Of Course I Hear You – I’m Just Not Listening!
Four new P’s – polls, populism, performance and of course, profits!
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Actually not that different with the three P’s that pertain to property – position, position and position. Throw in politicians and bankers and what we have is the 2010 equivalent of economic soup that is murky and far from palatable. During the global financial crisis (GFC) Westpac and the Commonwealth banks wrote approximately eighty (80) per cent of all mortgages which explains why today, collectively, they own the largest mortgage books. Alan Kohler wrote on The Drum that banks only have themselves to blame which has caused a stir given many consumers are losing faith in our pillars of society. Of course, there has been plenty of gratuitous PR advice for our friends in banking although the politics of banking was intelligently addressed when Janet Albrechtsen wrote in The Australian – Let’s hear the positive story from the banks.
Plenty of rhetoric this week as home owners angered by increases in interest rates then news broke that the Big Four banks to dump exit fees as backlash grows against lenders. Then late this week ANZ raises rates, scraps exit fees at or about the same time as ASIC bans banks from double – dip mortgage exit fees which means banks that charge customers to establish a mortgage, will no longer be able to apply contentious exit fees. Too early to say who will get the last laugh with this announcement – possibly bank establishment fees will rise? Certainly the four new P’s won’t change.
Is the landscape at Circular Quay about to change? Special deal on city skyscraper as a giant residential tower, double the size of any other building in Circular Quay, is expected to be approved soon. The site Gold Fields House is set to become a luxury apartment block that will tower 191 m above Circular Quay making it Sydney’s eighth tallest building. Sydney has only one of the top 10 tallest buildings in Australia – which prompts the discussion for progress of our capital city.
Australian Property Monitors released its House Price Report for September 2010 and here are the key findings:
- National median house prices remain effectively unchanged at +0.1 per cent for the quarter with annual house price growth slowing to +11.5%
- Most capital cities experienced falls in prices over the quarter; however the major markets of Melbourne and Sydney bucked the trend recording positive quarterly house price growth
- National price units (excluding Tasmania) have fallen slightly, down -0.4% for the quarter, with annual growth falling sharply to +6.5%
- Unit prices have fallen in all cities except Melbourne, with Brisbane experiencing the largest price decline, falling -2.8% for the quarter
Source: Australian Property Monitors
SYDNEY
- House prices increased slightly by +0.7% in the September quarter, which is the third consecutive quarter of slowing growth.
- Unit prices have started falling for the first time since 2008, recording -0.1% for the quarter.
- Sydney’s median house price is now $634,346 and the median unit price has fallen slightly to $436,714.
- Annual house price growth sits at +11.3% and unit price growth is at +7.3%, both trending downwards.
Weak demand made for rate surprise all things considered the clearance rates are positive, although the most important conclusion would be that prices are flat lining. It is only natural that auction clearance rates fall on rate rise and we are seeing anecdotal sales evidence. One interesting observation in Mosman at present, is that private treaty sales are producing the highest volume.
Here is the comparative analysis for Mosman houses:
Mosman Houses 2009 – 1 January 2009 to 31 December 2009
- Total sold – 322
- Private Treaty – 281
- Public Auction – 41
- Total Value Sold – $815,649,751
- Median price – $2,094,000
- Average price – $2,564,936
- Highest price – $13,200,000 (RWM)
Mosman Houses 2010 – 1 January 2010 to 10 November 2010
- Total sold – 292
- Private Treaty – 219
- Public Auction – 73
- Total Value Sold – $639,048,555
- Median price – $2,100,000
- Average price – $2,468,570
- Highest price – $12,600,000 (RWM)
It should be noted that with the 2010 house sales, that the vast majority of sale prices are yet to be recorded, so we expect this year’s total value for houses sold, to be considerably higher $750,000,000 approximately. For example, this week, RWM recorded the second highest house sale for Mosman in 2010 which is yet to be recorded. Here is the Macquarie Research Economics Forecast where it should be noted that the banks have already moved the cash rate to the Reserve Bank of Australia (RBA) Macquarie Research Forecast for Quarter 1 – 2011. So what we now have is an official cash rate and a real cash rate, which I will call the “real, official cash rate” – ROCR!
