Plenty of negative press about the property industry at the moment although we could well ask “what came first the chicken or the egg?” When consumer confidence levels are down, real estate markets have never boomed, although one market characteristic never changes, that being supply. Alas, that economic equation of demand V supply where plenty of demographic markets are experiencing an oversupply when demand is waning. To settle more than a few arguments in this week’s edition, we unveil exactly what is happening in the Mosman housing market where we identify plenty of mystique and mystery – with not that much misery. The figures don’t lie – so we went to Mosman’s most accurate market barometer Domain Property Data

Australian Bureau of Statistics (ABS) data published this week, revealed house prices fell 1.7 per cent across all capital cities except Melbourne where a 2.5 per cent drop was recorded for the March quarter 2011 – house prices dive in massive market fall. I actually love these commentaries given we are one of the few real estate businesses within Australia (with a very large voice) who can address these issues.

Steve Keen was at it again – Why Australia’s housing balloon is shot which focuses on the 1.7 per cent decline in property prices. Steve Keen predicted property prices would collapse in Australia by forty (40) per cent during the global financial crisis (GFC).  He lost that bet and he keeps (unsuccessfully) suggesting that property prices are in a bubble that will collapse. Just like me suggesting that Julia Gillard knows what she is doing as Prime Minister of Australia. Mortgage debt is the new “economic fascinator” although – RBA leaves rates on hold. The present cash rate is 4.75 per cent so there is plenty of scope to further reduce, depending on market movements.

BUY PRINT

What many forget is that in Australia, our property industry is defined by a thirty something analysis – one third rent, the second third own with a mortgage and the final third own without a mortgage. Here is the proof – it will be interesting to see how this pie graph changes after this year’s Census (I doubt by very much.)

Having been absorbed by the real estate gig for the last twenty five years I remain fascinated. Why? Purchasers go berserk during a property boom where they happily pay well above market value. Yet when the market slows and prices reduce they go into a self-induced hibernation/paralysis.  Even more intriguing is that today, online offers immediate property data anecdotal sales evidence. No better example, in How Twitter tweeted before Obama sang that Osama bin Laden had been found and executed.

So let me use the definitive sales evidence in Mosman to correctly explain what is actually happening where you work the numbers (not my words) pertaining to the mystique, mystery and whether or not there is any misery. Firstly, let’s look at the number of apartments and houses currently on the market compared to previous years.  Does this suggest that Mosman is experiencing a huge exodus of property owners?

Let’s analyse the Mosman house market March Quarter for 2010 as compared to the March Quarter for 2011- actually, we go back to 2005 to observe any patterns.

MOSMAN HOUSE SALES MARCH QUARTER 2010

• Total Number Offered – 105
• Private Treaty – 75
• Public Auction – 16
• Total Sales – 91
• Total Value Sold – $230,950,500
• Average Price – $2,685,470

MOSMAN HOUSE SALES MARCH QUARTER 2011

• Total Number Offered – 83
• Private Treaty – 40
• Public Auction – 19
• Total Sales – 59
• Total Value Sold – $55,030,000 (37 sales recorded a zero sale price)
• Average Price – $2,311,666

So to be fair let’s compare the March Quarters from 2005 to 2009.

MOSMAN HOUSE SALES MARCH QUARTER 2009

• Total Number Offered – 64
• Private Treaty – 48
• Public Auction – 3
• Total Sales – 51 (less than 2011)
• Total Value Sold – 130,000,000
• Average Price – $2,653,061

MOSMAN HOUSE SALES MARCH QUARTER 2008

• Total Number Offered – 81
• Private Treaty – 54
• Public Auction – 7
• Total Sales – 61 (2 more than 2011)
• Total Value Sold – $188,720,000
• Average Price – $3,093,770

MOSMAN HOUSE SALES MARCH QUARTER 2007

• Total Number Offered – 108
• Private Treaty – 78
• Public Auction – 16
• Total Sales – 94
• Average Price – $2,617,332

MOSMAN HOUSE SALES MARCH QUARTER 2006

• Total Number Offered – 99
• Private Treaty – 69
• Public Auction – 15
• Total Sales – 84
• Average Price $2,303,107

MOSMAN HOUSE SALES MARCH QUARTER 2005

• Total Number Offered – 72
• Private Treaty – 45
• Public Auction – 8
• Total Sales – 53
• Average Price – $2,296,323

All in all, a positive story despite what is being written in the media (never let the facts get in the way of a good story). So moving on, let’s have a look at the ongoing debacle at Julia Gillard’s – Fort Fumble.

Source: The Australian- order Bill Leak’s print

Strong dollar spells political trouble for Labor as voters abandon Julia Gillard’s carbon pricing plan due to be released in July. Easily Australia’s worst ever policy announcement, which is now looks very much dead and buried. Fort Fumble can’t revoke any more new policies, given the number previously done and dusted – an Australian political record.

Budget surplus has to go and by 2012 -13 which is a political decision rather than an economic one. Still a very strong possibility that by the next federal election Australia will still be in budget deficit.

