The Reserve Bank of Australia (RBA) issued a grim forecast this week when it raised inflation predictions for 2008, which are now getting out of control. Having raised the official cash rate last week by 25 basis points to seven per cent, we anticipate much more aggression by the RBA in coming months. The news this week just gets worse and there is simply no other alternative but to fight” fire with fire”. When the Board meets next month, the rumour is that the next official cash rate will have a minimum 50 basis point increase. Continue reading »

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15.02.08Robert SimeonNo Comments »

I think the two greatest ‘bloops and blunders’ in 2003 were from those who doubted the ability of the Wallabies, and those who predicted a property market collapse. I, like many others, backed the property market and had no faith in the Wallabies. Now I am backing both and my apologies go to all those brilliant Wallabies for their sensational performances last week!! It takes courage to admit mistakes and make amends for them, so it was great to see all those who were doubters, stand up to be corrected. Shame the same can’t be said for those who have been niggling all year at the property market. They have been consistently one hundred per cent incorrect!! Some started as early as the first week in January this year. To make a mistake is only human-with the property market, the mistakes were well and truly overdone.

Great to see the Productivity Commission is alive and well. For the first time they came out snarling with their dentures locking-in to the property market. The problem as I see it, is that they have identified the investment market as a great place to start. I guess they share the same view as the ‘Governor of Moolah’ in that they identify three factors that drive the investors to the property market. One being the attraction of capital gain, second the availability of attractive finance rates, and third, tax minimisation. How convenient that they failed to identify the big ‘CC’, otherwise know as Corporate Collapses, that constantly appear in the newspapers with gloomy forecasts marinated with non-profit warnings and earnings downgrades. Maybe the Productivity Committee might wish to rinse their dentures as they contemplate these figures, which are compiled by the Australian Bureau of Statistics and researched by Australian Property Monitors.

Mosman property prices twelve months to 31 October, 2003. Average price for a home $1,795,129, median price $1,420,000 and the median price change over the last twelve months sits at 0 per cent. Average price for a unit $$596,253, median price $451,000 and the median price change over the last twelve months sits at – 1 per cent.

Cremorne property prices twelve months to 31 October, 2003. Average price for a home $1,281,046, median price $1,052,500 and the median price change over the last twelve months sits at – 4 per cent. Average price for a unit $572,243, median price $487,500 and the median price change over the last twelve months sits at 1 per cent.

Neutral Bay property prices twelve months to 31 October, 2003. Average price for a home $1,051,013, median price $884,250 and the median price change over the last twelve months sits at – 2 per cent. Average price for a unit $705,960, median price $506,500 and the median price change over the last twelve months sits at 13 per cent.

Since the last edition we have had four apartment sales fall over due directly to unobtainable finance. All four were first home buyers with approved finance. Well the approvals were “approved” until the ‘Governor of Moolah’ upped the rates on Melbourne Cup Day. Now the banks are reassessing the borrowings/equity ratios. This week we sold four apartments with a fifty/fifty split between home owners and investors. Even more confusing are the attempts by agents to explain why the auction clearance rates dropped to 56.5 per cent last weekend, and 51.5 per cent if withdrawn properties are included. Not one agent commented that the new legislation now stops them from dummy-bidding so at the risk of attracting a fine, together with adverse publicity properties are now withdrawn. The reality is that the numbers of prospective purchasers attending open for inspections have halved. Then, take into consideration the current stance taken by the banks, which is the ‘RRR’, reality realty rate!! This equates to applications for 2003 which are now denied the “please re-apply next year” response, when we can work out what is happening. Merry Christmas, your re-establishment fee has been waived as your business is important to us.

Sydney’s residential vacancy rate dropped to 3.4 per cent in October, which is a further improvement on the September 3.7 per cent figure. These figures from The Real Estate Institute identified that the reduction was greatest in the areas within a 10km radius of the city. Well, I guess that also confirms why our Property Management team is so busy.

