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Australian property markets make compelling viewing for letterbox voyeurs given we’ve never been better despite the crisis. According to the Australian Bureau of Statistics (ABS) we are healthier, wealthier and wiser and Australia, during the first half of the global financial crisis, was one of only three developed countries with finances and economies remaining positive. On the flip side, housing affordability and conditions continue to deteriorate based on the Measures of Progress report released by the ABS which plots social and economic changes every ten years across Australia. In the ten years to 2009, the homes that were affordable to low income earners, fell from 15 per cent to 7 per cent.

The Reserve Bank of Australia (RBA) again defied market expectations this week when it left the cash rate at 4.5 per cent for the fifth straight month. The letterbox voyeurs of doom and gloom were quick to regroup following the RBA rates surprise when they trumpeted focus shifts to November for rate rise. The RP Data – Rismark August home value indices revealed that Sydney has been one of only two capital cities to avoid any falls in value, recording a 0.2 per cent rise in house and unit values over the quarter (the other city was Canberra). Price trends put Sydney buyers in the driving seat “The improved value proposition in Sydney’s housing market is also helping to keep more residents from departing for other states. Based on the latest data from the ABS (to March 2010), the outflow of residents from NSW has not been this low for 15 years.” No doubting that this would have something to do with the forthcoming removal of its incompetent government – Fort Crumble.

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I love a debate. I read rates could pop house price bubble: economist Dean Baker who tipped the US housing market collapse says Australia’s high house prices are at risk of slumping if interest rates rise further. US banks still remain on a government-induced life support and Australian banks are posting healthy profits with net interest margins back at pre GFC levels. RBA officially given a role as stabiliser for financial system where its mandate has been broadened for the first time to take into account the stability of the nation’s financial system. From the end of October, the majority of the big banks will start reporting full year profits which, for the big four banks, are expected to report a combined record profit of more than $21 billion. US property markets were decimated when subprime hit. This was brought about by the banks going into liquidation and I fail to see any such similarities – no cigar for Dean Baker. The Sydney property market can’t and won’t collapse, given the first third of households rent, the second own with a mortgage and the final third, own with no mortgage.

Housing estimates from the ABS identify that at the last count (2007 – 2008) Australia had 7,914,300 homes, compared to US figures over the same period at 112,362,848. Hardly an intelligent summation given the stark differences – have I loved this housing debate!

As we have discussed previously in Virtual Realty News Mosman has approximately 4,900 houses where (for arguments sake) approximately 1,666 rent, 1,666 own with a mortgage and the other 1,666 own without a mortgage. Interest rate increases affect the 1,666 that have a mortgage and not the 3,222 who rent or own without a mortgage. After looking at 2007, 2008, 2009 and 2010 house sales in Mosman, I can confidently say that it would take a financial tsunami to see our property prices drop to the levels predicted by Dean Baker.

• Mosman house sales in 2007 – 414
• Mosman house sales in 2008 – 269
• Mosman house sales in 2009 – 322
• Mosman house sales in 2010 – 255

IMF sees risk in ‘mild overvaluation’ of Aussie house prices given it will stress–test Australia’s mortgage market. House prices in eight major cities rose by 18.4 per cent in the year to June, prompting some analysts to warn of a bubble. House building activity hits 18 – month low a direct result of builders on Fort Fumble/Princess Gillard’s playgrounds of gold. Why build with their money when they can build using Gillard’s ‘cash for tuckshop’ building contracts.

I noted whilst reading Macquarie Economics Research The Australian Insider – Outlook for the December quarter 2010, their observations pertaining to the above graphs.

• Stepping back from the state–based detail, it is also obvious that the housing market is in a vastly different position to that prevailing in 2006 – 07. Not only has housing finance fallen by 26% since September 2009, it is also 26 % below its average level over 2006 – 07 (a period when finance was fairly stable). This means that dwelling commencements could easily fall by over 20% over 2011.

Only the uninformed would suggest that Australia has a housing bubble, because it is very clear that we are suffering from an undersupply, not an oversupply. Our non – existent house bubble presents another excellent explanation which takes one back to very basic economics – supply V demand.