So to the four new P’s – polls, populism, performance and of course profits which continue to stymie our Forts Fumble and Crumble. The politician who should have been Premier of NSW, Blacktown MP Paul Gibson ‘Fed up’ NSW Labor MP quits so now thirteen (13) Labor MP’s have announced their retirement in the past two months. Paul Gibson “we’ve moved from platform and policy and pursued a poll driven agenda.” Fort Crumble is shambolic and an embarrassment where Transport Minister John Robertson has already called his transport removalists to grab the now vacated seat. Thirteen, with more to come as powerbroker Joe Tripodi quits. Premier Kristina “Bambi” Keneally has (unofficially now) been placed on the endangered species list due to a lack of interest – polls, populism, performance and no profit.
A perfect dismount from the strangest election ever – You can say that again! The four new P’s continue to dominate as Julia Gillard losing ground to Tony Abbott, News poll shows given the continuance of Labor’s policy woes pile up. No doubt we will be hearing and reading plenty more about this in the months to come. Fort Crumble continues to disintegrate – polls and populism shape public perceptions. Fort Fumble relies on the hope factor – Swan’s numbers looking rubbery when more ‘courage’ needed in spending cuts, says Access Economics. Polls, populism, performance and of course profits continue to threaten the capability of Fort Fumble.
Back in 2000, Virtual Realty News subscriber sales sat at zero when we launched our online platform. Today, they sit at $998,770,220 so we are now $1,229,780 from breaking the $1,000,000,000 mark.
Unfortunately, this week’s $10.000 million plus Balmoral sale did not qualify – another big week of local sales which suggests a strong run of property transactions through to Christmas.
Cheers ^__^
This week’s sales Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate Click Here
Our NSW government – boom one day and bust the next!
Yes – Fort Crumble (NSW government) is basically lost and now trying to turn back time. Today, it is stone motherless broke and with no idea how to turn the economy around, can conveniently lay the blame on the global financial crisis. The 2008/09 budget announcement re-winds the clock to 1996 (when NSW was last in deficit). With an estimated budget deficit of $1.3 billion for 2008/09 and net debt to rise to $12.9 billion by June 2010, it’s hard to believe that Fort Crumble can return a budget surplus again. (It could not manage NSW in economic growth – with record tax/GST receipts).
Last Sunday, editor of The Sunday Telegraph Neil Breen wrote “Labor bungling a total turn-off” where he too turned back time. Neil Breen wrote “On Tuesday, Treasurer Eric Roozendaal will deliver the 15th budget since Labor was returned to government in NSW at the 1995 election. They switched off. Long ago.”
What an amazing capture by Tim Mooney – my favourite photo so far and one that illustrates just what makes Mosman so special. A natural suburb with a striking seascape where nature is preserved over housing development – be the judge? Since Tim joined our online platform, Virtual Realty News, many subscribers have contacted him to purchase his photos for their enjoyment.
Website: www.timmooneyphotography.com
Email: info@timmooneyphotography.com
Back to Neil Breen, “You need only read the following excerpt to understand why. It’s from then Treasurer Michael Egan’s first budget speech 14 years ago.
Labor was back in power and was feisty.
“For too long, we have put up with long hospital waiting lists, an understaffed police service, inadequate child protection and lack of accommodation for the disabled.”Mr Egan thundered.
“This budget delivers major improvements in hospitals, schools, police and crime prevention and community services.” Sound familiar?
Fourteen years on, everything is broken and now, our Premier ‘Nathan Please’ has listed Mosman police station for sale – indeed a backward step. If he can’t manage a surplus, how can he manage debt – by living in the past?
