Time for property markets to step up and step out!
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That proverbial property fence is about to get a whole lot lighter because this week in real estate is good news week! Thus far in 2011, the Mosman house market has erred on the side of caution with historically low property offerings, but is this about to change? Let’s analyse this week’s announcements, bearing in mind that since the global financial crisis (GFC) in 2008 our property markets have been in self–imposed hibernation.
This week, the Reserve Bank of Australia (RBA) decided to leave the cash rate at 4.75 per cent. Here is the Statement by Glenn Stevens, Governor: Monetary Policy Decision. Then the big news announcement that Australia’s gross domestic product (GDP) rose by 1.2 per cent which clearly shows that the summer floods and storms seriously impacted our two biggest export commodities – iron ore and coal. The strong National Accounts position also means that the federal government will not be able to use this as an excuse for not returning the budget deficit back to surplus. A better than expected result as the economy returns to growth in the June quarter so the September quarter should post a positive GDP result also.
Just as interesting as the GDP jumps ahead of market forecasts as consumer spending rises was a revealing survey: more cash, struggling to pay for basics, but spending more on fun. Further evidence this week – RBA graphs highlight growing savings culture where the growing trend of households is to save more and reduce debt. Despite market bets on rate cut the RBA continues to play a waiting game this cautious outlook may help contain inflation.
Australia’s unemployment rate rose in August, to 5.3 per cent (the highest level in a year) up from 5.1 per cent in July. Rising unemployment builds case for RBA to cut interest rates given the GDP results the rise in unemployment actually means that the economy is slowing. The September unemployment figures will actually show if this is trending and I suspect that unemployment will continue to rise due to the inherent problems in retail and manufacturing.
This will place the RBA under extreme pressure to lower the cash rate and it will be interesting to see if the banks, this time around, follow suit or play hard ball again? I would expect that this time, (if the following graph is any indication), they will all be singing from the same hymn book
What is interesting is that when the RBA met over cucumber sandwiches in August, there was strong argument to increase the cash rate. One month later, it has acknowledged that the global outlook is deteriorating and Australia will feel it down the track. The September quarter GDP results may tell a completely different story to that of the June quarter? Just as confusing prices fall for first time in two years where on an annual basis, inflation rose by 2.9 per cent in August, slowing from the 3.2 per cent in July.
Sydney house sales slow but steady before expected late spring uptake which is an expected, given the recent ‘shock’ market capitulations last month. We also share the opinion that the spring market set to bloom late so we expect the Mosman market to step up and step out in September, October, November and December. The telltale factor will be an easy observation – just watch the stock levels! We expect to see a week on week growth through to Christmas. I would have to agree that the economy and housing markets are stronger than you think although households are still concerned about ‘that’ stench – Rio Tinto warns Gillard over carbon tax.
MOSMAN – 2088
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• Number of houses on the market last week – 107
• Number of houses on the market this week – 115
• Number of apartments on the market last week – 93
• Number of apartments on the market this week – 91
CREMORNE – 2090
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• Number of houses on the market last week – 14
• Number of houses on the market this week – 14
• Number of apartments on the market last week – 31
• Number of apartments on the market this week – 34
NEUTRAL BAY – 2089
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• Number of houses on the market last week – 9
• Number of houses on the market this week – 13
• Number of apartments on the market last week – 67
• Number of apartments on the market this week – 79
For this week’s sales in 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 It is interesting to note from the past week’s activity that anecdotal sales evidence keeps growing as against declining.
Another diabolical week for Julia Gillard and her Fort Fumble with voter satisfaction plunging: Gillard’s support dives to new low. The obvious was stated in that only a miracle can save Julia Gillard as Labor moves on to the main game: who’s next? Stockbroker Charlie Aitken stepped up his attack on Julia Gillard by forecasting that the Australian equities market would rally by ten per cent if the Prime Minister was rolled. I reported a few editions back, that Julia Gillard has until Christmas to turn her popularity around and I stand by that!