Whilst on teams, our great team, The Wallabies will be the first ever nation to win back-to-back World Cups this Saturday night. Spare a thought for our English friends. I guess the words “age does not weary them” no longer applies, maybe a name change from the Barmy Army to Dad’s Army. Memo to: Sean Fitzpatrick picked his ANZAC team and not one Australian player made it. Don’t give up your day job mate, baaaaaaaa byeeeeeee!! Cheers and clink ^__

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22.11.03Robert SimeonNo Comments »

All in the name of a good read, it seems that once again many are speculating on what the Reserve Bank and our very own ‘Governor of Moolah’ have in store for the economy. However once again it is the hands that are moving faster than the eyes. Yes, the ‘Magician of Money’ came out this week and released his “Statement on Monetary Policy” and the property market barely rated a mention. Whilst they did voice concerns about the rapid rise in household debt, the report certainly made no mention that this is being fuelled by runaway house prices. Personally, I think the reported journalism is running away at a much faster rate than the housing market. The latest Consumer Price Index figures showed that housing costs increased by just 1.8% from the June Quarter, and for the twelve months from September 2002 to September 2003, the overall increase was just 4.6%. There are strong similarities between the odds on the Wallabies retaining the Rugby World Cup and the housing market; they are both blowing out. The ‘Governor of Moolah’ did identify that all signs are pointing to strong economic growth ahead and in all probability that is the reason why he stopped short of discussing the property market because there is anecdotal evidence of a slight cooling in the key Melbourne and Sydney property markets. Much of the steam has evaporated out of the high-rise apartment sector and the September 2003 Bureau of Statistics’ figures revealed that first-home buyers accounted for just 13.3 per cent of all new loans. This certainly places The Reserve Bank in a quagmire with regard to further rate increases as this will only accentuate the problems with regard to easing the affordability crisis facing first home buyers and those on low incomes.

Still smarting at being overlooked for the “invitation only” Rugby World Cup cocktail party at the Mosman home of Australian Rugby Union boss John O’Neill, not even our very own Steve Patrick managed to crack an A-list invite. As many know, Steve is still acknowledged as the man who introduced “running rugby” to Australia, when he was the highly regarded fly-half for Gordon first grade, back in the late seventies. Steve, was also one of the first Australian players to venture overseas when he took up a contract playing for glamour club, Perugia University in Italy. Whilst discussing the chances of the Wallabies in this week’s up-coming game against the All Blacks, Steve served up his homemade Gamberi rossi conaglio e mollica, with a magnificent Don Pietro Rosso 1997. It should be noted that no team has ever won back to back World Cups (yet), which casts doubts as to why we were not using a youth policy in this World Cup? I had better not say too much as Mosman is now the retirement home for many past Wallabies.

Aside from the World Cup, many have been asking what effect the recent rate rise will have on our market. The simple answer is what rate increase? Our market was the very first to show significant capital appreciation, which in turn forced adjoining suburbs to follow suit. Over recent years our annual appreciation has been consistent around eight to twelve per cent capital appreciation, which is sustainable. What is interesting is that the surrounding areas of Liverpool and Campbelltown, have over the last few years, been recording capital appreciation of thirty-four to thirty-eight per cent. This would be very difficult to sustain, should there be a significant rate increase. These areas would then be referred to as “high-risk”.

With investors moving back to the established suburbs, the rental market here continues to surge ahead. The Corporate market is very strong with the new 2004 executives out here at present looking to lease properties for January occupation. We are experiencing strong enquiries from $300 a week to $4,000 per week, which also explains why one in three apartment sales are going to investors.

The rate-debate will not be on the vast majority of minds this week-end as all eyes, hearts and emotions will be on the World Cup semi-finals. My tips, the Wallabies by a leap and a bound, because how can the Kiwis know what they are up to, when we don’t even have an idea. The French over the Poms, by half a croissant!! This could see Fleet Street, re-named Struggle Street!! Go you Aussies!! Go you good things!! Cheers and clink…^__^

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15.11.03Robert SimeonNo Comments »

Do you think, or do you just think you think? Well our esteemed ‘Governor of Moolah’ has a plan in place for the property market and I think I know what it is !! If you asked the Gov. which month of the year he dislikes the most, I would hazard a guess he would say February, as that is the month that launches the property market each year. Next year, 2004 will be the eighth year of unprecedented trading and I think the Governor will try and slow the February market down to a mild walk. Our ‘Governor of Moolah’ mounted phase one of his stealth attacks on Melbourne Cup Day and he certainly ambushed the market, as nobody called it, given that interest rates last moved way back in June 5, 2002. I predict that we will not see another rate increase until they meet in February 2004 and then we can expect a ‘rate slap’, aimed at taking the wind out of the property market for 2004. In 2001, September 11 stopped the market, as was the case in 2002 with the Bali bombings. The 2003 market has not had to contend with terrorism. When the Governor issued his Media Release on Monetary Policy on November 5, he left plenty of fingerprints on it and it is abundantly clear that he has a hidden agenda. Time will tell if we are correct with our interpretation of where the property market is headed; it will be an interesting February edition.