Thank goodness the Reserve Bank of Australia (RBA) remains on the money. This week it released board minutes from its last meeting – keeping its powder dry. As our economy manoeuvres its way through a global crisis there are obvious and escalating concerns which were highlighted when the Commonwealth Bank raised its standard variable rate last Friday (still below competitors.)
As the retiring member for Higgins announced this week, the greatest challenge facing our economy in years to come will be interest rates and yet, leading economists still maintain that borrowers should remain on variable rates. I don’t agree.
The problem with interest rates, is lack of competition as identified this week in www.crikey.com.au “Since the financial crisis first became apparent, the Government has explicitly put competition second to the need for stability within the Australian financial sector, waving through the merger of two of the five largest banks in Westpac and St George and acquiescing in the Commonwealth’s (CBA) rescue – purchase of Bankwest. The consolidation has come at a time when non- bank mortgage lenders and regional banks have either been driven from the market or badly bruised by the financial crisis, magnifying the damaging anti-competitive effects of the dominance of the Big Four.
Once competition is lost in Australian markets, it is awfully hard to regain. The ACCC has no divestiture power, so even when we are over the impacts of the financial crisis, we will not be able to regain even the limited degree of competition that applied until 2008. The only sensible course of action for most consumers is to buy bank shares, and get at least some benefit from the gouging, exploitation and bastardry that our banks can get away with.
But that’s no help to small businesses that can’t get loans, or face usurious interest rates when they do, or exporters, who face a punishingly high Australian dollar courtesy of our interest rates. Or, for that matter, to the workers who depend on them.”
Much like Michael Egan’s prediction in 1995 (it never came to fruition – only his pension evolved) BIS Shrapnel’s Residential Property Prospects report announced that house prices will rise by nearly 20 per cent over the next three years. “Green – shoots” of recovery based on the first home buyers grant and low interest rates. Green shoots can quickly become red shoots should banks up interest rates – which explains why the RBA continues to keep their powder dry.
One day later, the following graph appeared online criticising BIS Shrapnel for its forward thinking because such forecasts do not consider the x-factor and three years on so much can change. There again, fourteen years on and nothing has changed for the NSW government (other than a huge deficit). With fewer banks today, this scenario is no different from the control that Woolworths and Coles have over food and petrol prices.
Wayne Swan criticises the CBA for “selfish acts” and its rate increase of 0.10 per cent that “threatens recovery” of Australia’s economy (still the lowest). It is somehow puzzling that Ruddy Fantastic then shakes his sauce bottle to all and sundry in an effort to stimulate our economy. Not in agreement, Westpac and St George then increased fixed mortgage rates by 0.5 per cent, citing higher wholesale funding costs. Quite the opposite when the Reserve Bank of Australia (RBA) announced that our Big Four banks are currently enjoying healthier net interest margins (NIM) than before the global financial crisis. “The major banks ‘ NIM currently averages 2.27 per cent, which is a little above the level before the onset of the financial market turbulence in mid 2007.” Nation Building or Bank Gilding?
Back to the NSW budget – with a brilliant spin to kick start the housing sector. A short lived spin – where just one day later the Australian Bureau of Statistics (ABS) announced that (in the first quarter of 2009) home building fell to its lowest level in eight years. Economists then predicted that this sector would increase significantly in the second half of 2009 – this won’t happen as the banks are no longer lending to developers – fact. Re – affirmed by the latest ABS release which (alarmingly) identifies that our NSW government policy (rhetoric) is definitely not in sync with banking policy.
ABS data for the three months to March, identifies that the number of new housing starts has fallen to 5,400, down from 7,500 compared to March 2008. In the March quarter 2004, new starts were 11,000 (a fifty per cent decline). This is what then happens – the following data shows that Sydney clearance rates are now at 71 per cent and above 80 per cent, is considered a boom market.