When you have a government funded Builders Revolution it’s no wonder the tools are down!

No doubt when they complete their government guaranteed building works (when they return from their respective overseas holiday jaunts) may we again see the cement being poured on construction sites.

As they say “when you’re on a good thing – stick to it” hence, the Builders Education Revolution.

For connoisseurs of outstanding Mosman waterfronts look no further than this sensational Sydney Harbour residence – click here.

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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8.10.10Robert Simeon2 Comments »

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The same can be said for many commentators who continue to argue that our macro property markets are, by world standards, massively overpriced. In Australia, overpriced does not equate to  over-populated, with Australia’s population very shortly to reach 22,500,000 population clock ABS with approximately 6,000,000 homes being the macro picture. Tick – tock goes the housing time bomb – “a confluence of building approvals, housing price and population figures are likely to all point in one direction: the failure of housing policy in key markets to keep pace with the nations needs.” So what happened a few days later?

• New home sales fall 4 months in a row where the number of new homes fell by 2.6 per cent to 6,887 in August, the Housing Industry Association (HIA) said in a statement on Wednesday. The fall followed a 7.1 per cent drop in July and brought about the decline since April to 19.7 per cent. Sales in August were 20.5 per cent below the level recorded a year earlier in August 2009 and at their lowest point since 2008. This data reveals that new home commencements would have risen in only two years out of ten – those being 2002 and 2010. Politicians in Canberra offered no comment – no idea.
• Immigration plunges – without politics which signals that Australia’s net migration rate has started to nosedive where births comfortably outnumbered net migration over the year – 303,500 babies versus 241,400 migrants. Migration levels in sharp drop as Australia’s population growth has fallen to its slowest rate since 2007. Politicians in Canberra again offered no comment – no idea.

BUY PRINT

Only when commentators start looking closely at the machinations that drive property markets, will they even begin to understand what drives property prices. Only when one starts to piece the puzzle, does the picture become clearer. In the Sun Herald last Sunday, Louis Christopher from SQM Research wrote “SQM’s vacancy rate series also reveals a tight rental market with only some slack at the very affluent end of the market place. Vacancy rates are at 1.3 per cent and even tighter in Sydney’s west at a dire 0.7 per cent. And from what I can see there are no significant increases in new housing developments in the next two years for the local market.” Christopher went on to say “this is scary stuff and means only one thing for rents. Our forecast is for a Sydney – wide average rise of 5 – 7 per cent a year for at least the next two years. The west could record an even higher growth rate of 8 per cent – plus.” When rents climb, the rental community buy and this coincides with government policy on house construction which, as we all know is dead policy!

House prices do not inexorably rise another great article by Christopher Joye on Business Spectator “If the Reserve Bank of Australia (RBA) ‘central case’ comes to pass, which would involve a surge in resources investment on the back of China and India’s industrialisation, notwithstanding weak US and European growth, we can expect to see it raise the target cash rate at least four times to 5.5 per cent with an upper bound of 6 per cent. Note that this is an exclusive of any ‘top – ups’ delivered via the banks. When the RBA speaks, listen up as bad news looms for debt – laden households. The share of debt–free households in Australia has plunged to a nine year low, amid signs that people are borrowing heavily to keep pace with rapid growth in house prices forcing more people closer to the edge.

Barring catastrophe, interest rates likely to be high for many years to come where it will be a safe bet that the official interest rate will rise in 2010 and even more to be expected in 2011. It’s in your own best interest to save before the Reserve forces you because the cost of owning a home (with a mortgage) will go up, given the inflationary impact of the mining boom as RBA’s stride quickens. The mining boom is reflected with labour supply – Western Australia recorded the nation’s highest growth of 2.3 per cent, Queensland 2.2 per cent, Victoria 2 per cent, Northern Territory 1.9 per cent, ACT 1.6 per cent, NSW 1.6 per cent, South Australia 1.3 per cent and Tasmania 0.9 per cent.