Now back to our market, which has just weeks left to trade before the close of business 2003. Many are saying that the market is now dead and buried with the market coming off big time. Well, I may have something to add to that as in the last ten days we have exchanged $23,590,000 in local property, of which $11,365,000 went to subscribers of ‘VRN’. This knocked our Internet sales up to 132 at a value of $224,609,000. This is an amazing story in itself, as we are the only agency that uses this method. Gone this week, 7 Wallaringa Avenue Neutral Bay which only confirms that the waterfront market is still alive and well, sale price confidential. 39-41 Aubin Street, Neutral Bay sold ahead of the closing date. Both the purchaser and vendor are subscribers, so again a confidential sale price (the purchasers flew in from Singapore). 28 Ryrie Street Mosman sold at auction for $2,300,000; purchaser is a subscriber, 1 Cabban Street Mosman went prior to auction and is confidential as the purchaser is a subscriber and I owe him a bottle of port. 4 Queen Street Mosman was sold for $2,500,000 and 5 Murdoch Street Cremorne went early and again a confidential sale price. 7 Hodgson Avenue Cremorne sold to a subscriber and the price is confidential. The home unit market still remains strong with 8/ 10 Clifford Street Mosman selling to a subscriber for $701,000, 26B/2 Brady Street Mosman sold for $800,000 and 3/20 Killarney Street Mosman sold for $925,000. Just goes to show that some just “think they think that they know” what the market is doing.

The ‘Queen of Apartments’ Marize Bellomo has the flush of success stamped all over her, as she is currently marketing fourteen apartments, which once again shows that Marize sells more apartments in the area than any other agent. An interesting statistic with this market is that one in three sales is to an investor, so as soon as we sell the property it is back up for rent and the rental market still remains very strong. This again confirms the Wizard Home Loans’ survey which revealed that nearly 900,000 Australians will be back investing in the property market next year. The most amazing statistic to come from this is that three years ago, the same survey identified 246,000 investors and three years on it has tripled. We anticipate a strong home unit market as Mosman, Cremorne and Neutral Bay are blue-chip investment areas that are very well established with strong tenant enquiry. Jasmine Dimitriou has joined us also and both Marize and Jasmine, or as I call them ‘Maz & Jaz’, will be the dominant forces in this market again in 2004.

It is a very interesting market at the moment and we are loving every minute of it. The dynamics are changing weekly and who would have guessed that the ‘Governor of Moolah’ was reading a different form guide on Tuesday. What remains to be seen with a Federal election looming is, will the Governor be on the Treasurer’s Christmas Card list this year? It is alright to think globally, however for quite a few the real issues are local, the only problem is that most of us just don’t get the big picture!! I never did understand macro-economics, cheers and clink!! ^__^

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8.11.03Robert SimeonNo Comments »

What a difference a week makes, the real estate industry has to thank the Aussie $ for ensuring that properties will trade well in the final quarter of 2003. It would appear that we will not see any rate adjustments for some considerable time, although many believe that we were not going to see one at all. It has been well documented that the ‘Governor of Moolah’ prefers to organically grow the economy, hence his decision to leave the rates alone since 5 June 2002. With the Aussie $ climbing past the US70c mark for the first time since November 1997, one must not forget that the property market has been climbing since September 1996. 2003 will be the seventh year of this unprecedented run, and it is the overall dynamics of the market that need to be closely monitored. Back in September 1996 the cash rate target was 7.00 per cent then in December 1998 it hit today’s rate of 4.75 per cent. Then on August 2000 it had climbed back to 6.25 per cent and in December 2001 it hit the all time low of 4.25 per cent, and 5 June 2002 the ‘Governor of Moolah’ locked in the present rate of 4.75 per cent. Really, when you look back at the cash rate targets, talk of rate rises is not much more than “a storm in a tea cup”.

