It has been our absolute pleasure to deliver to the clients in our dynamic market, the most comprehensive online electronic property data. Richardson & Wrench Mosman & Neutral Bay (RWM) continues to lead our markets with results, performance and innovation – “we never stop thinking about you.”

Without a doubt, the introduction of the Goods & Services Tax (GST) has seriously impacted on our markets and has definitely stymied property development and investment in housing. Some even refer to it as a Value Added Tax (VAT). The only problem is, that governments reap the financial benefits to the detriment of consumers. Banks are also reluctant to pursue mortgagee – in – possession (MIP) sales simply because they will have to pay GST on these forced sales. As stated previously, we have received just one instruction to act on a MIP sale in 2008.

Back to GST, the tax that our state government happily received but never passed on the tax reductions as promised. A disgrace, considering that in NSW, taxes have actually increased since the GST was introduced in 2000. NSW is now the (GST) 10 plus per cent state where tax payers are simply and obviously much worse off. What we have today is a government that is all but insolvent where state finances are now in debit, not credit.

A prime contender for a Double Dissolution, it has blown, wasted and destroyed all tax payer monies in the pursuit of disastrous economic policy. Our very own government failed miserably and is now MIP. No state government in our proud history has received such obscene tax payer donations which, as a direct result of incompetent financial management, have simply disintegrated.

This prompted the Prime Minister Kevin Rudd, to fire off a warning to Premier Nathan Rees, to lift his game. A tad late for Kevin -07, given that the NSW mini-budget to be delivered next week will identify the worst possible case scenario, a governing body that is broke!

I love the election promises that politicians make during election campaigns (like every child will have a computer). An obvious state and federal government communication problem which never eventuated, because of failed election promises. The NSW government costed this and said that it simply won’t happen as it is unaffordable.

Now it has announced that 700,000 school children will lose free public transport at a time when sexual predators are running amok. Considering the attempted abductions around Sydney, the NSW government plan is to make more children walk the streets to home? Care factor for NSW families is now at zero point, obviously aligned with economic management policy.

Then of course you have the NSW government announcement that it will cut the red tape and free up the rezoning of land. Spend a few hundred thousand dollars of tax payer monies with extravagant advertising promoting the metro line only to now see it shelved. Spare a thought for those who acquired property based on this election promise. Politicians now gone and struggling home owners left carrying an asset marinated in broken election promises.

Our elected state government with its increasing tax grabs is a hindrance to our property markets when it should be an ally. Confidence will restore our property markets and cheaper money serves as great economic relief. With the Melbourne Cup out of the way and the popular election of Barack Obama, global confidence is now finally on the mend (so it appears).

And that is exactly what we got this week when the Reserve Bank of Australia (RBA) knocked off a further 75 basis points – the lowest rate since December 2003. Many forget that 2003 was a bull property market and whilst we are not suggesting another bull market, we can certainly see a confident market ahead. It should be remembered that during the last recession we had falling property prices with record high interest rates. Today, we are faced with adjusted property prices and the prospect of record low interest rates.

We would like your thoughts on this, so post your comments on our weekly “Virtual Realty News” blog and we will happily publish them. We invite you to participate and have a look around at our latest online media platform. We still have a few bugs to iron out which is only natural as this website has 1,262 pages (and populating) of data. Cheers ^__^

Here is a snapshot of the site provided by Peter Ricci our web developer. We have so many features, we have asked him to highlight a few!

Welcome to the New Richardson & Wrench Mosman and Neutral Bay Website

The Richardson & Wrench Mosman and Neutral Bay (RWM) home page, is quite a large home page. Because of the wealth of information provided by RWM over the years, we think it is important to share this information – even to the casual visitor.

We worked with the team from RWM to identify all of the key information areas and combined this into a home page, which is now more of a jump station to various sections of the site.

We also realised the importance of the people at RWM, you can have the greatest technology, the best systems on the planet, but it still comes down to your people. Including items such as latest news, most popular news, people, weekly feature properties, recent sales and latest releases gives the site more of a newspaper theme.

With all of this in mind we wanted it to be unique, we think it is.

Team Page

It all comes down to your people and RWM has been a steady ship for many years, so we engaged a photographer to take a range of photos in and around Mosman and Neutral Bay.

Each Team Member has profiles, plus their own unique page with their vendors listings and recent sales results (‘Success Stories’) on the page. Team Members can be contacted individually as well from their own page.

Property Page

The property page is where we really get things firing. Having so much information on a page can be daunting for any developer, but the principal still remains, what do potential customers want to see? To the top left of the page we provide pricing, accommodation and other relevant information. Below this are the agents assigned to the property and a simple contact area for users to contact agents directly.