Economy on solid foundations, Wayne Swan despite Labor’s growing labour crisis Fort Fumble keeps addressing international politics whilst ignoring local concerns as ALP urged to embrace growth. Budget deficit of $54.8 billion for 2009/10 is smaller than expected then Access Economics declared Swan’s budget an ‘accident waiting to happen’ given budget surplus in 2012 ‘may be short – lived’. Naturally, Wayne Swan responded Access Economics Budget forecast is pessimistic although he failed to respond to Chris Richardson’s concerns that “Treasury may be right that there is a permanent boom in mining but it would be the first ever recorded in any market.”Australia still the great performer, buoyed by the resources boom although Fort Fumble must cut spending to boost competitiveness given Labor facing storm clouds: International Monetary Fund.

Next entry on the whiteboard will no doubt be the “Great White Elephant” – Gillard’s NBN. Mexican telco billionaire’s claim that NBN is too expensive backs our case: Tony Abbott then Conroy hits back at Slim: you don’t know what you’re on about. My prediction: Conroy will be smashed over the untried and costed Gillard NBN roll-out – Advantage Turnbull given, Telstra nonchalant on NBN.

Cable equates to “why more” and wireless equates to “why not less”?

Someone should ask Wayne Swan why we are doing plenty of digging, yet no building? The sooner someone explains to him that Australia is not about digging a nation, but rather building a nation,  will we see greater housing affordability – and  that won’t be happening anytime soon.

We need direction to build on – not tax on!

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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1.10.10Robert Simeon1 Comment »

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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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With my iPad still on order – my attention this week was on the release of ‘Betrayal’ – The Underbelly of Australian Labor by Simon Benson, senior political journalist at The Daily Telegraph. Like many Aussies who are in absolute dismay at what is currently unravelling within the seams of our ailing economy, here is a book with more twists than a Rubik’s cube. Rudd broke secret pact with Iemma so as quick as a flash The Emperor denied such a thing.

More importantly, past Prime Minister Paul Keating commented in Betrayal – “When the motivation of the machinery of the Party is unfurnished as to policy purpose, it has nothing to offer than to focus on marketing and polls. After a while the public becomes aware of this and they realise that marketing and spin have no basis … That is more the rule these days than the exception.” Again another week of prolific marketing spin from both Fort Fumble and Fort Crumble – our esteemed federal and state Governments collaboratively spinning this most uncomfortable electoral seat of bad poll therapy. So here I go again, to ‘spin’ this week’s edition of Virtual Realty News.

Heaven forbid – How Sydney’s iconic Opera House is at risk of ‘financial tragedy’ a damning internal report has revealed , that unless urgent action is taken, the Opera House will have to close. “In April last year Prime Minister Kevin Rudd hit the roof after The Daily Telegraph revealed former Premier Nathan Rees planned a $900 million rebuild.” Sydney Opera House has been lobbying Fort Crumble for ten years so in next week’s State Budget $130m to save Sydney Opera House from closure. Maybe our mining companies can save our Opera House. After all, they are expected to save everything else in Australia. As for the State, it is stone motherless broke – absolutely devoid of imagination and concept. Marketing and polls won’t save it.

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Frustrating when you see that Fort Crumble wasted $500 million when it axed the failed CBD Metro proposal and it’s all about to get worse. Second harbour crossing – or chaos where a team headed by the state’s former rail and roads chief, Ron Christie, identified that without a second rail link across the harbour, the CityRail system will face paralysis by 2022. I thought we were already there which may explain why Fort Crumble is using marketing and polls in an effort to change its identity.

Fort Crumble is fast becoming Fort Chaos – mates race: $45 m deal snares MP as the V8 Supercars race will now cost taxpayers at least $10 million more over the next five years – the budget was $35 million. So when all else fails what does the government do? Labor shuts off access to secrets the Ombudsman, Bruce Barbour, is seeking to change a nine-word loophole where access to documents has previously, been refused. The cost of hosting World Youth Day came in $64 million over budget yet, $50 million was pledged this week, to keep the rugby league grand final in Sydney. This was $20 million more than Queensland was prepared to pay. Little wonder senior Fort Crumble ministers joke that Labor should re-name itself “the Keneally Party”, as it is now politics without a whiff of Labor just another example of marketing and polls.