Subscriber sales jumped this week to $892,096,219. Over the last 18 days, we have sold 16 properties to the value of $47,000,000. I might add that RWM is the only local agency reporting such great sales. As I wrote last week “better to be in the market than on it”, and that means growing your online market, not reducing it. The leaders in real estate today, are those who invested and developed successful online media platforms (years ago). Times have changed. We have and as our sales results prove, businesses need to move with the times. http://www.rwm.com.au/sales-list/sold_listing/
RIP – Paul Eastaway, a Mosman identity who will be greatly missed. A very funny and caring man who brought a smile to everyone’s dial – so many wonderful memories.
Cheers ^__^
For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales http://www.rwm.com.au/news/
Now the Australian economy becomes somewhat technical.
For many, the new economic lingo has become rather disheartening. GD2 means Great Depression 2 and this week technical recession raced to number one spot on the economic chart with a bullet. It can’t be dodged nor can we hide from it and no need to look for the “smoking gun”. All eyes will now be taking aim at Fort Fumble (Federal government). After all Kevin Rudd and Wayne Swan keep telling us that they will lead Australia out of ‘technical recession’.
Australia’s gross domestic product (GDP) fell 0.5 per cent in the December quarter so the term, technical recession, comes as no great surprise. We are already in “Club Recession” with record memberships. Australia’s first negative quarter in eight years so now we have to wait another three months to confirm what we already know – we are in a recession – technically speaking.
First, Fort Fumble delivered its December “cash splash” which most believe was designed to buy votes for an early election. The ugly side of all recessions is unemployment where again all eyes will be on Fort Fumble to see what business splash initiatives they employ (no pun intended). It is well documented that I believe Pay Roll tax consistently kills both business and employment growth.
Over to Fort Crumble (NSW government) where NSW opposition leader Barry O’Farrell called on a NSW business stimulus package where Pay Roll Tax should be cut by 15 per cent (it needs to be much greater than that Bazza.) Premier of Fort Fumble Nathan Rees responded “We’ll do it in a fiscally responsible way, not a lazy way, not in an ill-disciplined way.” WOW – Australia’s most incompetent government quotes the words “responsible”, “lazy” and “ill-disciplined” in the one sentence! Moral dilemma? Absolutely not – Fort Fumble has its finger prints all over this week’s GDP figures and although they dominate, they are not alone.
I read this week “Wall Street Banking Explained”.
“Young Chuck moved to Texas and bought a donkey from a farmer for $100.00 and the farmer agreed to deliver the donkey the next day. The next day the farmer drove up and said, ‘Sorry Chuck, but I have some bad news, the donkey died.’
Chuck replied, “Well, then give me my money back.” The farmer said, ‘Can’t do that. I went and spent it already.’ Chuck said, ‘OK then just bring me the dead donkey.’ The farmer asked, ‘What ya gonna do with a dead donkey? Chuck said, ‘I’m going to raffle him off.’ The farmer said, ‘You can’t raffle a dead donkey!’
Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody that he’s dead.’
A month later, the farmer met up with Chuck and asked. ‘What happened with the dead donkey?’ Chuck said, ‘I raffled him off. I sold 500 tickets at $2.00 each and made a profit of $898.00.’ The farmer said, ‘Didn’t anyone complain?’
Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’
Michael West wrote this week on www.smh.com.au an article titled “Vultures go hungry” (think of the donkey).
“Pacific Brands is a classic of the golden era of private equity.
Bought out of the floundering conglomerate Pacific Dunlop for $730 million in 2001, its new private equity owner ripped out $100 million in cash, geared it up with mountains of debt and sold it back to the stock market in early 2004. They banked $1 billion from the public float.
It was a slick operation all round. The privateers from CVC Asia Pacific and Catalyst Investment Managers, and their investment bankers from Macquarie Bank, who teed – up the float, slapped together an impressive board of directors. Fat with other peoples’ money to spend, the big super funds bought it with ears pinned back, even though it was loaded with debt to the tune of 3.5 times its earnings (before interest, tax and so on).
