All eyes will be focussed on ‘The Block’ this weekend to see just how strong the Sydney real estate market is, when the four apartments hit the market, after the very public renovations. General opinion is that they will sell between $675,000 and $725,000 and no doubt the Productivity Committee will be showing more than an interested eye. The intrigue of renovation was rubbing off at our auctions this week as an un-renovated apartment at 3/10 Raglan Street sold for $690,000 which was $100,000 above the reserve. The strength of the renovation market is such that we issued twenty-eight contracts to interested parties and Marize the “Queen of Apartments” sold four from four on the night and all up we did five from five. What we are seeing with the renovation market, is that you don’t have to be “the sharpest tool in the shed” to make a tidy profit, and it has become very contagious.
For the month of June alone, loans to buy investment properties were up 8.3 per cent to post a new record of $6.88 billion, which coincides with household debt climbing 20 per cent per year. With the Reserve Bank courageously suggesting that “this is simply unsustainable”, one must never forget that the borrowings are asset-backed. What they really should be saying is that the real reason Australia is engaged in an unprecedented housing boom, is directly attributed to the deregulation of the banking industry, and this is why money is cheap. It should also be remembered that Sydney was the very first Olympic city that did not go into recession after the completion of the games. In simple terms the Australian economy is performing well against the weaker overseas economies. What also needs to be taken into consideration is that in the majority of areas we are not really seeing any new developments, so the renovation market has taken the place of the new off the plan market. Who would have thought a television show with four couples living in a derelict block of apartments, would exceed all rating expectations and rate ‘number one’ for the year. As for a follow up series, I doubt it, as ‘Big Brother’ owns their house and after this weekend there will be no more of ‘The Block’. As for finding a suitable replacement, good luck. They don’t make them any more!! Which then explains why the property industry is where it is!! When it comes to renovating, Aussies have made an art form of ‘rip off and duplicate’, so we can expect to see many cloned properties, courtesy of ‘The Block’.
With the Bureau of Statistics coming out this week with figures that identify that lending to investors for housing is up by 36 per cent on the previous year, some will show concern. Many would be giving a nod of approval. In the majority of cases the borrowings are set against the family home. As the value of the family home continues to climb, due mainly to the fact that the number of homes coming on the market continues to diminish, because home owners are now in renovation mood. The vast majority of these borrowings are for the specific purpose of negative gearing. Many young home buyers are still living at home, so they are taking advantage of their position by using the Australian Tax Office to deduct their losses from their assessable income. No wonder the Productivity Committee has yet to furnish its ‘terms of reference’. I honestly believe that it has no idea where to start!! Memo to: Productivity Committee (if you do exist). “Housing affordability has nothing to do with GST, Stamp Duty, or first-home owners grant. The problem is that the leading suburbs of Sydney are too popular and nobody wants to leave”. Maybe we might see the introduction of the American system, where all the costs are tax deductible including the mortgage. At least that way when someone does some home improvements, that question, “what about cash”, will no longer exist!! You do however pay tax on the capital gain.
Well we have been very busy expanding the business of late and we can announce that we have just purchased Richardson & Wrench Cremorne and Richardson & Wrench Neutral Bay. We will officially take ownership on September 1 this year, and we are very excited about our new business plan. We have added another feature to Virtual Realty News, which now includes our rentals section. We have had plenty of requests to include this feature in our weekly e-zine. From September 1, our new Company will be Simpatico Realty Pty Ltd, trading as Richardson & Wrench Mosman / Cremorne / Neutral Bay.
Well it will interesting to see who comes home with the money from ‘The Block’. It just goes to show that ‘The Toaster’ is not the be all and end all of desirable residential locations, although ‘The Toaster’ does come with parking, and given the recent goings-on in that car park, some may prefer not to have parking!! Cheers and clink ^__^
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16.08.03Robert Simeon
