THE AUSTRALIAN ECONOMY NEEDS “GIDDY –UP”. NOT GOING, GOING & GONE!

THE AUSTRALIAN ECONOMY NEEDS “GIDDY –UP”. NOT GOING, GOING & GONE!

Just what part are Australian tax payers missing, when the monthly Reserve Bank of Australia (RBA) reports are met with Federal government approval . Inflation continues to accelerate yet the inflation drivers remain for the better part, on ignore. Interest rates remained at 7.25% when the RBA met this week and neither it or the Federal government offered an economic solution that will intelligently address the inflation accelerants, other than a moronic suggestion, that over time it (inflation) will address itself. The inflation rate is headed to 5 per cent (as we will identify).

The Richardson & Wrench Mosman & Neutral Bay (RWM) quick quiz on the Australian economy suggests that the problem is excessive governmental taxing. Collectively, both federal and state governments are wholly and solely responsible for the inflation rate today. Somewhat ironic, when governments encourage a reduction in household spending , yet there’s no mention of a reduction in taxation – excise tax on fuel today, is nothing more than an absurdity and is a Federal government over indulgence at the expense of tax payers.

March 2008 was met with climbing household costs led by petrol and rent. The TD Securities –Melbourne Institute monthly inflation gauge rose 0.4 per cent in March, after a 0.3 per cent increase in February.

Petrol Action – (Kevin Rudd)
Answer: remove/reduce Federal government fuel taxes as this then reduces this constantly climbing inflation component.

Rental Property Action – (Kevin Rudd and Morris Iemma)
The Sydney vacancy rate for residential property within a 10 kilometre radius of Sydney CBD has decreased from the previous recorded month’s result of 1.3 per cent in January 2008 to 0.9 per cent in February 2008.

These declines are a direct result of collective governmental mismanagement where investors are fast becoming an extinct species. Hint: it’s three letter word called “tax”. In a perfect economy vacancy factors should be running between 2.5 per cent to 3.00 per cent. Not less than 1.00 per cent and declining.

G.S.T – (introduced in 2000) – (Kevin Rudd)
State taxes have actually increased not decreased which is why investors are not participating in residential real estate. A vacancy rate of 0.9 per cent identifies that our rental markets are terminally ill. Tax payers still pay 10 per cent G.S.T to the Federal government which is then passed onto the states – the only problem is that taxes keep climbing not reducing.

Housing Affordability – (Kevin Rudd)
The RBA stated this week when they released their housing report “Australians should resign themselves that housing will never be affordable.” The RBA said to “improve housing affordability, governments should be focused on policies on land use and improving efficiency in the supply of land and housing.” Absolute rubbish – if governments encouraged investors, rents would reduce, which would mean that households could save more. The rental crisis should be stamped as priority one and if that means significantly reducing Capital Gains Tax for an investment property held for over ten years, then so be it.

With new construction down and Australia’s population racing ahead , according to the latest figures from the Australian Bureau of Statistics (ABS), we are now seeing a population growth expansion not experienced seen since the migrant boom of the 1950’s and 60’s. Confirmation of this, based on ABS statistics, identified that the established house price index during the 10 years to December 2007, increased by an average 9.9 per cent per year. In 2007 this index rose 12.3 per cent. Since 1988 house prices have risen on average by 7.9 per cent per annum.

With the Eastern Suburbs property markets feeling a bit of pain at the moment with supply exceeding demand , it is certainly not the case in Mosman. Dyson Austen & Co are compiling its March quarter 2008 Top 10 sales and Mosman for the first time, failed to make the cut with a single sale. Remember back in December quarter 2007 when Mosman contributed half the sales and two $11,000,000 house sales failed to make the Top 10. Mosman has bunkered down which ensures that prices will remain strong at the top-end.

Here are the figures on exchanged properties that Australian Property Monitors (APM) prepared for us where March quarter 2007 and 2008 for house and apartment sales were compared.

Houses – March Quarter 2007. Mosman (based on exchanges)
Total Sales – 93
Total Value Sold – $241,839,720
Median Price – $2,100,000
Average Price – $2,600,427

Houses – March Quarter 2008. Mosman (based on exchanges)
Total Sales – 33
Total Value Sold – $53,851,400
Median Price – $1,775,000
Average Price – $2,447,341

APM needs to obviously increase its agent customer care although its recorded results are much higher than competitor RP Data. For those curious, the highest price (we believe) was in the $5,000,000 range with five sales recorded. RWM posted three of these sales including the highest sale for the quarter. I noticed that we were recorded with only one sale however if we included our other unreported house sales, the total sales recorded, would increase APM results by 65 per cent. None of our $5,000,000 plus house sales have been recorded at all. So when all sales are recorded you will see a higher median price and average price ,which should break $3,000,000 this year.

Apartments – March Quarter 2007. Mosman (based on exchanges)
Total Sales – 139
Total Value Sold – $107,587,000
Median Price – $560,000.00
Average Price – $791,081.00

Apartments – March Quarter 2008. Mosman (based on exchanges)
Total Sales – 39
Total Value Sold – $26,309,000
Median Price – $527,000.00
Average Price – $ 711,054.00

Again many more sales need to be recorded however , when one compares median and average prices for both apartments and houses it is very clear that recorded sales prices have increased in Mosman. Without a doubt, the Mosman real estate currency remains the strongest across Sydney as property prices continue to grow. Investors have all but ‘sold out’ their investment homes, given that 25 per cent of returns go to Land Tax (Iemma) and 48.5 per cent of rent received goes to the Australian Taxation Office (Rudd).

Ladies and gentleman, this explains why our vacancy rate is now at 0.90 per cent and reducing. Rent and petrol keep climbing and elected governments keep taking. Although we keep being told to reduce household expenditure as this then reduces the inflation rate. Just what part are Australian tax payers missing ? Not taxes! Cheers ^__^

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