If asked to compare the strength of Julia Gillard’s longevity in Canberra to Mosman real estate prices – it’s a no brainer. Mosman house prices never looked better. Although while we have a Labor Government in power – that would represent a *BUY RECOMMENDATION*.

To all our beautiful “mums” enjoy your day this Sunday – very well deserved and forever the salt of our lives.

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

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The same can be said for many commentators who continue to argue that our macro property markets are, by world standards, massively overpriced. In Australia, overpriced does not equate to  over-populated, with Australia’s population very shortly to reach 22,500,000 population clock ABS with approximately 6,000,000 homes being the macro picture. Tick – tock goes the housing time bomb – “a confluence of building approvals, housing price and population figures are likely to all point in one direction: the failure of housing policy in key markets to keep pace with the nations needs.” So what happened a few days later?

• New home sales fall 4 months in a row where the number of new homes fell by 2.6 per cent to 6,887 in August, the Housing Industry Association (HIA) said in a statement on Wednesday. The fall followed a 7.1 per cent drop in July and brought about the decline since April to 19.7 per cent. Sales in August were 20.5 per cent below the level recorded a year earlier in August 2009 and at their lowest point since 2008. This data reveals that new home commencements would have risen in only two years out of ten – those being 2002 and 2010. Politicians in Canberra offered no comment – no idea.
• Immigration plunges – without politics which signals that Australia’s net migration rate has started to nosedive where births comfortably outnumbered net migration over the year – 303,500 babies versus 241,400 migrants. Migration levels in sharp drop as Australia’s population growth has fallen to its slowest rate since 2007. Politicians in Canberra again offered no comment – no idea.

BUY PRINT

Only when commentators start looking closely at the machinations that drive property markets, will they even begin to understand what drives property prices. Only when one starts to piece the puzzle, does the picture become clearer. In the Sun Herald last Sunday, Louis Christopher from SQM Research wrote “SQM’s vacancy rate series also reveals a tight rental market with only some slack at the very affluent end of the market place. Vacancy rates are at 1.3 per cent and even tighter in Sydney’s west at a dire 0.7 per cent. And from what I can see there are no significant increases in new housing developments in the next two years for the local market.” Christopher went on to say “this is scary stuff and means only one thing for rents. Our forecast is for a Sydney – wide average rise of 5 – 7 per cent a year for at least the next two years. The west could record an even higher growth rate of 8 per cent – plus.” When rents climb, the rental community buy and this coincides with government policy on house construction which, as we all know is dead policy!

House prices do not inexorably rise another great article by Christopher Joye on Business Spectator “If the Reserve Bank of Australia (RBA) ‘central case’ comes to pass, which would involve a surge in resources investment on the back of China and India’s industrialisation, notwithstanding weak US and European growth, we can expect to see it raise the target cash rate at least four times to 5.5 per cent with an upper bound of 6 per cent. Note that this is an exclusive of any ‘top – ups’ delivered via the banks. When the RBA speaks, listen up as bad news looms for debt – laden households. The share of debt–free households in Australia has plunged to a nine year low, amid signs that people are borrowing heavily to keep pace with rapid growth in house prices forcing more people closer to the edge.

Barring catastrophe, interest rates likely to be high for many years to come where it will be a safe bet that the official interest rate will rise in 2010 and even more to be expected in 2011. It’s in your own best interest to save before the Reserve forces you because the cost of owning a home (with a mortgage) will go up, given the inflationary impact of the mining boom as RBA’s stride quickens. The mining boom is reflected with labour supply – Western Australia recorded the nation’s highest growth of 2.3 per cent, Queensland 2.2 per cent, Victoria 2 per cent, Northern Territory 1.9 per cent, ACT 1.6 per cent, NSW 1.6 per cent, South Australia 1.3 per cent and Tasmania 0.9 per cent.

Economy on solid foundations, Wayne Swan despite Labor’s growing labour crisis Fort Fumble keeps addressing international politics whilst ignoring local concerns as ALP urged to embrace growth. Budget deficit of $54.8 billion for 2009/10 is smaller than expected then Access Economics declared Swan’s budget an ‘accident waiting to happen’ given budget surplus in 2012 ‘may be short – lived’. Naturally, Wayne Swan responded Access Economics Budget forecast is pessimistic although he failed to respond to Chris Richardson’s concerns that “Treasury may be right that there is a permanent boom in mining but it would be the first ever recorded in any market.”Australia still the great performer, buoyed by the resources boom although Fort Fumble must cut spending to boost competitiveness given Labor facing storm clouds: International Monetary Fund.

Next entry on the whiteboard will no doubt be the “Great White Elephant” – Gillard’s NBN. Mexican telco billionaire’s claim that NBN is too expensive backs our case: Tony Abbott then Conroy hits back at Slim: you don’t know what you’re on about. My prediction: Conroy will be smashed over the untried and costed Gillard NBN roll-out – Advantage Turnbull given, Telstra nonchalant on NBN.

Cable equates to “why more” and wireless equates to “why not less”?