Property Photos

We use a flash gallery to view photos, plans, voice-overs and videos. This software has a range of features. Visitors can scroll through photos by mouse over, they can pause and play, view full screen.

The software automatically plays through each photo and then through to plans/videos. Tabs at the top are only displayed when there is content, so no plans, no plans tab, likewise no videos, no videos tab.

Maps with Street View

We also include properties with addresses displayed Google mapping with street view. We have nice large maps for visitors to see exactly where a property is located. They can also zoom down to street view and take a walk around the area.

Suburb Profiles

We created a range of suburb profiles and these match up perfectly within our system, so a property in a certain suburb will bring the correct suburb profile into the page. We also engaged a photographer to take a range of photos around each suburb, so users can view these via a simple pop up screen.

Walk Score

“What I can walk to” is a common home-buying and apartment-renting criterion. Our integration of Walk Score’s technology calculates a Walk Score for any property and shows a map of what’s nearby with reviews to help you find a great neighbourhood. The software showcases nearby restaurants, coffee shops, bars, movies, schools, parks, libraries, bookstores, fitness centres, pharmacies, hardware and retails outlets within the area. We think it is a great inclusion inspired by the team at RWM.

Recent Sales

RWM’s recent sales, reads like the who’s who of property within Mosman and Neutral Bay. We bring in recent data into a page, and users can also jump through to the main screen and view all Internet sales from RWM over the years.

Similar Listings

Both sales and rent pages have a similar listings tool which matches property type and suburb and brings in data to match that criteria. We only display 3 most relevant for each property.

Virtual Realty News

Okay Robert/Richard/Stephen have had a free reign over the years, splashing out their thoughts, now you can also tell him what you think. Each news article allow the user to make a comment. You can return any time and start a conversation with the author or other people making comments. RWM will of course have to monitor this, and we have functionality to do this. But give it a try, believe me it is fun!

Recommended Browsers

Any expert will tell you, that you should have the latest browsers. This site is optimised for 80+% of the market using Internet Explorer 7, Firefox 3, Safari, Opera and Google Chrome browsers. If you don’t have one of the latest browsers, I suggest you download one of your choice. My personal favourite is Firefox, it is fast, flexible and secure.

RSS Feeds

You can subscribe to RSS Feeds for Sales, Rentals, Virtual Realty News, however you will need one of the latest browsers or a feed reader like Google Reader.

Issues

Yes it is a new site, with a lot of new technology, we do not expect it to be perfect from the outset, we have a small team of testers and have found most little annoying bugs, but sometimes new ones do arise, I would love your feedback and you can contact me (Peter Ricci) on 0438 391 397 or alternatively by email at peter@agentpoint.com.au

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Freeze Frame. In the Senate standing committee that met this week for a “Please explain?”, Barnaby Joyce attacked Fort Fumble with his six guns, not to be confused with six pack. Straight from the hip he fired a question at Treasury guru Ken Henry which then ricocheted to David Gruen (obviously the smoking gun). “Had Treasury done any modelling on the Government’s $10.4 billion rescue spending (spree) package?”

The answer was a simple ‘no’, which prompted Federal Treasurer Wayne Swan, to advise those with no access to their money to attend Centrelink – obviously Wayne is now our missing link. Joyce went on to say “My wife runs a kindergarten, it’s better than that lot”. One can only assume he was referring to Fort Fumble.

There we go, half of the surplus gone and with no business model in place, our concerns over OPM (Other People’s Money) are met with an icy response.

Alan Kohler had his nail gun ready at hand on www.businessspectator.com.au when he wrote about our modern day Ice Age. Could this be the nail in the coffin of Fort Fumble?

Fire one. “The Rudd government has made a terrible, almost unbelievable mistake by guaranteeing some savings for free. Fire two.- “Prime Minister Kevin Rudd and Treasurer Wayne Swan don’t seem to understand what is happening or what they have done.” Fire three. “Unless they go down in history as bumbling fools who wrecked the Australian economy, they must instantly, this morning, put a universal price on the deposit guarantee that was announced on October 12.” This is Vintage Kohler! The nail gun left more than splinters when the Federal government capitulated. Fort Fumble’s stand up comedy version of icing your cake or, should that be scrambling your nest eggs!

Fort Fumble was then left trying to unscramble its eggs when it (wait for it) accidentally had an email moment – don’t you hate that. Wayne Swan’s office (in the process of moving from Windows 95) accidentally sent out an email detailing the questions to be asked in Question Time – shock horror. In Canberra we now have email for comment where at Fort Fumble the motto is: Hear no evil, speak no evil and email no evil unless you are privy to Wayne’s online Outlook. Fort Fumble is in great hands and it was revealed this week that Question Time in parliament is Outlook “confused”.

