This is our final edition for 2008 and what a rollercoaster year it has been. For many an initiation and for others, a ‘here we go again’! The overriding consensus from most that we have spoken with, (and it is a wide circle of influence) is that the first six months of 2009 will be tough – but there is light at the end of the tunnel. The spruikers who said that the banks were about to release an abundance of mortgagee-in-possession sales to our Mosman, Cremorne and Neutral Bay markets in 2008, were wrong. It never happened! They would be better served and suffer much less embarrassment if they kept their Chardonnay commentaries to themselves and concentrated on the 2009 Melbourne Cup winner (same odds).

Like this week’s Mosman real estate story where (supposedly) a vendor walked into an agency wanting to list his home (quietly). He told the agent where he lived and the agent responded “ so you are number 16? I now have in your street 14, 12 and 10, so that is a development site.” Of course, this never happened!

Newspapers accentuate these stories yet on the other hand they expect advertisers to invest in their organisations. This is why I predict that on an economies of scale basis, ‘online’ will outplay print in 2009 – an all time first. Why? Because real estate agents are tired of defending print campaigns when journalists (based on short term opinions) keep talking property markets down.

Let me say once again, that Richardson & Wrench Mosman & Neutral Bay has not been asked by any major lender to provide submissions to market properties in 2009 where the vendors are financially distressed. This speculation is a complete nonsense and with our dominant Mosman market share (where they always call in three or more agents), we would certainly know!

For obvious reasons we will all experience certain elements attempting to talk values down because of a vested interest. Cashed up buyers – yet in Keating’s recession where unemployment was at 11 + per cent and interest rates at 18 per cent, today’s landscape is entirely different. Today all markets correspond succinctly and correctly and (collectively), we are in a much better position to take a more educated market positioning.

The Mortgage Choice /REIA Real Estate Market Facts has reported that the Australian weighted average median house price decreased from $459,795 in the June quarter 2008 to reach $447,659 in the September quarter 2008 – a decrease of 2.6 per cent over the quarter, and an increase of 0.7 per cent over the year. The report acknowledged that while house prices fell in the September quarter, tight vacancy rates and high demand for rental properties identified that rents continued to rise in most capital cities. It should also be noted that over Christmas and the New Year we will see many expats return to our shores which means that if they don’t already own they will be market participants in sales or rentals.

For example: a Burran Avenue sale was recorded two weeks ago for reportedly $19.7(something) million. This sale was for two adjoining properties which last sold in June 2005, one for $14,000,000 and the other for $6,500,000. Total $20.500 million. On that basis these property values have dropped by just over three per cent (combined) since the June 2005 transactions.

Unemployment is rising and this week it climbed to 4.4 per cent (the highest in twelve months) when 15,600 jobs were cut in November. Such an increase obviously adds to the gloomy economic outlook which is only natural since we have just come out of an unprecedented seventeen years of economic growth. It must also be noted that Australia is still well above the 1990/91 recessionary levels which is obviously assisted by decreasing interest rates and greater fiscal stimulus which will play dominant roles in 2009 and beyond. Already, some schools of thought are that the Wall Street stock market bottomed two weeks ago. If correct, will see significant cash reserves (namely idle superannuation monies) head back into our financial markets. It should also be remembered that Australia still remains the fourth highest player in the World economy given our compulsory superannuation contributions.

The Australian Bureau of Statistics (ABS) reported this week that home loan approvals actually rose in October 2008 ending eight months of consecutive falls – an obvious legacy of aggressive interest rate cuts by the Reserve Bank of Australia (RBA). The number of home loans seasonally adjusted, rose by 1.3 per cent compared to September 2008. October 2008 totalled $12.3 billion which represents a 2.4 per cent increase from September, investment housing increased 0.7 per cent and loans for existing homes rose 1.6 per cent which reversed the 1.3 per cent decline in September 2008.

We predict that in February the RBA will drop interest rates by a further 50 basis points which will see the cash rate sit at 3.75 per cent and by June 2009 we can see a strong argument for property players to start giving strong consideration to fixing interest rates. In 2009 we predict that the property canary will sing to the Reserve Bank Governor – cheap cheap!

Virtual Realty News (VRN) is now into its ninth year and next year in September, we celebrate our tenth anniversary and we remain confident that we will have posted one billion dollars in online subscriber sales. Our online models are certainly well positioned to meet these expectations. After all, VRN is Australia’s largest and oldest weekly real estate property E-zine.