The success of the deal was not down to paper shuffling alone. The privateers had turned the manufacturer around. They fixed the supply side. They breathed new life into the brands. Blue collar marquees such as Chesty Bonds and King Gee turned bogan to chic.” The article goes on and well worth reading on the SMH website so search Vultures go hungry www.smh.com.au
To the Mosman real estate market where we are happy to report that over the last five (very difficult) months Richardson & Wrench Mosman & Neutral Bay (RWM) has successfully sold just over $80,000,000 worth of houses (that’s one house sold every seven days). A clue is that our subscriber sales to ‘Virtual Realty News’ have jumped to $827,158,019. According to Domain Property Data this is the highest recorded volume of sales recorded by any Mosman agency.
Congratulations to Mosman’s most popular property portal www.domain.com.au that this week released a very savvy new look with a much more advanced search criteria. A brilliant new interface – combined with excellent search functionality. Great to see an online business actually investing in and developing greater client online experiences for property market voyeurs. This week we acquired from Fairfax Digital the property gallery for Balmoral so we now exclusively own Mosman and Balmoral property galleries – for the benefit of our vendors.
Today, websites are graded. Go to http://website.grader.com to see how they are graded on marketing effectiveness. The score incorporates website traffic, search engine optimisation, social popularity and other technical factors. Compare websites – I have and the only website that beat us was www.domain.com.au (that being in the real estate category).
Judge yourself – RWM scored 87/100 which has a lot to do with our recession sales results.
Oops – I’m being technical again! However we are in a technical recession! A technicality that will identify Kevin Rudd, Wayne Swan and Julia Gillard as fake or famous. Now they will have to ‘walk the walk’ not talk the talk’. At the last Federal election they boasted best practice abilities so after this week’s announcements they now have to prove it – Australia is now in recession!
Yesterday’s release from the Australian Bureau of Statistics identified that in January, new building approvals fell 3.7 per cent – the Rudd/Swan cash stimulus (cash splash) failed.
Over to you Kevin – you told us that you are the man to lead this great country. History will now judge you and your elected government as being either fake or famous.
For this week’s recorded Mosman real estate, Cremorne real estate, Neutral Bay real estate and Cammeray real estate sales http://www.rwm.com.au/news/
Cheers ^__^
Time to play pin the tail on your dollar!
Discretionary spending is now first and foremost our defining Global Positioning Satellite (GPS) the irony being that in future the vast majority will be viewing Local Positioning Satellite (LPS). This is where our recovery of lost dollars starts (well for most anyway). In troubled times where the volume of the “bridge over troubled waters” is now playing at the maximum we need to move to a different beat which for obvious reasons, starts at home (sweet home), the only asset that remains tax free.
Very few countries globally, enjoy a tax free environment for their principal place of residence. The current market environment presents a leap frog market where losses can, in a few year’s time be capitalised into tax free capital gains. As real estate markets shift so should market sentiment and is was no better example than those who purchased during the last recession (1990 – 1993). They saw entry price double within a few years (tax free with the principal place of residence.)
MY ADVICE FOR THE FUTURE – RIGHT CLICK & SAVE
Many will remember the year 2000 as the year that Sydney hosted the Olympics. At the time the Olympics were being staged, we launched our e-business to the world, and we certainly have not looked back. As an agency we needed to identify a point of difference. All the products in our industry are basically the same, so we went about using the Internet as our channel of communication. We dared to be different and history has now judged us. In August 2000, we created a new site www.rwm.com.au and stopped supporting our site at www.randw.com.au/mosman. This radical move has seen the majority of agencies of today adopt abbreviated domain names. RWM was to become our new brand name as we utlised the convenience of the Internet, to service our target groups of current and potential clients. We chased solutions for long-term survival, to build the strongest brand name possible. What now remains to be seen is whether or not the vast majority of agents who refuse to embrace the Internet, will change their Internet ‘illiteracy’.