On a lighter note let’s get back to what drives the economy, our property market which most interestingly, is experiencing a strong surge of expat enquiries. The Mosman market is most fortunate and attracts an international audience. The South Pacific Peso better known as the Australian dollar, is enticing more than a few, who are flying in to inspect our properties this weekend.

Online enquiries play an integral part for all real estate agencies whatever the property demographic and a close look at our information highway reveals an amazing number of overseas enquiries. This is no great surprise when you take into consideration the drop in the South Pacific peso combined with home value adjustments (the savings are approximately fifty per cent). Today’s purchasers prefer to communicate via email, a sign of the times which identifies the importance of having a strong online platform.

This is our last edition under the current format and next week, we will release a website full of the latest online innovations – an industry first. We have moved our online platform to a RWM – media outlet where we will release online applications that have never been seen in our residential property market. Walk Score is brilliant technology and you will see it change for every property on our website

We believe that RWM is the very first Australian real estate agency (or property portal for that matter) to roll out this application and it’s fantastic for our expats.

It’s an online model that was twelve months in the planning combined with the most expensive schedule of finish in terms of agent individual websites. I would like to take this opportunity to thank Peter Ricci and his very talented team at www.agentpoint.com.au who not only understood my different online mind, but then exceeded my expectations. Our new media platform offers the largest homepage ever seen, full of property data and individual property pages and the photo galleries are a kaleidoscope of colour and information.

One online industry expert who reviewed our new website described it as a Website (or should that have been Weapon?) of Mass Destruction for our competition. We are happy to let you the consumers, be the judge on this.

The market has started late this year given the obvious distractions and next week, we will release more homes. Our Mosman prestige home release – Burran Avenue, Glencarron Avenue, Union Street, Moruben Road, Calypso Avenue, Middle Head Road, Bradleys Head Road, Tivoli Street and more.

“Virtual Realty News” has been has been arriving weekly at in boxes for nine years now. Tag every edition (Google approved of course and we have tagged some 15,000 pages) – then hit > send to the Google search engine and every Mosman, Cremorne and Neutral Bay property search engine result will have the RWM business as the leading point of contact. The online battle gets more interesting each week and this is highlighted by the recent changes to our economic climate.As they say “timing is everything” so next week RWM will be starting its engines! Cheers ^__^

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This week a caller to ABC morning radio announced that Mosman was about see one hundred and thirty mortgagee – in – possession properties about to be released to the marketplace. The only problem with this market touch up is that nobody has bothered to tell the real estate agents. For the record, the number of mortgagee – in – possession properties that we have been asked to sell in 2008, is just one.

This announcement prompted me to then crunch the numbers of houses in Mosman currently for sale, so I went to www.domain.com.au to do the mathematics. Now we know that Mosman has just over 4,900 homes and 136 (2.78%) are currently listed on this portal for sale which is exactly the market norm for this time of year (commonly regarded as a peak selling period). One also needs to bear in mind that on average, Mosman houses trade annually at five to ten per cent of the total number.

Here is the breakdown for Mosman houses, compiled yesterday.

• $1,000,000 to $1,500,000 – a selection of 24 houses
• $1,500,000 to $2,000,000 – a selection of 27 houses
• $2,000,000 to $2,500,000 – a selection of 15 houses
• $2,500,000 to $3,000,000 – a selection of 5 houses
• $3,000,000 to $4,000,000 – a selection of 20 houses
• $4,000,000 to $5,000,000 – a selection of 15 houses
• $5,000,000 to $7,500,000 – a selection of 19 houses
• $7,500,000 to $10,000,000 – a selection of 5 houses
• $10,000,000 + — a selection of 6 houses

• Total 136

Now for the touch up, touch down and out of touch Mosman market test. We used the days on market analysis to put the volume into greater perspective.

• One month on the market – day one to day 31 identifies 58 houses
• Two months on the market – identifies 26 houses
• Three months on the market – identifies 24 houses
• Four months on the market – identifies 28 houses

• Total 136

Also, one should not forget that the expat market is the strongest we have seen all year. They now enjoy a thirty plus percent discount, after the Aussie dollar caught a cold.

So let’s take a peek (or should that be peak) at the touch ups that occurred this week. As I predicted last year, the consumer price index (CPI) jumped to five per cent. Year on year, the biggest annual jump since 1995. Rentals rose another 2.1 per cent which comes as no surprise given that rentals accelerate CPI every month as investors continue to desert this market. I will now predict that CPI will hit 6 per cent although the Federal Treasurer Wayne Swan said “In terms of inflation I think this is expected to peak, and we would hope to see it moderate over the year ahead.” Unsure if this is either out of touch, a touch up or hopefully a touchdown (love the ‘hope’ word).