Cheers ^__^
The 2009 Mosman property market this week went bottoms-up!
Our Foreign Investment Review Board (FIRB) appears to be much busier of late with early indications pointing to the Mosman house market as now in active engagement. What a difference a week can make and we are certainly not talking apparitions – rather anecdotal sales evidence. Expats have suddenly upgraded their position to buy recommendations and the 2008 house rules of engagement no longer appear to bear any resemblance.
On our blog last week, Patricia requested “Robert … An acknowledgement and analysis of the factors surrounding the high inventory of upper – end homes ($3,000,000+) that have been on the market for 6+ months (some almost a year) would be illuminating.” I love blogs as they get to the coal face of our property markets. Watch for more agencies offering this facility (highly unlikely).
In our first edition this year we highlighted the fact that (according to Australian Property Monitors) Mosman in 2008 transacted just 219 sales which is the lowest volume in decades. The hangover of the Global Financial Crisis (GFC). In 2007, Mosman, recorded 384 house transactions and in 2006 the volume was 440. Back to 2008 where the last six months was an absolute disaster evidenced by the following data.
January 2008 – 8 house sales
February 2008 – 24 house sales
March 2008 – 24 house sales
April 2008 – 25 house sales
May 2008 – 30 house sales
June 2008 – 20 house sales
The GFC decline
July 2008 – 17 house sales
August 2008 – 22 house sales
September 2008 – 13 house sales
October 2008 – 14 house sales
November 2008 – 12 house sales
December 2008 – 9 house sales
Many owners who might otherwise be selling, have to decided to hold their market position. After the Stock Market crash of 1987 where the economy came to a complete halt many forget that our property markets were in full boom just six months later in June 1988.
The buyers are calling for blood and vendors are blowing raspberries!
When I look at www.domain.com.au (the number one Mosman property portal) there are 147 houses listed – then when I remove co-agents and apartments that sneak in, it actually comes to 127. The greatest myth in Mosman is that half the market is for sale. This would equate to 2,450 houses which is a complete nonsense. Currently just 2.5 to 3 per cent are on the market. A far cry from our previous house volume trades of 6 to 8 per cent which we put down to the raspberry factor.
Back to Patricia and our blog “Hello again … Another disquieting aspect of the current Mosman market is the high volume of single –family homes available for lease for $1,000+ /wk.
In a normal market, www.domain.com.au ordinarily lists 40 – 45 Mosman houses for lease. Currently there are over 90 available with the majority over $1,000/wk. MANY of these have been available for several months. It appears that the corporate leasing markets have all but disappeared.
Thanks for any thoughts on this leasing segment.”
The leasing market for houses is actually on par with normal market demand and when one removes the double-dipping, Mosman has actually just 66 houses for lease. Although Domain lists this week’s volume as being 77 houses. It needs to be noted that more than a few properties are multi listed. The top-end of the market is somewhat weak – a result of the GFC. It should be noted that a few vendors who have sold have gone into rental properties.
Back to bottoms – up! When you look at this week’s sales activity (remember where you read it first), RWM sold two properties for $3.025 million and $3.500 million, a home in Waitovu Street was sold for $3.800 million, Prince Albert Street $6.000 million, Hopetoun Avenue $7.000 million and the big double digit Clifton Garden’s sale. RWM posted the highest recorded sale for 2008 with the sale of a Raglan Street waterfront for $14.700 million and last week’s sale is not far behind it. Congratulations to Richard Simeon who negotiated both these sales. All the sales recorded over the last week were Internet based advertising campaigns. I am of the opinion that our Mosman property market has now bottomed (given the current anecdotal sales evidence) when compared to the 2008 sales volumes.