Since we launched ‘Virtual Realty News’ and this is our 104th edition, we have made 86 sales to subscribers totalling $146,184,500 so it would be fair to say that our voyage into Internet Technology to-date has been very successful! I have also shared a fascination with the online property classified websites, and was intrigued to read an article in The Financial Review by Miranda McLachlan titled “Real estate websites ripe for mergers”. One of the most interesting comparisons is that of domain.com.au and realestate.com.au, as they battle the agents to win their business and their biggest hurdle is trying to convince agents that the Internet works. We subscribe to both property portals, and they provide an excellent service. Current figures reveal to us that they are running neck and neck with unique visitor numbers. In February 2003 we had 5645 views of our properties via domain.com.au and 4561 visits via realestate.com.au. In March 2003 we had 3652 views on domain and 3484 on realestate. We should also add that with domain.com.au, we are listed on their premium package, and just this week we up-graded with realestate.com.au to their platinum package. We have found that the real estate market has strong demographic markets, and our market has a very strong association with Fairfax newspapers… oh, the power of Title Deeds!! Our e-mail enquiries and subscriber ratio runs at about 3:1 in favour of domain over realestate, and that is the statistic that I watch the most, as it is alright just to look, but we need the buyer interaction.
The best news for both of these property portals is their growth over three years, with realestate.com.au attracting 652,437 individual visitors in February 2003, which is almost five times the number of visitors in February 2000, according to RedSheriff. In February 2003 domain attracted 387,757 visitors, last month when they offered a $20,000 off your mortgage competition they jumped up to 435,461 visitors.
I very much look forward to the day when either, or both of these portals offer a poll to the users so they can find out what the visitors think of their sites. I am sure that they would be in for a few surprises.
For successful agencies to move forward in the Internet, the first strategy is to stand alone and host their own website, so that they can target their niche market. This in years to come will cause major problems with the respective franchises, as they don’t and won’t allow the individual offices to stand alone on the Internet. As the Internet continues to prosper the major franchises will lose some of their ascendancy as the market will focus on this new medium. LJ Hooker and Ray White have invested in realestate.com.au to protect their interests and have a say in the direction of this portal. Some franchises face major headaches within the next three years, as their offices will insist on hosting their own sites, and control their own direction on the Internet. Whatever the scenario, the Internet is here to stay and will continue to increase its market share as it has proven beyond any doubt that it is the preferred medium.
Our children are being brought up on the Internet, and they will ensure the longevity and domination of e-business in the future. Today, there is very little sharing of ideas and concepts as individuals seek new resources and concepts to further enhance their IT development. This is what makes it such a unique resource. We have spent nearly three years designing and constructing our new software programme which will allow other agencies to do what we’ve done using the Internet. We own all the intellectual property, and we’re way ahead of any of the current software programmes that are being released. All things going well we will be in a position to release it for sale in June this year.
The noticeable difference with the property market in 2003 as compared with 2002 has been a considerable reduction in the properties offered to the marketplace. So far this year we are down approximately fifty per cent on unique visitors, because we are not carrying anywhere near as much stock as we did in 2002. Lately when we list a property, it’s sold within forty-eight hours so we reduce our audience considerably, which explains why our traffic has been reduced. Whilst some may say that the Internet is a clear winner, one should never forget that it is also the purchasers and vendors who are also reaping the benefits, and it is by far and away the most economical way to advertise a property, and attract a large audience.
Oh yes!! So what happened in the property market this week? Not much, as stock levels are getting smaller and smaller. It still is definitely a vendors market which was evidenced with our $30 million plus sales last week. With Easter and Anzac Day fast approaching we are recording some very interesting off-market sales which only further identifies the strength in the market. The present market could possibly be the strongest that we have ever encountered. The sales evidence would certainly suggest this.
Whatever the scenario the real estate industry has never been more exciting. The combination of property and Internet is a perfect marriage. All that remains to be seen is who comes up with the smarter strategies. It has moved an enormous distance in the last three years and my tip is that it will more than double in the next three. It will be a ‘survival of the fittest’ and innovation and those who ‘dare to be different’ will be what drives it. Watch this space… cheers and clink… ^__^