Yesterday, NSW suffered its first monthly deficit in eight years and naturally, blamed the property and financial markets. This amazing administration identified a surplus of $109 million in July that was smashed in August with a $163 million deficit. As always, the decline in Stamp Duty was the blame – maybe (no I will do a Swan) the NSW government should hope that a reduction in Stamp Duty rates will stimulate the property markets.

Kevin Rudd keeps spending his inheritance on the economy where the key might be spending in state governments to reduce taxes that would obviously bolster economic activity.

You can be the judge on who is out of touch, who keeps touching you up and what constitutes a touchdown and we aren’t talking Australian Idol. Just keep paying your taxes and hope for the best!

Interest rates are coming down and we are very very confident (not hoping) that property is about to experience a touch up! History identifies that when property prices are a touchdown, property prices then touch up – and I don’t believe I am out of touch!

After all – it is a numbers game. Interest rate reductions will certainly help to stimulate the market, but what would really kick it along is a reduction in stamp duty and those in State government are the only ones who fail the test. Cheers ^__^

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With the benefit of hindsight, it’s a case of “too many eggs in the one basket” given that superannuation is a long term hold and deadly, if you have a short term exit strategy. Last year, at or about the time that investors were busily transferring monies into their respective funds, I argued (suggested) that property should also be included in the equation. We were in the middle of a property rental crisis, so investors should also be encouraged to buy an investment property specially as after you hold the asset for ten years it is not liable for any capital gains tax whilst it is held in a superannuation fund. Individual super funds would be a lot healthier today if real estate had been included along with the other three growth strategies of geared funds, warrants and alternative investments.

Whilst the Rudd government is in overdrive with rhetoric, confirming that the Australian economy and our financial system are in excellent shape, the same can’t be said for small business owners. This week an iconic Mosman business, “Berny’s”, closed the doors after 39 years of business. There would not be that many Mosman households that have not purchased whitegoods or televisions from this company. The reserve Bank of Australia (RBA) advised this week that the financial belts are tightening, with annual credit growth in August at its slowest pace for six years. Housing lending is growing at its slowest pace in 25 years.

The political canvas at present resembled more of a blank canvas, when the Council of Australian Government’s (COAG) met in Perth this week. Prime Minister Kevin Rudd stated “what we do also in a whole range of areas, including investing in the nation’s future infrastructure.” No doubt he would have been refreshed when NSW Premier Nathan Rees announced that the government of the day is struggling to keep Sydney running. It emerged that Sydney will need almost 900,000 extra homes by 2031 – a third more than estimated three years ago. Sydney is currently welcoming (so to speak) 1,500 new arrivals each week.

“Camp Chaos” better known as the State government is faced with a $1 billion shortfall from the downturn in the property market plus GST revenue declines of $400 million. And just as important, is that this week , it withdrew all support from the Rudd election promise of computers for every school pupil in NSW, the out tray of failed policy promises is mounting.

Which explains why “Camp Chaos” is holding back on releasing a report about Sydney’s new housing market that identifies that the number of lots released in Sydney has fallen to fewer than 3,000 a year since 2004, which is down from the peak of 9,000 lots, eight years ago.

The financial crisis of the US sub-prime crisis is contributing to Australia’s housing shortage as builders claim that they presently are having loan applications refused by banks. Master Builders Australia chief executive Wilhelm Harnisch said, that many builders were being turned away by lenders, which meant fewer homes were being built.

The gallery gasped this week when news broke that Kevin ’747′ Rudd was contemplating becoming the first Prime Minister in more than twelve years to take on net debt. The Howard government when elected in 1996, started paying off $96 billion in inherited debt and on April 21, 2006 the former Treasurer Peter Costello declared that the government was debt free, ending interest payments of $8.4 billion a year.

Maybe offering Australians tax free capital gains on an investment property in their superannuation funds is a smarter idea , given that they are not that excited about playing in the shock market for the time being. More investment actually reduces the rental crisis ignites building activity and more importantly it is done by using other people’s money.

Although I’m still not sure what part(s) the politicians keep missing about property given that everybody wants it except them!

Cheers ^__^

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The three market determinants are economic growth (which is what we all have enjoyed for the past thirteen years), economic consolidation and economic recession. With the economy slowing, we find ourselves in economic consolidation which requires the implementation of cleansing and reforms. These include reductions in overheads, cost cutting and business realignment, all aimed at prevention of the third component, economic recession. I don’t believe we will go into economic recession. It all depends on economic market psychology.

The Westpac – Melbourne Institute consumer sentiment index increased seven per cent (six points) to 92.2 per cent in September, on top of a 9.1 per cent rise in August. If this sentiment continues we won’t see the Reserve Bank of Australia (RBA) decrease interest rates further because economic markets need to remain in consolidation mode for a while yet. Better to formulate a psychology of survival in the turbulent financial markets of 2008. The head teller at the RBA, Glenn Stephens, said in his address to the House of Representatives economics committee “we’ve got to try to navigate through some pretty tricky areas and accept some slowing in our economy for a while. That’s my message.” Otherwise known as economic consolidation. So let’s take a closer look at how our Sydney residential markets are performing.