The Reserve Bank of Australia (RBA) met this week to spin the cash rate where house prices ‘out of whack, set for slump’. A comment from abroad where the International Monetary Fund voiced its concerns on house price values compared to average incomes. Possibly too much time was spent reading two American dreams shatter although Australian property markets are witnessing households pull back spending as rates rise. Yes – a chill wind through house prices which prompted the RBA to place rates on hold.

Interesting to note that when property markets are booming, buyers adopt an aggressive pattern of behaviour and yet when property markets cool, become passive. I’ve been doing this gig for twenty five years now – currently I am selling the first home I ever sold in 1986 for $285,000. 43 Rangers Road Cremorne can now be purchased for around $2,250,000. So are you better off buying in an aggressive or a passive market? I suggest the latter. Here is an interesting graph courtesy of RP Data that I found this week. It amazed me, considering we are more a private treaty real estate model compared to public auction. In 2010 – 80.4 per cent of public auctions were conducted in Victoria and NSW. This will become an interesting topic in weeks to come.

For the month of June, the RBA left rates on hold prompting Treasurer Wayne Swan to make this comment: “This news will be a welcome relief for many Australian families and businesses around the country, who are of course doing it tough.” Again, this would be marketing and polls.

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Wayne Swan again “Tomorrow we have the national accounts, and I have every confidence that with the right policies in place, our economy can continue to be one of the best in the world over coming years… From our perspective on this side of the house, we will do everything to reform our economy, to build economic capacity, to keep pressure off inflation so we can grow sustainably.” Wayne, please allow me to explain a few basic economic fundamentals that escape you.

When Swan released his Budget 2010/11 – he announced that it was hedged on a consumer price inflation of 2.5 per cent, even though the RBA recorded a March 2009/10 rate of 2.9 per cent. In Virtual Realty News I suggested that inflation would be at 4.5 per cent by June 2010 and your 25 per cent increase for cigarettes tax slug would further ignite inflation. So what happened? Cigarette tax sparks inflation jump where prices increased by 3.7 per cent in the year to May, up from the 2.9 per cent annual pace in April according to the TD Securities – Melbourne Institute Monthly Inflation gauge. Given the RBA has an inflation comfort zone between 2.00 – 3.00 per cent, let me adjust my inflation prediction to 5.00 per cent by June (this month). Petrol prices up, rents up, vegetables and electricity always increase over winter – spin, marketing and polls.

Taxpayers fund Swan’s ad blitz where the mining tax sets nerves on edge as the big miners gave Rudd the fight he was looking for just that taxpayers never expected another back flip where they foot the bill on a tax that is yet to be passed,despite a $40 million advertising campaign approval. Although Rudd treats us like mugs with latest backslide on government ads. On The 7.30 Report Swan defends mining tax ads and the smaller miners reject Kev’s idea of help. Head of Infrastructure Australia offered this advice restart tax plan: Kevin Rudd’s man Rod Eddington as too did Alan Kohler The government’s RSPT spin is a disgrace. Then the first of many announcements as the tools go down Xstrata suspends development spending two projects over super tax and that, as The Emperor described earlier , is neither “bunkum” nor “balderdash”.

My iPad is yet to arrive so I keep reading Betrayal, so can marketing save PM? Absolutely no chance as the Mad Monk enunciates from his soap – box keep fighting Rudd and super – profits tax. Don’t pay too much attention to the March GPD figures. The June GDP will paint an entirely different position. Europe debt situation serious – Treasury which is a burning issue as too – home insulation inspections yet to begin. Kurraba Point declared a new suburb and ASIC give up on the Offset Alpine mystery.

The stand–off between The Emperor and Australia’s mining companies is a compelling visual. My tip: the mining companies will smash Fort Fumble. Why? Simply because nobody at Fort Fumble has ever run a business before. So how does one turn a big business into a small business? That would come down to marketing and polls. Australia would be better off if it had invested our $38.500 million in BHP and Rio Tinto shares.