Someone should ask Wayne Swan why we are doing plenty of digging, yet no building? The sooner someone explains to him that Australia is not about digging a nation, but rather building a nation,  will we see greater housing affordability – and  that won’t be happening anytime soon.

We need direction to build on – not tax on!

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

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Last week, I wrote that July can be a lost property month as so many are away on holidays. This is echoed with website traffic where Unique Visitors are busily visiting other sites such as beach resorts and or snowfields. Sour outlook for house prices as investors are the only source of growth in market which is interesting given investors tend to only play when they identify a buyer’s market. Clearance rate slumps as supply surges where it was reported “Sydney’s auction clearance rate plummeted at the weekend with just 49 per cent of properties selling – the poorest result for 18 months.”

To confuse the issue further home loans up for first time in eight months which is a clear sign of market recovery. “The number of new owner – occupied home loans rose 1.9 per cent in May, the first increase in eight months. Lending to housing investors continued its recent surge, rising 2.6 per cent in value, and has now swelled by 35 per cent since early last year. No doubt investors are circling First Home Buyers who are feeling the strain of increased funding costs.

The Australian Bureau of Statistics (ABS) released its lending finance approval data this week – lending remains subdued, easing bubble fears. The average in 2009 was $53.14 billion per month, compared to $65.67 billion per month in the pre – crisis year of 2007, meaning $12.53 billion less coming into the economy per month via lending institutions. At the current growth rate, total lending, at $51.58 billion in May, would take another six years to regain the high point of $70.63 billion reached at the end of 2007. I am not sure that we need to reach the high point anytime soon as borrowers told to pay down debt given the cash rate overtime will go up not down. In 2007 we saw borrowers lock and load debt where today, it is the complete opposite of lock and unload debt.

BUY PRINT

Business conditions hold steady given interest rates remain attractive as well as strong job growth, this identifies that Australia has solid business fundamentals. It should be noted that I am referring to businesses not governments. One of the biggest global bond managers Pimco rated Australia as a top investment destination so the outlook from a business perspective looks sound. Although that scenario could quickly change as banks face pressure over cost of lending and look likely to raise rates. Contrary to what the Reserve Bank of Australia (RBA) suggests, the banks are becoming increasingly triggered happy to reprice their mortgages – banks to cool on rate rises until after poll.

As a business we rely strongly on the Macquarie Economics Research data as an economic compass for our advice to purchasers, vendors and subscribers to Virtual Realty News. So let’s look at its economic forecasts, where the key issue is how long will rates remain on hold? Throw in a likelihood that banks could increase rates independently and the heat comes back into the market again.

The Macquarie Economics Research – Outlook for the September quarter 2010 identifies both calm and choppy waters ahead. The common denominator is quite simple (for me anyway) based on the above forecast, simply put: excessive debt is dangerous. This would explain why in our real estate market demographic we see bonuses being paid directly back into reducing debt levels. Leveraged lending on speculative investments is today a thing of the past, as households have all but ruled out those global financial crises – margin calls. A clear message: to borrow within not without.

Sydneysiders have always been proud that collectively our property markets are the benchmark for the Australian property industry, however for the very first time this is about to change. Our state Government – Fort Crumble (the most incompetent in Australia’s history) will show you why with the following graph.

Source: Australian Property Monitors

Senior Labor figures face annihilation – “Secret polling shows state Labor is facing a near wipe – out at the next election, with seven ministers and former Premier Nathan Rees among 28 MPs likely to lose seats. Polls by Labor and unions showed a 15 per cent swing against the Keneally Government statewide.” Fort Fumble due to their inability to provide infrastructure have driven residents to other States and Territories – Melbourne close to overtaking Sydney in price stakes. With annual population growth in Victoria running at 2.2 per cent, compared to NSW at 1.7 per cent, driving demand, it’s not hard to imagine Melbourne seriously challenging for the crown of Australia’s most expensive median priced city in the near future.

It will be a fascinating run into Christmas for both political and property voyeurs. The Colmar Brunton survey is always an interesting read Bubble – burst fears rise where investors are expecting house prices to remain flat or possibly fall. A very interesting read as well is show us your ticker, Gillard, before you force us to vote. Then our non – elect Prime Minister has to hose down the stoush where Paul Keating unleashes on Bob Hawke: I carried you through years of ‘Malaise’.

Julia Gillard announced that if elected the failed Emperor Kevin Rudd will sit on the front bench – I doubt she will hand him the Insulation Portfolio.

Steve and Richard have returned back from holidays so over to them.

I’m looking forward to road testing my iPad under my umbrella on the beach in Thailand as well as reading RISE OF THE RUDDBOT. Given what transpired at the Press Club yesterday PM Julia Gillard accused of double deal where it very much looks like the Labor Party is witnessing the Revenge of The Emperor – and it’s looking ugly.

Back in three weeks to cover the federal election which is taking more turns than a Winter Olympics.

Why is Mosman the strongest real estate market in Australia? Mosman is way out in front which, explains ladies and gentlemen, why, Mosman is Australia’s ‘numero uno’ municipality.

Just announced Federal Election – August 21.

Got a plane to catch,

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

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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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