These Sydney property auction clearance rates identify an exact market positioning where in economic growth, property clearance rates sit from 75 per cent to 85 percent. Otherwise known as a boom market. In economic consolidation, clearance rates (historically) sit at 45 per cent to 55 per cent. In economic recession, they struggle between 10 and 20 per cent and can drop to 0 to 5 per cent. All things considered, Sydney property markets are performing much better than expected and market price psychology needs confirmation, not consolation. Although last week, one Mosman real estate agency posted an economic recession auction result – they are still valuing in economic growth mode.

New Zealand Treasury and economists confirmed this week that their economy was now in economic recession , its first since 1998. On the back of this announcement, the New Zealand central bank slashed its key interest rate 0.50 per cent from 8.00 per cent to 7.50 per cent.

The United States government this week seized control of mortgage finance companies Fannie Mae and Freddie Mac (with names like that, it’s no wonder they failed – Fannie and Freddie). These two institutions own or guarantee half of the country’s $US 12 trillion outstanding home mortgage debt. Australian housing markets currently sit around $3.2 trillion and that is valuation not mortgage. What further insulates our residential property markets is that in Mosman (for example) from 2000 to 2007, houses posted capital growth averaging six to ten per cent. This equates respectively, to 42 per cent and seventy per cent which is well above the Australian average. In the US, the average price over this period rose by 69 per cent and in the United Kingdom the average price rose by 127 per cent. These are property markets in economic recession.

When Michael “Cost –ya Plenty” was sacked as Treasurer last week, he then revealed that NSW is the State of Disgrace. Morrie “Dilemma” also sacked, with revelations that NSW finances now face a $1 billion hole. Newly elected Premier Nathan Rees (pronounced Reece) told reporters “I don’t have time, nor the inclination, to examine why we got those estimates wrong.”

The question now, is that after thirteen years of economic growth (with taxes), and a little thing called the Olympics, where has all the money gone? The NSW Labor government has over this painful period of time, collected the greatest amount of taxes in Australia’s history.

A code of silence exists between Kevin Rudd and Wayne Swan over the NSW bankruptcy dilemma with the government of the day now being referred to as the “Fannie and Freddie” government. Not true that “it could only happen in America!” Businesses in NSW are in economic consolidation and the NSW government “Fannie and Freddie” is in economic recession. If you want an excellent read, grab a copy of Alan Greenspan’s book “The age of turbulence”. It has just been updated and the second edition was released this week with a new chapter on the current credit crisis.

Individual psychology always overrides political psychology – because they don’t make any money until you do – a taxing question? Just like Fannie and Freddie – our elected NSW government has failed miserably and to such an extent, that it could be the worst performing government in Australia’s history.

Quite a number of politicians headed to www.seek.com.au where their CV’s will make riveting reading and perhaps they should consider using the spell check function. Cheers ^__^

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Those rates have been much higher, with charges of between 100 basis points to 200 basis points over “cash” becoming the norm since January. It is the cost of borrowing tens of billions of dollars from these markets to meet the country’s lending demands that is most worrying for the banks, since this funding has been “locked in” to as far as 2013.

Also, previously cheap long-term loans taken out between 2003 and 2005 are coming up for replacement and refinancing will be at higher rates than last time.

About a quarter of the funding needs of the Big Four banks – Commonwealth, NAB, Westpac and ANZ – is sourced from long – term markets with another fifth to a quarter provided by the short – term ones. The rest is from customer deposits.

The trend in long – term markets is for bank borrowings to rise – from about 42 basis points above “cash” rates at present to 82 basis points by the end of next June. The relief provided by the short – term markets where the difference is just 10 basis points (0.1 per cent) is likely to be reversed once the Reserve cuts its own rates – by as much as 50 basis points (0.5 per cent) by Christmas.

Bank economists are forecasting the spread in rates to rise 58 basis points which, with the additional long – term price pressures, could lead to an overall rise to 140 basis points – 1.4 per cent – within the next 10 months.

Under that scenario, the banks will face the same dilemma that they faced late last year: raise rates no matter what the Reserve does, or take an even bigger hit to the bottom lines of their home – loan divisions. Given money market trends, betting in the industry is that home loans won’t come down as quickly as they went up, and may stay high for months.