The burning question for most will be how the property market performs in this final quarter given that in 2001 and 2002 at this same quarter we were coming to terms with effects of terrorism. The December quarter for 2002 was a disaster with clearance rates being the lowest in living memory. This in turn led to a hang-over of failed properties over the Christmas break. Then the market for the March quarter jumped twenty per cent, which once again contradicted many who were of the belief that the property market was ailing. From our perspective we are seeing a market that still continues to look strong and confident. Our Home Unit Department has listed thirteen apartments so far this quarter, and eighty per cent of sellers are young couples making the natural progression to trade-up. The other twenty per cent are either retiring or selling an investment property to fund a renovation. The Rental Department is averaging one new lease a working day, and this market is very buoyant and healthy. Then the Sales Department, is in the middle of the first run of marketing campaigns and all the properties are in the process of identifying new owners. At this stage we are unsure if we can emulate last month’s record sales of $42,500,000 however we believe that we can go close to matching this. One of the greatest market dynamics is without a doubt the role of the Internet, and that dynamic salesperson data-base. I had a laugh when I spoke with a subscriber this week who was questioning other agents on what they use to monitor the market ? Their response was “number of pages in The Mosman Daily”, which is the complete opposite of our business model. We look at the long term and where the market will be in 2005/2006 and what technology will be at the forefront of our industry. Just ask the founder of “Penthouse”, Bob Guccione who has just placed the magazine on the market for sale, as a result of falling sales. Playboy Inc has not posted a profit since 1999. This is a classic example of those at the top failing to recognise what effect the Internet will have on their business.

Whilst many are concerned about household debt, which set a new record at the conclusion of the June quarter posting an incredible $693 billion, what needs to be defined is how much of this is managed debt, and are there sufficient resources to absorb any overflow should there be a sell-off? I personally believe that there is (in our market anyway) and the market for 2004 is certainly looking promising, given that we will be entering the eighth consecutive trading year. It is really interesting to look at the enormous changes that have occurred in our industry since 1996, the most interesting phenomenon is how fast our industry is changing. We have fast tracked a long-term relationship with technology, and agencies are now moving into the banking/finance arena. When we start 2004, we will also be launching some new exciting brands under the RWM business plan, and every new brand will be completely Internet driven. We are in the process of registering the Domain and Company names, so watch this space.

It is fair to say that we don’t know what the future holds for any of us, but from our perspective we know that the future will start with www!! Sadly, some just don’t get the ‘point’. Cheers and clink…^__^

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25.10.03Robert SimeonNo Comments »

As they say, “the easiest way to start an argument these days is to get two economists together”. ‘The Economist’ ran an interesting story last week predicting a global fall in property prices, based on the theory of “I know boats”!! Once again, we see the supposed property bubble being blown up or blown out of total proportion again. The simple truth is that nobody can predict the future, so I will offer this little one about the property market, ‘it has to rain, before we see another rainbow’.

The Sydney Morning Herald journalist Stephen Bartholomeusz, gets a gold star for his interpretation on this latest AOMD = Article of Mass Destruction. Mr Bartholomeusz correctly identified that many ingredients make up the property industry, and the only sector of the market that could cause concern is that of the investment market. Given that the ‘Governor of Moolah’ has decided to leave the cash rate target at the same level for twelve months, it appears that our economy is trading well au naturel!!

We have always grown up looking at statistics, personally when I was a kid I was only concerned about Racquel Welch and her vital statistics. If you look at the statistics published this the week, you will see that the average price for a home in Mosman for the twelve months to April was $1,776,001. This figure is down by a life threatening $9348 from the previous month where it peaked at $1,785,349. Does this mean that the value of a home is easing back? It certainly does not! It means that more, less expensive homes were sold during this period, and this does not include private treaty sales. On the other hand, The Mosman Daily excelled itself again this week, when they ran a story headed “Mosman Slips in Price”. One does not have be a brain surgeon, to identify that in 2003 the market has been tight with properties, hence 49 properties were sold in the Mosman area with an average price of $1.19 million. Now here is the funny part, they are comparing it to the December quarter, which recorded 56 homes sold for an average of $1.5 million. Nothing ever happens in January, and these figures do not include private treaty sales, nor those where the vendors place a confidentiality statement on the sale price. In this period we sold a home in Burran Avenue for $9.5 million, and another in Hopetoun for $6.00 million, neither were used in the calculation!! Also, that does not include another six homes we sold greater than $2m that escaped the system. Great to see the asylum is still running true to form. Even more amazing is that some agents believe these figures, and some are telling vendors to cash in now before it is too late.

