Time to play pin the tail on your dollar!

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.)

In the current LPS markets you simply have one of three choices: –

  1. Engage and entice the market.
  2. Rent your property out.
  3. Monitor the market with the possibility of re-listing within twelve months time, or beyond.

Our GPS markets are certainly not sugar-coated in 2008 and this resonates through to our LPS property markets. Looking closely at the Mosman real estate market we note that quite a few properties that failed to sell have now been rented out (Option 2) over the past week(s). Markets do recover although I would suggest that the Mosman real estate market will point north faster than other real estate markets based on historical anecdotal sales evidence.

Superannuation is more like a super disappearance where for twelve months to the end of October, median balanced fund returns fell by 17.6 per cent. Then on top of this result we have a bear market – which should in my opinion be called a” bare” market. Whilst on the grizzly bear markets in 2007 – 2008 the recorded performance is much worse than that of the 1987 crash where $800 billion to $900 billion has been wiped off the share value of Australian shares over the past 365 days. The grizzly bear is now circling property markets feeding off a diet of debt.

Fitch Ratings announced this week that more than 840,000 residential mortgages valued at $140 billion remain outstanding as at the close of business September 2008. The top 10 are;-

  1. Helensvale (Qld)
  2. Nelson Bay (NSW)
  3. Raymond Terrace (NSW)
  4. Katoomba (NSW)
  5. Greenacre (NSW)
  6. Guildford (NSW)
  7. Vaucluse (NSW)
  8. Fairfield (NSW)
  9. Cessnock (NSW)
  10. St Marys (NSW)

NSW – records ninety per cent of the top 10! A major concern – for Fort Tumble (NSW Government) although such results are testament to their abuse of power. A manifestation of the “lights being on and nobody home”. Fort Tumble is a strong contender for being the most incompetent government ever should the “Guinness Book of Records” record such a category.

So psychedelic here we go – forget the Holy Grail! Our collective attentions are now turned to showing us the money! This starts at home where interest rates are tipped to drop to the lowest levels since the early 1960’s – Flower Power! In January 1960, the cash rate was 2.89 per cent which is a classic example of history repeating itself – albeit nearly 50 years on. For those with cash – at – bank, there will be little to no return on investment.

So the decision is then shares, superannuation, or bricks and mortar as the preferred investment model that allows participants to pin the tail on their dollars. Alas, the beginning of the economic recovery process better known as discretionary spending identifying market choices that deliver profit not losses. Where corporate ambiguities continue to reign supreme it leads me to suggest that the value return of a property is always much more secure than that of a business on the shock market – oops! I meant share market. You can’t short sell the property markets. Hedge funds do not invest in bricks and mortar. Simply put: real estate is much easier to understand for the vast majority than trying to follow the share market as property is much more transparent and the family home is tax free.

No doubting that we are presently in a spy market as against the much preferred buy market. This will change when we enter the psychedelic market where I predict that when the Reserve Bank of Australia meets next month we can expect another 125 basis point reduction. Market rate reductions stimulate the spy markets which will no longer be regarded as shy markets.

Our spy markets are very strong when I do a Google Analytics report for our “Virtual Realty News” and website online activities. Our online traffic goes to;-

  • Six continents
  • Twenty sub – continent regions
  • 93 countries/territories
  • 839 cities

Our top 10 cities are;-

  1. Sydney
  2. Melbourne
  3. Brisbane
  4. London
  5. Austin, Texas
  6. Singapore
  7. Hong Kong
  8. Bucharest
  9. Perth
  10. New York

Our 839th city is Etterbeek, Brussels, where we had one visitor. At the end of the day it is all about captivating our audiences and this is certainly happening with our fast increasing traffic to our new website.

We are excited to report that our website is the number one individual website visited in Mosman for real estate searches.

For those receiving email alerts, on your email cover page in your inbox under this week’s article, is an easy three step – process to update your buying criteria.

RWM thank for your ongoing support and readership.

Now off to the blog we go – how do you see the markets? How much influence will the psychedelic markets have on property prices? How cheap will the Reserve Bank of Australia have to go with rates?

Cheers ^__^

3 Responses to “Time to play pin the tail on your dollar!”

  • Steve says:

    Your new web pages are too white. I have to copy the text into another application to read it. Too many websites today are overly white (I use at least 50 each day and at the end of the day, like now I’m reluctant to read your website. I must be getting oldand suffering from white out

    Have a look at http://www.ft.com/home/asia which in my view is the way to go .

    Steve

  • caroline needham SC says:

    Thanks for including the street addresses with the photos. Steve – at least you’ll have a white Xmas this year.

  • Peter Ricci says:

    Hi Steve

    Thanks for your comments. My name is Peter Ricci, the web developer for rwm.com.au. The reason white is used throughout the website is to comply with web standards . This is because white is used as a background by newspapers, book publishers and whiteboards and our eyes are adjusted to suit this background.

    Your idea of a light beige background whilst fine and still in compliance does not suit the brand of RWM. We wanted a clean crisp environment, where the colours stand out.

    I hope you still come back and read the Virtual Realty News each week. RWM value each and every one of its clients and their opinions and so do we, I thank you for contributing and whilst we cannot resolve your particular issue, I hope to hear from you again soon.

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