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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4.06.10Robert Simeon11 Comments »

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I would say yes, given the global financial crisis (GFC) in the Australian vernacular was an “easy come – easy go” experience where we experienced just the one quarter of negative growth. If you remain somewhat confused as to where the property markets are headed, don’t be.  It appears that everyone else is too. International Monetary Fund sounds warning on property bubble in Asia – Pacific and it was reported that Australia is not immune from a potential property bubble. The report said “in Australia, a combination of rapid interest rate cuts and the extension of the first – home buyers grant ensured that property remained robust during the worst of the financial crisis. Most recently, there has been a 13 per cent jump in median home prices to the end of February.” Then “the IMF report comes amid evidence the resilience in house prices has caught the eye of the Reserve Bank (RBA) Minutes of the Reserve board’s April meeting, when it announced the fifth rate rise since October, showed members noticed the property market’s continued buoyancy despite new home loans falling”. Evident with Sydney auction clearance rates graph courtesy of Australian Property Monitors.

RBA eyes May rate rise which I believe is odds – on, having read the minutes of its April 6 board meeting where they will move the official cash rate from 4.25 per cent to 4.50 per cent. Home truths on the whys and wherefores of the property market which identifies the property conundrum: housing is the biggest market in Australia – yet there is no central database that records transactions and prices. “Housing markets in the United States and Britain lost 40 per cent of value from their 2007 peaks and are only tentatively recovering, that Australian market appears only to have dipped slightly in 2008 (the pain was contained to the top end) before shooting up in the past 12 months.” Now the biggest clue “banks have changed their attitude. Where they used to push 100 per cent loan – to – valuation ratios (LVRs) now they lend 80 per cent over the value of the asset before demanding a swag of fees (usually labelled lenders’ mortgage insurance).”

BUY PRINT
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I love challenging Tim, who called me this week and asked “what shot do we need?” I responded, “The Emperor (Kevin Rudd) got his Health Reform approved so we need a smiley face. Can you shoot Luna Park, Ripples restaurant, North Sydney swimming pool, and a ferry at Luna Park wharf?” The man is pure genius! Tim again, exceeded our expectations – his shots make for great Christmas cards too.

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Macquarie’s Robertson sees easing in house price gains where with his latest note to clients Mr Robertson said “anyone with their eyes open is aware that usually low funding costs over the past 12 – 18 months powered a good part of the double digit house – price gains that have excited so much comment and talk of “bubbles”. Economists baffled by robust property market given after five interest rate increases in seven months they wonder how auction clearance rates remained so high for so long, along with rising median house prices. “It’s a bit of a puzzle,” said Macquarie Bank’s senior economist, Brian Redican, who once worked at the Reserve Bank. “You wonder how auction clearance rates remain very high along with house prices themselves.” Which takes me to the real estate ring of confidence – remember Aussies would bet on two flies climbing a wall.

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Prestige home market lies becalmed, Median prices up in Sydney – but not as much as in Melbourne and Penthouse sales hit bargain basement had Sydney Morning Herald property editor Jonathan Chancellor a very busy journalist this week. “Sydney’s $5 million plus prestige residential market has stalled. The number of sales this year sits at slightly above the low levels recorded during the trough of the global financial crisis. There have been 45 sales higher than $5 million during the first quarter of the year, a small rise on the 44 sales in the March quarter last year. Volumes are well down on the 74 sales in the 2007 March quarter, and 63 in the 2008 March quarter.” Richardson & Wrench Mosman & Neutral Bay (RWM) recorded 5 of the recorded 63 sales. Subscriber sales jumped to $942,854,220 this week.

Australians’ insatiable appetite will continue although it must be noted that home loans, power and now gas – the family budget squeeze is on given NSW families will have to find an extra $3,000 in their annual budgets by the middle of next year as the soaring cost of living consumes an additional three weeks of the average worker’s wage. Even though land prices are growing at their fastest rate since 2004. No data: foreign buyer property puzzle which by coincidence identifies a twelve month anniversary since The Emperor abolished the acquisition by foreigners of Australian real estate. At 6:38 pm on April 21 I received this notice REA as well as a increased number of emails from Russian buyers agents looking to acquire residential properties.