In 2009 we expect to see some major re-distribution of advertising monies until such time as our property markets justify such expenditure. So what was previously a mandatory spend could very easily become a secondary spend as property owners (given the economic circumstances) become much more conservative with their money. 2009 will very much be a MoM (month on month) proposition as against ‘what a difference a day makes’.

So there you have our predictions – we would love to read yours? Scroll down and post in our blog.

On behalf of Steve, Richard, Marize, Mark, Jacqui, Eleanor, Gillian, Pip, Belinda, Judith, Lynn, Yana, Sharon, Rebecca, Bernadette, Alesha and Deeann we want to take this opportunity to thank you for your ongoing patronage. We wish each and every one of you a very Merry Christmas, a prosperous New Year, health and wealth in 2009 and beyond.

Cheers ^__^

Our next edition will be on 23 January 2009 when again we will go weekly until December 11 2009. Then we start all over again in 2010!

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12.12.08Robert Simeon6 Comments »

Whilst many waited anxiously for the Reserve Bank Governor, Ian Macfarlane to sing “Oh come all ye faithful” when he announced the December cash rate targets this week, most were left a little disappointed when it was announced that they would be the same. It was exactly twelve months ago on December 5, 2001 that the Reserve Bank dropped the rates by – 0.25, the cash rate of 4.25 was then the lowest in living memory. The Bank has been busy in 2002 increasing the rate just twice in May then June to the present rate of 4.75 per cent. It is interesting to note that in 2001 we had six rate adjustments, 2000 had four, 1999 had just one as did 1998, 1997 had two and 1996 had three. Since the property market embarked on the marathon trade in 1996 we have seen nineteen adjustments to the cash rates. Some might argue that the bank is playing a game of ‘eeney meeney miney mo’. Given that the Bank does not meet in January, the next meeting will be in February, which is two weeks after the real estate season launch on January 26. My tip, a -.050 announcement.

This week I read with interest a report from the Real Estate Institute of NSW, ‘Property Focus’. Here is an extract. “The strength of the NSW property market continued during the September quarter, 2002. Total residential sales remain at historically high levels. There were 38,442 sales of houses, units and land in NSW during the September quarter 2002. This was only marginally lower than the outcome for the record breaking June quarter and higher than the 35,744 sales recorded a year ago in September 2001″. The December quarter will in all probability paint a completely different picture, the volume of property will remain much the same, and I would think that sales evidence would be the lowest for quite some time. The market overall is struggling coming to terms with drought, fires and terrorism so it will be only a matter of time before ‘ The Pied Piper’ of property, Mr Macfarlane, starts playing a new tune.

The Real Estate industry is set for massive change next year with the introduction of the legislation that so many have been calling for. We are already seeing some agents suffering from the ignominy of their actions. Last week we read in a Sunday newspaper how one agent started bidding in front of everyone in an effort to get the price up… this is a big no no. I was amazed to read that the agency principal stated that “I don’t think this poses any ethical dilemmas. I see no problem with what the agent did”. What next? It is alright to make an honest mistake by confusing my personal cheque account with my Trust Account!! An auction last week in Mosman advertised “Bidding from $1,400,000.” Those in attendance last Saturday, were amazed when the auctioneer called for an opening bid. $1,900,000 was called and then nothing happened, except that it was passed in, so the reserve must be in excess of $2,000,000. There are two things that agents can be assured of in 2002, the new legislation will put an end to this, and if you follow this practise you can expect to see your picture in a weekend tabloid. Already there are quite a few agents up before the Department of Fair Trading, and they are not there in recognition for their excellent services to the industry.

The auctioneers are also included in the new legislation so you can be assured that many agents will be back to ‘auction school’ next year. The positive part is that it will greatly improve the ethics of the industry, the sad part is that it took so long to come to fruition.

Great to see that homes are still being sold despite what you read, this week we sold 3/16 Munro Street, McMahons Point for $2,250,000 and a few other properties are dragging their chains as they near exchange. Many agents are reporting that their properties are moving finally, so the market still continues to trade. This week we took our exchange total in three weeks to nearly $22,000,000. I predicted we would do $30,000,000 before the close of business, so it is back to work we go !! Cheers and clink…^__^

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7.12.02Robert 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 »