I will address the stimulus package next week. What I find interesting is that Kevin Rudd is allocating taxpayer funds that our hopeless and useless State Governments were supposed to expend, based on tax receipts. Much like Mum and Dad bailing out a sibling on a margin call. Kevin Rudd is attempting to buy another term in government at taxpayer expense. Double dipping in taxation is simply not acceptable. State wastage is of greater concern. On the 7.30 Report this week host Kerry O’Brien asked Prime Minister Kevin Rudd if the NSW government would struggle to assemble a Lego set, let alone an infrastructure package. Rudd did not answer the question (for very obvious reasons).
State governments complained when Australia was in economic growth that they needed greater GST receipts and let’s be honest we are in mild recession. Just that it takes eight months to be told that we are in recession. The GST receipts will be down by forty per cent so Fort Crumble (NSW Government) is now bankrupt.
Bottoms – up and cheers to that and blog away ^__^
2009 – The recession we had to have?…………or keep reading about!
Already media outlet www.crikey.com.au is referring to newspaper reporting as “recession p-rn” (add an o in the missing space) as it is everywhere. It appears that every “recession p-rn” article appearing on Fairfax Media, News Ltd papers and websites, has resulted in prospective sellers cancelling their 2009 print marketing campaigns and opting for online marketing (the cheaper alternative).
Fairfax Media and News Ltd real estate print revenues will be smashed in 2009 when these (previously) “rivers of gold” will become dry creek beds. Smarter print initiatives need to evolve which, with respect, should have already been released for the 2009 real estate markets. This simply explains why vendors are presently reluctant to engage in costly campaigns – preferring to opt for the high tech online agencies. Our point of difference in this market is our online investment in technology.
Here are the exclusive facts based on sales evidence provided by Australian Property Monitors. The Mosman house market consisting of 4,900 houses would, in strong markets, trade at ten per cent of volume. 2008 was the worst ever recorded year in terms of Mosman house sales where just 219 sales were recorded as compared to 384 in 2007.
Mosman House Sales In 2008
Total sales – 219
Total Value Sold – $580,558,112.00
Private Treaty – 156
Auction – 63
Median Price – $2,376,000
Average Price – $2,870,373
Mosman House Sales in 2007
Total sales – 384
Total Value Sold – $1,153,329,720
Private Treaty – 270
Auction – 114
Median Price – $2,360,000
Average Price – $3,003,462
Mosman, for quite some time, has identified itself as a difficult auction market as anecdotal sales evidence proves.
If you look at the monthly Mosman house sales evidence, the story unfolds in 2008.
January 2008 – 8 home sales
February 2008 – 24 house sales
March 2008 – 24 house sales
April 2008 – 25 house sales
May 2008 – 30 house sales
June 2008 – 20 house sales
July 2008 – 17 house sales
August 2008 – 22 house sales
September 2008 – 13 house sales
October 2008 – 14 house sales
November 2008 – 12 house sales
December 2008 – 9 House sales
These figures will increase somewhat however it is clear that sales volume for Mosman houses in 2009 is obviously well down on previous years. The sales volume decrease in recorded Mosman house sales is 43 per cent down from 2007 to 2008 and 55 per cent down from recorded sales in 2006 compared to 2008. The percentage decreases over the same periods for average and median prices are nowhere as severe. What is blatantly obvious is the fact that Mosman is very much a private treaty suburb and not a public auction suburb which was further evidenced late last year when some clearance rates fell below ten per cent.
Again we are not valuing any mortgagee in possession properties for banking institutions so the ongoing rumours that half the suburb is on the market, is clearly incorrect. Yes – values are down by approximately ten to fifteen per cent however confidence levels are down by over 50 per cent which is an exact reflection of the market.
Another first in 2009 will in all probability see the tightest property volumes offered to the market place in years. What many fail to understand is that house volumes keep reducing not increasing and we know what that does to values. The tug – a – house battle in 2009 will be just as intriguing as probably every other thing that we will observe in the coming year.
We are now into our ninth year of Virtual Realty News and this year will be compelling. Welcome back and cheers! Next week we will look at how Mosman apartments performed. ^__^