Foreign men of property move in which demands an answer as to exactly why The Emperor approved this policy change – without consultation. Given home – ownership dream dims for Gen – Y where NSW ‘s dire housing shortage has been exposed by figures revealing that the State needs an extra 120 homes every week to keep up with population growth. To make matters worse, the average rental  of a Sydney house  is approximately $110 more a week than it was five years ago. So Fort Fumble wastes billions on pink batts and the building education revolution – and now it is taking on health? Back to Luna Park and that “Big Dipper” which resonates with Kevin 07. Although not alone – NSW still nation’s basket case, say analysts – the NSW economy continues to be the worst  in the nation and  analysts say, the government must urgently introduce initiatives to stimulate growth in housing construction, business investment and jobs.

As quick as a flash, The Emperor hightailed it to Tasmania rifts open in Kevin Rudd’s health plan given the rethink on insulation scheme over safety fears which then transformed into a junior minister Greg Combet announcing troubled insulation grants get the chop resulting in another taxpayer initiative $2.450 billion down the gurgler. Interesting that The Emperor was all over the stage announcing this – then hides when it is cancelled.

Bob Hawke and John Howard debate our future where the combined consensus was to remove states/territories from all forms of government.

Congratulations to Jacqui and Mike Rowland – Smith who this week delivered a brother for young Will – mother and baby are both healthy and happy.

Cheers ^__^

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23.04.10Robert Simeon1 Comment »

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Forget the spin and electoral rhetoric – Australia had just one quarter of negative growth yet in the wash – up many businesses did very well from the (apparently) worst global financial crisis (GFC) since the Great Depression. Danny John from the Sydney Morning Herald wrote “What crisis? Westpac gains ground from the GFC “A close study of Westpac’s annual financial result shows just how much the country’s second – biggest bank has benefited from the gains in revenue – and therefore market share – which all four of the majors have enjoyed in the wake of the global financial crisis.” No doubt shareholders will be happy with this most taxing banking stimulus!

That other stimulus paints an entirely new picture IMF praises handling of financial crisis when Peter Martin from the Sydney Morning Herald wrote “The International Monetary Fund has singled out Australia as one of the best managed economies, declaring that only Denmark, Korea, Norway, Australia and Sweden among advanced economies will require little or no medium – term adjustment to keep government debt at safe levels”. Now that may be fine however, Fort Fumble (Federal government) has some amazing housekeeping to balance both past and present where it will require some pretty amazing creative accountancy to balance its books. You can read Fort Fumble’s very own accountancy plan MYOB – (May You Obey Bureaucrats) here.

Tim Mooney Photography captures Cammeray, Tunks Park and Northbridge Golf Course

www.timmooneyphotography.com

Still on creative accounting, the award would have to go to our very own Nathan Rees who presides over Fort Crumble. This week he approved a three per cent pay rise for all NSW MP’s making himself the highest paid in Australia after The Emperor – Kevin Rudd. Now before we jump to conclusions both are battling enormous budget deficits so that in itself highlights the pressure they currently find themselves in.

The Sunday Telegraph revealed “Nathan Rees’ master plan to convince NSW to give him one more term. “Nathan Rees needs cash – and plenty of it – to convince fed – up voters to give Labor one more chance. Linda Silimalis reported “Embattled NSW Premier Nathan Rees is pleading with Kevin Rudd to help fund a $10 billion – plus pre – election spending spree to save his government.” Reads more like a last rites request although many would agree that from a business growth analogy, NSW passed away a few years ago and remains the highest taxing state with the least to show in terms of infrastructure.

As we all know, everything requires a plan although it would appear that a few requiring that stimulus are looking rather sick after construction on a Fort Fumble rail project was shut down in Sydney due to a financial blow–out, allegedly caused by poor planning. Our very own Minister for Infrastructure and Transport, Anthony Albanese, said earlier this year, that this project to take freight trains off the Sydney passenger rail network would be completed by early 2010 (now on hold indefinitely). Note this is a Fort Fumble initiative as against another Fort Crumble ongoing malfunction.