We won’t see a market like 1991-1993. I well remember when I watched “60 Minutes” some years ago, a National Party Senator in Queensland said, the definition of recession is when your neighbour loses his job. The definition of depression is when you lose your job, and the definition of recovery is when Paul Keating loses his job. The property industry is so much smarter today, and the property dynamics are changing right before our eyes. What is evolving is that we are seeing certain months where campaigns will not be run, due to public holidays and school holidays. April was a classic example with Easter, Anzac and school holidays taking up most of the month. July has school holidays from the 5th to 20th, so that month would also not be recommended as a great month to run a campaign. What we will see is more private treaty and Internet marketing of properties, and again this week, we proved the power of our Internet business. We listed a property at 123 Middle Head Road, which was a failed auction with another agency and what they could not do in eight weeks, we managed to do it in 48 hours!! So you can guess how happy the vendors are.

We are more concerned about working the property market, as against those who are fraudulently using statistics to bring the market down. Afterall, “an economist is a man who figures out tomorrow why the things he predicted yesterday, didn’t happen today”. The property market today is transparent, however some never let the facts get in the way of a good story. Statisticians prefer to work with confusion, as against conclusion, and Raquel Welch never looked better!! Cheers and clink… ^__^

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7.06.03Robert 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 »

If ever a vendor was to take the opportunity to sell in a bull-market, now is the time. With the full time whistle about to be blown on Iraq, it is now back to business. Thanks to the merging of Easter and Anzac Day, the April property market was all but a month of umbrella exercise, combined with rest and relaxation. We did however manage to reach a milestone when we recorded our 91st Internet sale to reach $151,994,500 in subscriber sales, and we have another $4,000,000 in the pipeline.

Perhaps the second greatest boo boo for 2003 after a share purchase recommendation of Pan Pharmaceutical, would be that the property market would collapse. Such mind-sets have once again been likened to April Fools Day, with the average sale price for a Mosman home now at $1,785,349 as at March 2003. I did predict a little while ago that this average will climb to $2,000,000 by the end of this year and I still stand by that. March was a record month for quite a few real estate agencies. It appears that many in the industry benefitted with the Reserve Bank of Australia releasing the latest figures. Once again housing borrowing increased in March by 1.6 per cent, with credit for housing reaching 21 per cent in the year to March. This is the highest rate in eight years. With the investors storming back into property, their borrowings now account for thirty per cent of the total in housing loans. This statistic is almost double what it was ten years ago.

This week we released some sensational properties to the market, now you can watch quite a few all time street records get smashed in the sales process! Listed for our First Eight auctions for May 27 are: 27 Cowles Road, 7 Hunter Road, 39 Killarney Street, 11 Wolger Road, 21 Ida Avenue and 48 Killarney Street. One interesting point that always comes up in a strong market is that of selling prior to auction. Is this the best method? One thing we do hear of a fair bit, is agents exchanging prior to auction and many interested parties not being offered the opportunity to participate in the pre-auction negotiations. Some sell prior because they have more properties coming up, and they need to make times available to fit the new properties in, so they don’t miss out. This could be construed as not exactly acting in the vendor’s best interests, however this is camouflaged pretty well. It will only be a matter of time before more get caught out. What we have done in the past, is to bring the auction forward, that way all the parties are extended every opportunity to participate on a level playing field. I believe that we should be seeing more of this in strong market conditions, however in most cases with real estate, circumstances do change.

It will be all eyes on the market indicators, to monitor just exactly how strong the current market is and we anticipate Internet page views to climb to record levels. The numbers at open for inspections are another great indicator and we believe that some properties will attract more than one hundred couples at each open over the coming weeks. Such numbers are a great test of resources as this is the perfect opportunity to work and maximise our database, which allows us to further build on our subscriber base and improve our client care side of the business. In markets like this we send out thousands of emails each week, working the database, which would explain why we have made so many Internet sales.