Despite what the Federal Government says, the banks reducing interest rates is akin to seeing the government reducing income tax. The Rudd government insists that higher interest rates are an evil inherited from the previous Liberal Government which simply identifies its struggle with the basic fundamentals of the economy. To put this into greater perspective, our elected PM announced this week. “They are challenges which are substantial on the basis of the legacy of 12 years of neglect inherited from those opposite, they are substantial because of 10 interest rate rises we had in a row.”

Construction figures keep declining which, based on consumer confidence and the cost of money comes as no great surprise.

Mosman Council was in the spotlight with yet another disgraceful performance which was reported by Carmel Melouney from The Sunday Telegraph – Apathy at Mosman. “Councils are fighting State Government moves to strip them of development powers – but one council doesn’t want them.

Last week, Mosman Council provided the perfect example of why reform is needed when it abruptly cancelled a planning meeting because most of the councillors couldn’t be bothered attending.

Fifty residents were present and the agenda was full, with nine applications to consider, but only four of the 12 councillors turned up.

Residents with development applications before the council will now have to wait until the September meeting to see if a minimum of seven councillors have the time or inclination to show up and assess their proposals.” An absolute disgrace!

Mosman Council on the other hand is brilliant at processing parking fines but there again that has nothing to do with elected councillors.

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A – Fall
B – Rise
C – Remain Constant
D – All of the above

Stock levels have been somewhat constrained thus far in 2008 with top end sales (and listings) sparse, compared to previous years. Should the Mosman market (in coming months) remain constrained, the clear message is that despite difficult economic markets, this market is one of the most resilient in Australia. Whilst compared to and identified incorrectly as an indulgence market, it (so far) bears absolutely no resemblance to the northern beaches real estate market, or prestige motor vehicle and boating markets that currently are being decimated.

Example, for anyone who acquired an Aston Martin in 2007, emergency exit deals are currently being negotiated at as much as 50 per cent less than the agreed purchase price. These markets where once ‘everything was available at a price’ have now been replaced with ‘everything is available for a buyer’. Cash is King for these markets given the urgency exits. This mindset resonates with Mosman property prices given perceptions that many vendors are in “Struggle Street” although at this point in time we remain unconvinced. Probably our most interesting observation has been vendors cancelling marketing campaigns. They are reluctant to enter the market until they are convinced that a market actually exists and their reluctance is based solely on restricted supply so far in 2008 (a good sign).

Better known today – as the Mosman residential real estate “Ring of Confidence” where the shadows of the US sub – prime crisis are diminishing within our economy. The Reserve Bank of Australia (RBA) received the F (Fail) mark with their reading of the economy given that 12 – year high interest rates are now taking their toll on the economy. No surprises that this week it suggested a back – flip where cash rates will very soon reduce. This is more like a “belly – flop” with its economic strategies or better still, its misunderstanding of the machinations of our economy. An emphasis on controlling (oops fighting) inflation has today been identified as beyond the control of Australian’s, trying to cope with the cost of living in 2008.

Households are not responsible for the accelerating cost of living – food, petrol, rents and mortgages, yet this institution keeps applying speeding fines (rate increases). It is blatantly obvious today that it is beyond the control of “the household”. Just as interesting is that the Federal Government has embarked on a mission as bank busters (a perception of winning votes) despite the reality that these institutions have the government in “ignore mode”.

Despite the fact that the big banks have upgraded shareholder returns by adding approximately 60 basis points above the RBA official cash rate – we will see weight loss with interest rates. With petrol prices reducing, consumer confidence is now increasing not decreasing.

With the benefit of hindsight it would be reasonable to suggest that the RBA would have played its cards much more moderately instead of applying aggressive rate increases which are now considered an historical error. Punishing households to combat inflation is today, an absolute no-brainer.

Even worse, was the announcement this week by Federal Infrastructure Minister Anthony Albanese that the latest Rudd Government initiative is to establish a group (chaired by Frank Sartor) to tackle housing affordability. Given that the NSW Government was single handedly responsible for the investor exodus in NSW which resulted in lowest ever vacancy rates and highest ever weekly rents – the greatest inflation accelerant today – fear not!

At the end of the day just like inflation – the households will cop the blame for that too!

The leading residential suburbs will remain the strong performers given that there are no alternatives. The problem with governments is their collective struggle with the basic understanding of ‘know’ and ‘no’! Cheers ^__^