For me, another great read of the week was the transcript from Stateline NSW – when Quentin Dempster quizzed Kevin Rudd and Nathan Rees – Discredited

Later in the week, The Daily Telegraph ran the story – Developer lobbies for Della Bosca (Bonka) to become premier. The country’s biggest property developer Harry Triguboff is privately lobbying Labor Party officials to support John Della Bosca’s bid to become NSW premier. You can draw your own conclusions on that although it is interesting to see a property developer interested in re-building Fort Crumble – (I will get to that shortly) as trigger – happy. Makes plenty of sense when the NSW government has next to no idea about building infrastructure. After all it is actually broke!

The Melbourne Cup rate increase (whilst widely tipped) had little effect on the punters and a record $95.600 million was bet on race day. The Emperor keeps telling us that we need his stimulus yet Australia is the only country raising its cash rate so who is actually punting?

Macquarie Economics Research – How high will rates go? They lead the tipping competition on our interest rate predictions? “The similarity between the October and November statements suggests that the Reserve Bank of Australia (RBA) game plan remains unchanged. This means that the first stage of tightening will be out to get interest rates back towards a neutral level – which we think this is now 4 1/2 %“. That means another 100 basis point increases although it should be noted that the RBA has never before increased the cash rate three months in a row.

Robert Gottliebsen wrote on Business Spectator  Rate rises may backfire “Tomorrow’s Melbourne Cup deliberations by the Reserve Bank board present issues far more complex than most commentators are canvassing.” Enter Harry Triguboff again backed by the Macquarie Bank graph (above). “The Reserve Bank, its hidden agenda is that it is deeply concerned that the recent sharp rise in dwelling prices and the bank fears that a new bout of housing affordability issues and an eventual price bubble is looming as Australia’s housing prices move outside world trends. The rising prices move outside world trends. The rising dwelling prices are pushing the central bank towards lifting interest rates more sharply, despite Treasury caution.”

“Then enter Harry Triguboff – the largest owner and builder of apartments in Sydney and a major force in Queensland.”

“Understandably many discount Triguboff’s conclusions because he clearly has an axe to grind. But over the years I have found that the base trends that Triguboff isolates are right nine times out of 10, but his remedies are uncomfortable. When Sydney was booming he said the city was dying, but then declared it would not die because eventually the politicians and local councils would start making sensible decisions. It’s taken eight years but they are now listening to him.”

“Triguboff points out that for the last five years the construction of Australian housing has been half the demand created by rising population, so a huge backlog has developed.”

“Triguboff now says: “If the Reserve Bank insists on raising interest rates in the hope of suppressing prices then they must understand that they will in turn suppress construction.”

“Banks are still very cautious and will insist on decent margins of profit, otherwise they will not advance loans to developers. I know that the Reserve Bank does not want to do it, but they have to make up their minds. Interest rates should not rise until building activity increase significantly. That is the true reasons for raising interest rates – stop oversupply. But all the evidence and rents and prices point to undersupply for the foreseeable future.”

“What Triguboff is highlighting is that the dramatic rises in Australia’s population complicate the interest rate argument. The Reserve Bank will not halt interest rates because of the Triguboff warning, but they need to understand that their current decision making process may create the opposite of what they expect in long – term dwelling prices.”

This should be a cornerstone point with the Ken Henry Review into Australia’s taxation report which is due on Christmas Eve.

On a lighter note – towel surfing was introduced to Australia last Friday when over 200 people on Bondi Beach joined in a synchronous dance to the music of local resident Ben Lee. I wonder when it will come to Balmoral Beach or possibly an open for inspection. (Turn up the volume).

Our property markets need to start dancing to the right tune – the RBA is obviously playing the wrong music as the dance floor is empty.

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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6.11.09Robert Simeon2 Comments »

Like teenagers who just received their first credit cards, Kevin Rudd and Wayne Swan have collectively joined Australian state and territory governments with a deficit budget (once approved in the Senate). To put this into greater perspective, the NSW government (Fort Crumble) has been broke for years despite record tax receipts and yet infrastructure maintenance remained all but non – existent. With world leaders announcing stimulus packages (and I agree we need them) let’s not camouflage these massive fiscal announcements under the guise of combating the Global Financial Crisis (GFC). The problems in NSW (and the other states and territories for that matter) happened well before the GFC.