Without a doubt, all the dynamics of a strong property market are before us, and many will be watching with interest what happens over the coming weeks. It would appear that due to the recent extenuating circumstances, the winter trading market could very well surpass those previous, in terms of property turnover. With property volumes in April falling across the board by ninety per cent, watch the market strike back in May, see you at the opens !! Cheers and clink ^__^

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3.05.03Robert SimeonNo Comments »

With the Aussie dollar hitting a three-year high last night of $US61.8, it came as little surprise to see that it is the expats who are really working hard on the top-end of the property market. Already this year we are seeing quite a few big sales, with many agents claiming to have posted the ‘highest sale for the year’. In the last week, we have seen a Balmoral home sell prior to the scheduled auction to an expat for $4 million plus. Then there was another home in Balmoral, which also sold ahead of the closing date, for $5 million plus, and again reportedly to an expat. The biggest sale so far in Balmoral for 2003 was actually a $6 million plus sale which was sold by our very own Steve Patrick, and a double yes, an expat and a subscriber. Now I believe that many of the expats are kicking themselves for not taking advantage of the market when the Aussie dollar was wallowing at $US47.5.

We are experiencing one of the tightest markets as far as listings are concerned and hopefully this will change significantly after Easter – as more positive results evolve from the marketplace. The first-run of auction properties for the year have been posted and it would be fair to suggest that these results are mixed. Once again, we are seeing inflated expectations from a few vendors and a few agents are blaming the events of Iraq for the properties that have failed to sell at auction. However, this does not seem to be consistent with the results from the rest of the market. What is consistent however is that once again this is a ‘white lie’.

At the meeting (on 4 March 2003) the RBA Board decided to leave the cash rate target unchanged at 4.75%, no surprises there. The Reserve Bank may have a few more reductions up their sleeve, but this is probably not the time to ‘play their hand’. Rather, they probably prefer to watch the property market meander away on its present course, and in the short term there is definitely no need to change direction, nor plot a new course. Sydney property markets continue to be the most resilient in the entire World, and whilst we are in our seventh year of prosperous market conditions, given recent share market turmoils, real estate is seen more than ever before as a ‘safe house’.

Bob “The Builder” Carr, must still be awaiting his legal advice regarding the recent Land Tax judgement – where the courts ruled that his Governments applications whilst assessing the tax were ‘just not cricket’. The judges found that the applied method to derive a valuation was defective, unduly selective, and based ‘effectively exclusively’ on four sales. There is still no mention of the fact that the property was never physically inspected. We received quite a few e-mails from subscribers who were horrified at how these figures are determined, so here it is direct from the ‘horses mouth’…

“The most direct evidence for assessing the land value is to compare the property with sales of comparable vacant lands. The comparison between the sales and the land being valued will relate to the size of the land, the services available to it and the uses to which it may be or is being put.

Other factors relating to comparability could include surrounding developments and amenities. These would include both positive factors, such as parks or views, as well as negative factors such as frontage to a busy road.

In areas or types of property development where there are limited sales of comparable vacant land the valuer may use sales of improved properties and make allowances for the value of the improvements. This would be appropriate where houses are either being demolished or extensively renovated.

Investment and commercial properties are valued by a hypothetical development exercise when sales of comparable sites are not available.

There are assumptions applied in valuing certain categories of land, for example special provisions apply to land the subject of a listing on the State Heritage Register (see later), heritage restricted land, coal mines, rent protected land and Crown lease restricted land.

The Courts have consistently applied the above methodologies in determining the value of land.

The contract valuers undertaking the valuation will have available to them a whole range of material and information, including maps, deposited plans, sales evidence etc., that will allow them to determine accurate valuations. The valuer may make an inspection of the locality and in most cases will have a general knowledge of the local area that enables him/her to identify the negative and positive factors.

With the valuer’s professional training and experience he or she is able to analyse and interpret this evidence to determine the land value that is to be placed on individual properties.

The most direct evidence for assessing the land value is to compare the property with sales of comparable vacant lands. The comparison between the sales and the land being valued will relate to the size of the land, the services available to it and the uses to which it may be or is being put.

Other factors relating to comparability could include surrounding developments and amenities. These would include both positive factors, such as parks or views, as well as negative factors such as frontage to a busy road.

In areas or types of property development where there are limited sales of comparable vacant land the valuer may use sales of improved properties and make allowances for the value of the improvements. This would be appropriate where houses are either being demolished or extensively renovated.