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I found this blog on the topic and here is what Matthew Auger had to offer on this delicate subject. “To understand why the banks have jacked up rates unilaterally, compare the RBA rates to the three month and one year Bank Bill Swap Rates (BBSRs). On the 1st of July 2007, the RBA’s Overnight Cash rate (AKA “Official Interest Rates” to the punters) was 6.25%, the three month BBSR was 6.64% and the one year BBSR was 6.82%. On the 8th of August the RBA raised rates to 6.5%, the three month BBSR was 6.64% and the one year BBSR was 6.94%. By November when the credit crunch was in full swing, the RBA raised rates to 6.75%, the three month BBSR was 7.11% and the one year BBSR was 7.52%. As you can see the gaps were widening and hence the banks started doing unilateral rises in January. At the February rate rise to 7.00%, the three month BBSR was 7.42% and the one year BBSR was 7.68%. Things were getting nasty in March when the RBA jacked up rates to 7.25%. The three month BBSR was 7.97% and the one year BBSR was 8.16% (nearly a full 1% above the RBA rate). Since then the RBA hasn’t changed rates but the three month BBSR has peaked at 8.11% on the on the 11th of March and is currently 7.80% and the one year BBSR has peaked at 8.47% on the 11th June and is currently 8.05%. As you can see, even today BBSR’s are over half a percent above the RBA’s rates hence why the banks have been unilaterally raising rates by a similar level. To get an idea of whether the banks will do any more unilateral rate raises keep an eye on the BBSR’s, they are what matter.”

Fear not! “Wayne’s World” Federal Government “bank switching package” will be ready by November for unhappy bank customers. Maybe Wayne Swan would be better served if someone explained to him what BBSR stands for when it appears in the business section of the newspapers.

Had to laugh at The Sunday Telegraph (Belly Laugh) article last Sunday “Housing market worst in a century.” Which kept contradicting itself.“Property values in Sydney and across Australia have plummeted with more than 50 per cent of homes across the nation losing value in June.” The article posted the Best Suburbs and Worst Suburbs.

To put the top-end markets into perspective , they continue to perform well despite the “Housing market worst in a century” headline. Here are the top apartment and house sales for 2008 that appeared in Saturday Domain by Jonathan Chancellor.

Here are the Worst Suburbs where the results are about as scary as a Wayne Swan economy outlook speech.

In last week’s edition I predicted that property prices through to June 30, 2009 would experience 5 to 10 per cent swings plus or minus and we are obviously still on the money. More importantly, Mosman is sitting on a +6.17 per cent three month swing which adds to the intrigue of the forthcoming Spring/Summer markets.

In preparation, I am away for the next two editions so our very own Stephen Patrick and Richard Simeon will be presenting “Virtual Realty News”. Now that will make interesting reading. Cheers ^__^

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With Australia’s population growing at its fastest pace in 18 years – throw in a new housing slump and bingo! Research by Residex identified that for the year to April, the median weekly rent for a Sydney house rose 19.05% and that is “after tax” money. New dwelling starts in NSW are forecast to fall by 2 per cent to 29,000 in 2007/08, and increase by just 1 per cent in 2008/09. Underlying demand for new housing stock is presently growing at well over 40,000 with absolutely no chance of meeting demand. Some may suggest that those in rental accommodation should buy – well the Housing Industry Association/Commonwealth Bank first home affordability index slumped in the three months to March 2008 by 3.5 per cent which is the worst result since the series began back in 1984. Certainly the cash rate being at a 12 – year high does not help where the average home loan repayment in Sydney now stands at $3064.00 per month.

The Federal budget sugar-coated the rental and housing affordability crisis with the announcement of a $2.2 billion housing package (an absolute no brainer). When the Sydney vacancy rate falls from 1.5% to 0.07% in just nine months, at this rate (by Christmas) Sydney vacancy rates could be at 0.00%.

The only way that this problem can be fixed (immediately) is for the Federal government to encourage investors by removing Capital Gains Tax and get the State governments to remove Stamp Duty and Land Tax for investors. The investment properties must be held for ten years to qualify and once the vacancy rates reach 2.00% this incentive is then removed. This is, in my opinion, the only logical answer given that rents are increasing annually by 20%.

The rental crisis keeps leaving clues and even the Prime Minister is catching a few (ever so slowly). He described the 100,000 people who are homeless each night as a “national obscenity”. Well he is the only person who can correct this and releasing his green paper on the homeless, seeking “bold new ideas” which will take years to implement, identifies the mental complexities of politicians. Talk is cheap which is exactly what rents are not. It is time for action, which we all know speaks much louder than words and pieces of “green” paper. The stark reality of this crisis is that now, the Federal government must act (unlike our State government) which (fundamentally) created this problem as a result of excessive taxation mandates.

The writing has been on the wall for some considerable time. If you look at the 2006 – Census of Population and Housing release by the Australian Bureau of Statistics.

• A smaller number of Australian homes were fully – owned in 2006 (2,478,267) than in 1996 (2,657,971). Over this time the proportion of dwellings that were fully owned also decreased from 41% to 33%, and the proportion that were being purchased increased from 26% to 32%. These changes in home ownership have occurred mostly since 2001.

• From 1996 to 2006, the proportion of occupied private dwellings that were rented decreased slightly from 29% to 27%.

