Well it will be all eyes and ears on the newly formed Productivity Commission, as the Federal Government tries in vain to turn the beat down on the rhythm of property prices. Already the State and Federal Ministers have started the mud-slinging and so far neither has proved that they have one iota about the cause. That fellow Costello, took aim with his property stun gun and suggested that states should lower stamp duty on new housing thus removing the pressures on housing affordability. Well ‘Peter Perfect’ that will ignite it further!! Then in perfect unity, the states responded by blaming the $7000 first home owner’s grant.

The truth of the matter is that it is the top-end of the market which is driving the market, not the bottom-end. As each day passes, the property market is playing the perfect game and the participants have the perfect match plan. The ultimate cause as to why the property market has escalated to all time record highs is because the blue-chip areas have out-performed and will continue to do so for quite some time to come. I mentioned a few weeks back, that Mosman has just 5860 homes, and on average since 1996 some 3500 have changed hands. In simple terms (just so that the Productivity Committee can fathom this) property numbers being offered for sale are diminishing. Just in the last three months we have posted the all time second and third highest home sales in Mosman. Then if you look at some recent home sales, we have just posted five new street records with the sale of homes. This then drives up the prices of semis which are now jumping over the magic million mark, so no wonder the prices of home units are showing an all time average high of $595,857.

We have prima-facie evidence, and the motive is supplied by a definite amount of money. With the Governor of Moolah once again refusing to make a rate adjustment, for the 14th consecutive month, it could be argued that Souths will win a premiership before we see a rate adjustment. The standing record is 19 months which was set from December 1994 to July 1996. My tip is July 2004 before the next adjustment. So it will be quite some time before we see any changes on the earth’s surface with regard to bricks and mortar.

The Productivity Commission needs to consider the movement of property prices, by taking into account the volume of future production, combined with anticipated market conditions. Or can one be so bold as to suggest an equilibrium of supply and demand, which can’t possibly eventuate due to the current character of the property market. If there was a World Cup in property in a few month’s time, Australia would be the odds on favourites to win. The fact that interest rates appear to be set for a considerable time to come, identifies that the current market will show no sign of change and if anything, prices will grow further, due to limited properties becoming available for sale. We have no property market complexities that can illustrate any projected disturbances, so prices will continue to remain consistent with further capital growth. After all, Mosman is an island surrounded by waterways, so for that very reason, it is a unique municipality, which further explains why it remains Australia’s most expensive postcode.

It will be very interesting to see if the Productivity Commission releases any findings on the way, or will we have to wait until they furnish their findings on March 31 next year. I think possibly the latter, as after all, life is very simple. We ourselves create the circumstances that complicate it. What remains to be seen is who will say I am sorry!! We just need to be confident that those presiding on the Commission are not relying on the ‘hope factor’. Cheers ^__^

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9.08.03Robert SimeonNo Comments »

The ‘Ozzie Ollar’ went Oi Oi Oi!! Peter Perfect delivered “Fudget ’03″. His defining moment was to ring JH as he prefers to be called whilst oiling it up in Texas, to tell him about his tax cut incentives. Surely these tax cuts would be better directed towards our public education and hospitals. That way our state schools would have the facilities of the private schools and give all our kids a better standard of education. It would also take the pressure off the parents, who are faced with the dilemma of huge private school fees. The most important asset of this nation is our children. After all, they are the future of our country. Or, with your extra $5 to $10 a week, you can buy one or two steaks at Hotel Mosman! What Fudget ’03 clearly identifies is that the Ozzie economy is alive and well.

The big decisions about the property market still remain entirely with the ‘Governor of Moolah’ and how he rates our economy, and by all accounts he is not perplexed with what is going on. Since he took control of the throne in September 1996 he has been forced in to action just eighteen times with interest rate adjustments. The cash rate target was 6.5 percent when he grabbed the reigns and eleven of his rate adjustments have been reductions. At next month’s meeting the rate will have remained unchanged for twelve months. Given that Macca, is just the eleventh ‘Governor of Moolah’ since the throne was first occupied in June 1912, the clear pattern is that he prefers to leave the economy on auto-pilot.

The most interesting observations about the current markets and previous markets are that they were completely different. Given the boom markets of 1988 – 1990 we saw prices double in the space of twelve months to two years when the official interest rate in January 23 1990 was 17 to 17.5 per cent. This time around, the market has been much slower to react, with the property market taking anywhere up to six years to double in price. When Sydney was handed the Olympic Flag in Atlanta to host the 2000 Olympics, this triggered and ignited the dynamics of the property industry, at the very same time Macca, took up residence on the throne.

Whilst many still predict that interest rates will blow out, at this point I just can’t agree as it is supply and demand that best controls our property markets. Once again we will see a strong Winter market, as this is when demand always exceeds supply. It was this time last year when clearance rates peaked at eighty per cent. Last weekend they climbed back to seventy-four per cent which reinforces my prediction that we will see a very strong May and June market. At one inspection last weekend we had just over two hundred people inspect a home in just one hour!! The clearance rates this time will probably hit the magic eighty per cent again, and many will agree that this is the prime selling period on the calendar.

The participants in the property market are much smarter today, as they maximise their asset. Figures just released clearly identify this, as renovations of homes are now beating new home constructions. 2002 was a record year with $4.03 billion being spent on home renovations, according to figures released from the Housing Industry Association. With the latest figures revealing that in the March quarter alone, $1.08 billion was spent on homes. This is nearly twenty-five percent higher than the December quarter of 2002. Real estate today is an entirely different industry and will continue to remain the country’s number one employer.

Always happy to help a worthy cause, some of our subscribers (well four ladies to be exact) are embarking on a fundraising mission this Friday, straight after they read this week’s edition. How is this for dedication, it is a 100 kilometre walk through Aussie bush land and it has to be completed within forty-eight hours. The proceeds from their efforts are for a charity called OXfam, which assists impoverished countries. Our great ‘Ozzie Mossie’ team are trying to raise enough money to pay for a water pump to provide clean drinking water for up to fifty families in a Cambodian village, and technical training for the local water user group. They are only after donations between $10 and $20, so let us know if you would like to assist them with this worthy cause, after all you are $5 to $10 better off this week thanks to Peter Perfect!!

Cheers and have a great week… ^__^

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17.05.03Robert SimeonNo Comments »