Investment and commercial properties are valued by a hypothetical development exercise when sales of comparable sites are not available.

There are assumptions applied in valuing certain categories of land, for example special provisions apply to land the subject of a listing on the State Heritage Register (see later), heritage restricted land, coal mines, rent protected land and Crown lease restricted land.

The Courts have consistently applied the above methodologies in determining the value of land.

The contract valuers undertaking the valuation will have available to them a whole range of material and information, including maps, deposited plans, sales evidence etc., that will allow them to determine accurate valuations. The valuer may make an inspection of the locality and in most cases will have a general knowledge of the local area that enables him/her to identify the negative and positive factors.

With the valuer’s professional training and experience he or she is able to analyse and interpret this evidence to determine the land value that is to be placed on individual properties”.

For those who would like to read more, here is the link.

Now it is alright to state that… “With the valuer’s professional training and experience he or she is able to analyse and interpret this evidence to determine the land value that is to be placed on individual properties”… but in reality, you are taxed on your property and they haven’t got a clue what your property even looks like, let alone if it has a view!! You have to hand it to them though, they’re good! We all knew that some ‘pollies’ love playing with mirrors!!

Cheers and clink…..^ __ ^

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8.03.03Robert SimeonNo Comments »

The obvious thing that came out of this week’s announcement regarding interest rates is that Reserve Bank Governor, Ian Macfarlane, is a SNAG, yes a ‘Sensitive New Age Guy’ and I for one am very impressed with his style. What we are seeing is a completely different approach from what has been in the past. Today the Governor ‘prefers to fire a few shots over the bow’, pre-empting the market. I read with interest last week his statement to the House of Representatives .

This clearly identifies that the Australian economy continues to amaze as it defies economic trends. The best example being, that every country that has hosted an Olympic games has gone into recession immediately after the conclusion of the games. It could be argued that we have performed better after the Olympics, than we did before and during for that matter, which is why the Governor is trying to turn the volume down a bit. Yes, it will affect some markets, however I seriously doubt that it will cause a ripple on our market. Mosman is a niche market and it is a ‘protected species’. Many words have been written since the rate increases and that is all they are. I see it more as ‘squibble and squabble over a game called scrabble’. Many are trying to get points for their selection of words as they play clairvoyant with our economy. Personally I am of the opinion that we just get on with what we do best and let the Governor steer the good ship.

One thing that we anticipate is that agents hopefully, will be a little more conservative when offering opinions of value. The winter market is more than holding its own and prices have remained in line. The only statistics that can confuse the market are the ones where the agent has applied the wrong opinion of value! For some it appears to happen more often than for others, and I am sure that if there was no commission payable, they would be right on the money!!

One must give credit where it is due and congratulations to BIS Shrapnel. They continue to call the market with accuracy and have been correct with their forecasts. This week in light of the Governor’s announcement, they stated that the rise in rates will dampen but not stall price rises in Sydney’s booming real estate market. They also claimed that the gap between cities would continue to widen, with Sydney continuing to lead. One reason why we, at this stage, see very little change in the market is that purchasers factored in the rate increases ages ago, so an increase comes as no surprise. From a personal point of view I like this market much better as it is much more challenging, and clearly separates the leading agents from the pack. Negotiations require much more skill today, than in the past.

So where does the market go from here? Words that spring to mind are “opportunity land”!! Contrary to popular expectations “Why don’t we jump at opportunities, as quickly as we jump to conclusions?” You only have to look at those who purchased immediately after Sept 11. There was a window of opportunity then. Just a little bit over six months ago, we had a happy vendor who pocketed nearly $100,000 a month. It certainly is quite clear for all to see that history will certainly not repeat itself with the events of a decade ago, kindly brought to us by the Labour Government. And the chances of ever seeing that market again are, in all probability, as great as the Soccer Roos winning the current World Cup!!

Today, the Reserve Bank is busily running up and down the fore deck trimming and adjusting the sails, watching the wind shifts to make sure that we are sailing on an even keel. And they are not on their “Pat Malone”. All businesses are doing the same, and yes we are making adjustments each week with the market, which by all accounts are barely visible to the naked eye. Each week I receive my e-mail alerts from the Governor. If you want to receive the same go to www.rba.gov.au and subscribe to the email alerts.