Simply put, investors have reached the point of no return (courtesy of taxes) where elected governments diluted the incentives by over-zealous tax policies. Investors are taxed on the way in, during, and again at exit.

The Prime Minister fired off a few parting shots at the $80 million retirement package of Alan Moss from Macquarie Bank. This identified just how out of touch he is, given that some actors earn $20 million per movie! I would much prefer to see a brilliant brain like Alan Moss assisting the property crisis in Australia, than Cate Blanchett, who co-chaired the 20/20 Summit.

No point in reading a “green paper” (politically correct) where acting should not be construed as action implementation. Lights, camera, action! Kevin, be active not inactive – the rental crisis requires purpose not paper. After all, you did put your hand up for the job!

The one and only cure necessary to correct the rental crisis is for Kevin Rudd to make a decision. Not a matter of paper, rock and scissors! Cheers ^__^

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The three most powerful words in the universal business community today were sadly missed in Budget 2008. The strongest financial industry leaders today are very much proactive. Those following suit adopt the secondary position of reactive. As for third place, (and no dividend paid) that would be the inactive. These are those once dominant participants who’s successes today remain as a somewhat distant memories, based on their respective expired business models.

For me, it was an inactive budget which offered absolutely no incentive for businesses.

Which is ironic, as small business which is actually the backbone of this nation. It remains much closer to the action than big business as it feeds the financial oxygen into the big business coffers, and responds accordingly based solely on its very own economies of scale.

Politicians in the modern era act months and months after the event, based on data (for consumers) that is no longer relevant. It’s much like issuing a warning of a tsunami that took place a week before.

A leading question. Why do newly elected governments remain in economic denial and when elected, start the economic game of blame? Better still, it’s like a newly elected CEO of a publicly listed company that automatically blames his predecessor for ongoing bad news to shareholders.

The Government inherited a $20 billion + surplus with 34 year, record low unemployment (compare this to when the Coalition government was elected with debts amounting to $96 billion) yet today, constituents are threatened with an inflation scare campaign. What remains to be seen is actually just whom is actually more scared, the constituents or the elected government? I think the latter.

The underlying survival criteria of “RIP” in its simplicity, is nothing more than the adaptation of the sound business models that the market leaders initiate. Followers then adopt a “same – same” mentality, with third place falling off the radar and spiralling into cyberspace with “no last known address recorded.”

So just how was inflation market accelerants such as rental properties and fuel addressed in the budget? Very well ignored, as it would not look good on the Rudd/Swan resume should the budget surplus next year be lower than those previously recorded by the Coalition.

In the March quarter rents rose at nearly three times the rate of inflation and much faster than wages. An inactive response given that building approvals continue to decline. Why? Because property developers have been taxed out by the elected governments of the day and here is the greatest clue.

Brick production March Quarter 2008 – 323 million

Brick production March Quarter 2007 – 359 million

Brick production March Quarter 2005 – 383 million

Brick production March Quarter 2003 – 409 million

Hardly a “swan – song” for declining productivity yet, for some strange reason not addressed in the Fudget oops, I meant Budget. The building outlook in NSW is at a record low. Yes, and rental prices will continue to escalate for the simple reason that the elected government have not offered one iota of incentive to this fast declining industry.

It’s fine to tax the rich however at the end of the day they are actually the key ingredient to employment. When employment falls so do property prices and one should not forget that employment benefits increase exponentially – which is far from the case today, for the elected government. A case of “financial conservatives” displaying “P” plates, given the economy is travelling much faster than 60 kph.

On that note let’s take a peek at Mosman property results for March quarter 2008.

March Quarter Houses 2007 – Mosman
Sales – 85
Median Price – $2,315,000
Average Price – $2,785,067

March Quarter Houses 2008 – Mosman
Sales – 31 (and growing)
Median Price – $2,300,000
Average Price – $2,825,023

March Quarter Apartments 2007 – Mosman
Sales – 139
Median Price – $560,000
Average Price – $791,081

March Quarter Apartments 2008 – Mosman
Sales – 74
Median Price – $474, 500
Average Price – $624,840

Source: Australian Property Monitors

No doubt we will all be watching inflation figures for the June quarter. It’s a shame that budget did not “dare to be different”. Oh well, the trainer wheels come off soon and that will be riveting.

If one looks at the big picture, over the last 10 years the combined 6.5 billion world population has failed on the last 8 occasions to meet the demand for basic food! So don’t just worry about bricks.

It’s ironic, that with small business you are just another number. The numbers have it at the moment and we are not talking about ratifying Kyoto, think tanks in Canberra or apologies to the “stolen generation”… It’s Time to manage the Australian economy and be proactive not inactive – watching inflation is not the answer. Cheers ^__^

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