months, a quarter of Australian real estate agencies will close down simply because they have fallen by the wayside with technology. This is the stark reality of changing times where nine years on our online media platform convictions/predictions are now a reality.

Electronic listings for ‘homes open for inspection’ are now being fast tracked. Then again, Richardson & Wrench Mosman (RWM) has been doing this for nine years and we were the first real estate agency to release this industry media platform.

My thanks to Steve and Richard for writing the last three editions while I took my mid-year break. Unfortunately, I failed in my efforts to secure that Aussie Bar table mat, because they have now sold out – so I am back at Christmas to secure this valued commodity.

Plenty of clues in the Mosman housing market at this point in time. RWM currently has 25 per cent of the Mosman housing market on our online sales platform which coincides with the fact that RWM has sold the greatest number of homes during the GFC – then again how many weekly market updates are in your inbox?

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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14.08.09Robert Simeon23 Comments »

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First the global financial crisis (GFC), then Great Depression Two, then Google and now our economy, Graduating with flying colours. The Spring/Summer real estate market will bear no resemblance to the one we experienced twelve months ago. The GFC has brought about many market corrections in property prices, interest rates, wealth and public perceptions. Our share market has just posted three days of strong gains so it is “steady as she goes.”

I have said it before and I stand by my previous comments, that in the recession of the early 1990’s, there was no Internet and no electronic information highway that today, has played a dominant role in the recovery process. When we look at our print spends with Domain North/Saturday Domain and the Mosman Daily/Cumberland – 1 July 2007 to 30 June 2008 and 1 July 2008 to 30 June 2009 the expenditure was twelve per cent less in the last year. In the GFC, if we break this expenditure down from 1 July 2008 to 31 December 2008 and 1 January 2009 to 30 June 2009, the expenditure with Fairfax and Cumberland is down 39 per cent (approximately). This reflects vendor concerns with print which, when compared to online advertising, is much more expensive.

Tim Mooney Photography – Bungan Head

www.timmooneyphotography.com

2 – 4 – 6 – 8 dig in don’t wait! The online real estate market received a major wake–up call last week after Google entered the Australian online real estate market. The online manoeuvres have been most impressive as institutions (real estate agencies/ Head Offices) compete to grab and take advantage – only to learn that location, location, location is not that simple and can be short-lived. The Google Maps release (designed here in Australia) is strategically designed to keep real estate enquiries under the one Google consumer umbrella. We have attached a property portal survey that only takes about thirty seconds to complete http://aussierealestateportals.questionpro.com/ Your participation would be very much appreciated.

Having said that we have no plans to depart from www.domain.com.au and www.realestate.com.au However, like every business, we will continue to monitor online eyeball enquiries from these property portals. The Google Maps release is great for our industry as it challenges the Domain and REA business models – better known as ‘competition’. At this point in time, Domain and REA have refused to allow their respective pages to appear on Google Maps, although both remain huge advertisers on the Google pages with Google AdWords.

Whilst the announcement was hush–hush, the serious online real estate agencies were laughing as years and years of dedicated work were finally being acknowledged on Australia’s number one search engine. For example, when one is searching Google for Mosman real estate, the agency that appears on the first page has a definite advantage. Unless you are prepared to pay for Google AdWords which cost per enquiry, the other alternative is to grow your online business organically by feeding the search engine’s online content.

For example our website now, has approximately 1,800 pages (and growing) of content. Simply put: the smart online agencies have positioned themselves to capture these online markets (Google) for the benefit of the clients they represent – both rentals and sales. Type Mosman into a Google search and guess which agency appears first? And which agencies fail to appear!

It would be reasonable to assume that for the moment it is highly unlikely that our cash rate will fall below 3.00 per cent which is a positive. The United States, United Kingdom, Japanese and European economies are at zero or close to – which denies further interest rate stimulation to these central banks. The defining moment will happen when the June quarter national accounts are revealed in just a few week’s time (just before the Spring/Summer market sales). Whilst it is possible that the June quarter may return a negative result – it is highly unlikely. The overall consensus in the market is that property prices have bottomed but, (always a but) this will depend on the volume of property available for consumption.

The X factor will come down to the banks and the properties they have quarantined until the market recovers which is exactly where we find ourselves today. Factors beyond our control however, real estate has always embraced the X factor. Just as compelling is a real estate market barometer and last week’s auction clearance rates – Sydney 70.5 per cent, Melbourne 82.1 per cent, Adelaide 79.2 per cent. Very high, particularly in a school holiday period. Clearance rates are a fantastic Litmus test and we will be watching them closely through to Christmas.