And for the record, not one vendor has contacted us in fear of the rise in interest rates. We have nearly 2,500 registered buyers wanting to buy property in all price brackets, and with just the 32 houses advertised on Saturday it will be quite some time before we have placed them in homes. So for those who believe that we will see prices in property drop significantly, I can’t agree with you. The money market, oops, I meant property market may have peaked for the moment. Don’t hibernate for long because the Spring market, is just ninety days away and then I anticipate that once again our spinnaker will be hoisted. What we have now is just a little bit of the calm before the storm!!

Have a great weekend. On a few occasions we do get two days off in a row… ^__^

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8.06.02Robert SimeonNo Comments »

I spy with my little eye something beginning with ‘I’ … (and no, it’s not interest rates!) It is Insurance. The momentum is rapidly building and we are fast approaching a transformation that could change many lives. The current wave of insurance crisis cases is just the beginning and the United Medical Protection debacle, which shook the medical profession this week, is what many believe to be just the beginning. Whilst our dollar stands up to the greenback, it is not just the currency that many are watching. We are fast moving towards the ‘litigious society’ and the words “it can only happen in America” no longer ring true. This week we paid our Professional Indemnity Insurance. It has risen from $3,000 to $9,000 and we have never even had a claim made against us. This is a clue to what could eventuate. Imagine if as soon as a solicitor has concluded the conveyance on the sale of a home, she/he could then commence legal proceedings against the agent on the same matter!!

Here are two interesting case scenarios that I observed this week:

Case One: Steve Patrick was called to a home that is going to auction shortly with another agency. The vendors called Steve because they were told that he was honest and reputable. Now the selling agent had told them they would attain $3,500,000 and now he is telling them $2,500,000, which is thirty per cent reduction in just over a month. He told them that the market had gone “soft”. Well there were two auction events conducted by agencies this week, one sold 14 out of 15 and the other sold 8 out of 10 properties, which hardly infers that the market is going soft. Clearance rates still hover at just over 80% for the week. Steve told them that their home was only worth $2,500,000; the additional million was nothing more than the agent buying the listing!

Case Two: I was approached by a couple who are interested in purchasing a property from another agency, and we discussed the likely value, based on comparable sales. The agent had told them over four million. In my opinion it was not worth that, so they made an offer of $3,800,000. Now the agent couldn’t get them up, nor the vendor down in price. The prospective purchasers had me value their home and I told them $1,800,000 to $2,000,000 on a good day. Next they called the selling agent of the other property in and he told them $2,500,000! The idea being, that if he tells them that their house is worth more, they might up their offer. Once they buy they will be forced to increase their mortgage. We all know that some agents still believe “that money grows on trees”! When I was told what the agent said, I told them to go back to the agent and say “we will increase our offer on the condition that you underwrite any money that we receive under $2,500,000″. Interestingly enough, the agent declined the offer of generosity by the prospective purchasers!

This is happening all over the market and it will only be a matter of time before a vendor challenges an agent’s opinion, and for quite a few agents, the days of a $9,000.00 Professional Indemnity annual account will be seen as being cheap!!

Now back to the property market… The school holidays are now over and we did learn something. Next year we are going to advertise in the ‘Noosa Journal’ over this period, because that is where the Mosman market retreats to at this time of the year! Makes sense… it really is an awesome destination. I am actually liaising with the licensee of our Noosa office, Peter Butt, to display their properties on our web site. It is amazing how many Mosman residents own real estate in Noosa.

I was interested to read this week, that a consultancy firm called “Market Intelligence Strategy Centre” (MISC) stated that one in six households took out a new housing loan last year, and that a record one million home loans were written by lenders. Now when you take into consideration the number that are mortgage free, it comes as little surprise that the property industry is the biggest employer in the country, which also explains why The Reserve Bank is not that keen on raising interest rates just yet. Whilst on the Reserve Bank, it was announced this week that figures show the lending boom has continued this year, with total home borrowings reaching $334 billion in March, which is up $10 billion since the end of the year.

This week I was asked to speak at my old school – Shore – for the upcoming careers night, about a career in real estate. Yes real estate now rates a mention! I made a rough count and in our market we have around twelve agents who are directors or employees who also went to Shore. A few agents have sons that attend the school now. Should be very interesting for the boys who discuss my speech over dinner at home! …^_^… Cheers.

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4.05.02Robert SimeonNo Comments »