Last Friday, I read with interest an article on www.crikey.com.au by John Hewson – economist and former Liberal party leader titled “Hewson : we could see an election this year” where in part he made the following comment “At best, the Rudd Government’s second stimulatory package will just buy some time — simply delay the inevitable. As long as the global recession continues to deepen and, as a consequence, China’s growth continues to stall, the best Rudd can hope for is to hold up consumer spending by the cash handouts sufficient to avoid a technical recession — namely, two consecutive quarters of negative growth. “The plot this week began to thicken.

Ross Gittins from The Sydney Morning Herald www.smh.com.au filed this week an article titled “With best intent, politics intrudes” A great read so here are the first nine paragraphs “Kevin Rudd has long been afraid the downturn in the economy will cost him re-election, making his Government a one – term wonder. Malcolm Turnbull knows the downturn offers the best chance he’ll get to defy history and win the election, thus securing his own leadership.

These never – to – be admitted truths explain the political games both men are playing over last week’s budgetary stimulus package, even as the economy burns.

If you want to understand what’s happening in the economy and the rights and wrongs of economic policy you have to be able to distinguish between the politics and the economics. But that’s not easy because the pollies are always trying to disguise their political motives as economic.

Whatever successful politicians do or say, the political implications of what they do are never far from the front of their minds – even when they’re doing just what they should be doing in the nation’s interests.

As part of his long-running efforts to ensure he doesn’t get blamed for the recession. Rudd has repeatedly emphasised how bleak the news is from overseas and how badly it will affect us. It’s true, of course, but saying it is so often and so forcefully risks adding to the blow to business and consumer confidence.

Rudd hopes he can escape blame for the downturn provided he’s seen to have done his best to respond to it. That’s partly why he keeps popping up every few weeks with another measure to counter it.

Even so, mainstream economic gloom-from the International Monetary Fund to the Australian Treasury and most macro-economists – has been urging the Government to use the budget to stimulate demand, to make the stimulus big to get it happening as soon as possible.

It needs to be big because the global recession is expected to be so severe, it needs to start as soon as possible because getting in before the economy starts unravelling will be more effective.

Of course, the need for haste doesn’t justify Rudd’s attempt to push the legislation through Parliament in just a day or two.”

Back to the thickening plot of Rudd’s early election (alleged) plans. So this investigative agent went off to The Tally Room where he found that the Queensland Labor government must call a state election by September 2009. This is to win a fifth term where a loss would seriously impact what some media outlets are already calling the “Ruddslide”. A clue: infrastructure spending to improve state government perceptions for approval levels, maybe re-election?

Then the clanger in yesterday’s Daily Telegraph with the headline “Protect Rees, Rudd tells Labor MPs” I loved this – “Labor Party bosses have been ordered to protect Premier Nathan Rees from a leadership challenge and “calm down NSW” to allow Kevin Rudd to call a possible early election in the second half of this year.

Oh dear – what extent some individuals will go to, to preserve and stroke their suffering egos. A case of once bitten twice shy? Maybe a case of Sunrise to Sunset!

Next week, we address the amendment to Land Tax legislation where the Premier Nathan Rees introduced his premium rate and investment property owners had the current rate of 1.6 per cent increased to 2.00 per cent for investment properties valued over $2,250,000.

With GST receipts already down by approximately 40 per cent, the elected governments simply increase taxes which results in businesses reducing staff.

Nine years on – it is now revealed that GST has increased taxes NOT reduced them. The platform was fraudulently sold to the voting public.

The GFC did not help – however State governments are just as bad, even worse. They escalate the financial remorse for taxpayers and it will only get worse.

A hard week for all Australians, especially those involved in the tragedy of the bush fires in Victoria. We have placed a link on our homepage for those who wish to contribute.

http://www.rwm.com.au/2009/02/victorian-bushfire-appeal-2009/

Cheers ^__^

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13.02.09Robert Simeon3 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 »