Again the recovery compass is dependent on the June quarter figures that identify how simplistic economic measures are. After the negative December quarter figures, the March quarter which was expected to confirm a technical recession, saw that quarter return a positive result. Given the data we have been reviewing, it would be an amazing turnaround for the June and September quarters to produce consecutive negative results – alas a technical recession again. Highly and most unlikely, although some schools of thought are that our cash rate will hit zero and property prices will fall by forty per cent.

It is now time for me to take a short break, based on my belief that Virtual Realty News has saved our economy from recession. My equally responsible next task is to remove that much publicised bar mat from the Aussie Bar on Patong Beach, Phuket. A difficult and dangerous assignment, yet I am confident that I am up to it without damaging international relationships too much.

In my absence, editions will be brought to you by Steve and Richard who will no doubt express their views on the market with relish, sentiment and satire.

Tim Mooney is having a clearance sale for his brilliant collection of Sydney Waterfronts – from Bondi to the bridge. Can’t believe how cheap they are and that includes delivery in Sydney. Limited stock available swbook1.

Bon voyage ^__^

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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17.07.09Robert Simeon4 Comments »

The penny has dropped (literally) as global economies fight the financial crisis by adopting the theories of British economist John Maynard Keynes who argued that governments should fight the Great Depression in the 1930’s with huge spending allocations and infrastructure as the number one target. How ironic that with ‘Fort Crumble’ (otherwise known as the NSW government) infrastructure spending has been all but non-existent over the last twelve years. Global growth predicted by the International Monetary Fund (IMF) is now just half a per cent – this is a deep seated problem. The question begs – do we put some artificial icing on the problems or fix the problems once and for all. What use are tax cuts if you are unemployed?

For example in NSW, the hospital system is actually sicker than the patients and this prompted our Premier (I use the term lightly) to seek a rescue package of $2.5 billion cash for a system that Fort Crumble sent broke!

Access Economics announced last week that NSW was in recession (a statement that Fort Crumble quickly dismissed) with the other Australian states set to follow. For obvious reasons, unemployment will be the barometer for property prices in 2009 which places the burden on businesses to fly the employment flag which is now ‘flagging’ because state governments continue to increase taxes.

To put this into perspective, I stumbled on an amazing report by the Institute of Public Affairs (IPA’s) which was released in December 2008. This report identified that NSW has the highest taxes on business and Western Australia, the lowest. The level of tax imposed on a business differs significantly according to industry and business size which sees construction and transport as the most heavily taxed by state governments.

So as the Federal Government embarks on its mammoth infrastructure spend, let’s look at key implication findings by the IPA :

• Transaction – based taxes at state levels disproportionately affect small business

• The structure of state government business taxes counteract federal government policies (e.g: infrastructure companies are more heavily taxed than service companies)

• The reliance by state governments on taxes levied on transactions undertaken by companies inhibits economic growth, because such taxes do not take account of business profitability.

• The structure of state business taxes should be reformed to encourage business development in a slowing economy with credit constraints.

Here are the reports should you wish to download

The Business Burden (click to download)

In my twenty three years as a real estate agent, I have never before seen the property rental market decimated as a direct result of the actions of the Carr/Iemma/Rees government policies of tax grabs. With rents now recording their highest increases since 1988, the outlook is dismal as the Australian Bureau of Statistics announced this week that the annual rate of growth in rents across Australia jumped to 8.4 per cent in the year to December. In Sydney, rents increased from 5.4 per cent to 8 per cent. Tax the investors out of the property market and this is the net result.

As at June 30 2008 there were 177,652 Australian households waiting for public rental properties. For obvious reasons this figure would be much higher today.

Next week we can expect either a 75 or 100 basis point reduction when the Reserve Bank of Australia meets for the first time in 2009. Enter Wayne Swan who (embarrassingly) has stopped rubbing his inflation “genie”.

Cast your mind back to February 3 2008 when our Treasurer (I use that term lightly also) stated (this is gold). “The economy is strong but there is an enormous inflation challenge out there, an inflation problem that Peter Costello left us.” Wayne needs an economics lesson as it has now been concluded that record oil prices were the main contributing factor for escalating inflation.

Oops! Our Treasurer struggles to understand the most basic fundamentals of the economy.

The 2009 Mosman property market started slowly but is gradually building momentum. Prices have been corrected and interest rates will come down significantly next week. Without a doubt, the slowest start in decades and why? Because the vendors ‘can’ and of the 4,900 homes in the municipality of Mosman, approximately 140 houses are on the market. This equates to 2.9 per cent.

Maybe John Maynard Keyes summed it up best with this quote “There is nothing so disastrous as a rational investment policy in an irrational world.” Now that’s stimulating!

Cheers ^__^

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30.01.09Robert Simeon7 Comments »