Plenty of heated debate this week when the Real Estate Institute of NSW published its quarterly Property Focus for the June quarter 2005 and Mosman copped a shellacking. The question was did Mosman prices for homes really drop by – 9.65 per cent in the June quarter ? The answer is yes and no !! Yes, the figures compiled identify that in that period the number of sales recorded was 44, however what they did not say was that many many more sales have not been recorded as the figures are compiled on settlements, not exchanges. In that period we recorded twelve home sales in Mosman and many of those sales (approximately $12,000,000) still have not settled so they were not included in the 44 sales. You can also throw in the $20,000,000+ Burran Avenue sale that has not settled and you can now see that – 9.65% in no way represents the Mosman market. The system still remains flawed. If one was to revisit these statistics in another six months, these figures (Biggest Falls Mosman) would not make the front page of The Sydney Morning Herald as was the case this week.

Allow me to refresh a few memories about an article published in the Fairfax newspapers by Alan Kohler on June 15, 2004 headed “Real estate data in urgent need of a major overhaul.” Twelve months on, the system still remains the same for collecting data. Mr Kohler wrote “The Australian Bureau of Statistics and the nation’s real estate institutes are each looking at ways of fixing Australia’s “hopeless” system of real estate sales data. That is the word Reserve Bank governor Ian Macfarlane used a week ago in his parliamentary testimony. Property is having the biggest influence on monetary policy, yet the central bank admits it does not know what is going on.” At this point in time nobody has contacted the real estate agents asking for assistance on the correct procedure of registering the sale details at the date of exchange. Why would agents be so keen to participate ? Because then they would not have to spend as much time re-assuring vendors that the present system does not convey a true reflection of property prices. In December 2003 we sold a brand new home in Clifton Gardens for $5,000,000. It was sold again in the June quarter 2005 for $4,975,000 which makes a mockery out of the – 9.65 per cent drop in house prices (for the record it has a December 2005 settlement). The question that begs, is that if most are aware that this system is flawed and inaccurate, why run a story (oops stories) bashing niche markets, which is open to ridicule. Freedom of speech is fine and should be respected, however abusing that privilege should not be condoned nor tolerated. Given that most are aware that these figures are always inaccurate, the Real Estate Institute of NSW would serve members and the public, by delaying the release of these statistics until they have compiled a much more accurate market positioning.

It was only a matter of time and better late than never, however we can now factually report that investors are back looking at and researching the apartment markets.We have not sold to any yet, however it is a positive sign to have them back at the open for inspections. More interesting is the housing market that is broken down into six vendor demographics and here they are. One, those vendors looking to sell to trade up. Two, those vendors looking to trade down, cash up, or empty nesters. Three, those vendors that are selling because they are moving elsewhere ie overseas. Four, those getting divorced. Five, mortgagee sales and six, deceased estates. The general rule of thumb is that demographics one and two generally make up seventy five to eighty per cent of our market. Today, they account for half of that, which explains the shortage of property on the Lower North Shore.

Transaction costs are the killer and stamp duty is the major hurdle for property buyers and Morrie “I’m sorry”, could well look at visiting a fairer formula for home buyers. On April 6, 2004 Stamp Duty payable by purchasers of residential property exceeding $3,000,000 was increased from 5.5 per cent to 7 per cent. Prior to that, the same mathematical formula applied to stamp duty had been in place since December 1986, with property prices being much higher (like a multiple of eight factor) and nineteen years later it is time for reform.

You can’t always get what you want, however, if you don’t ask you never receive. The Real Estate Institute of NSW certainly did not do their Mosman members any favours by releasing incomplete market figures. Our point is, that when the ‘Governor of Moolah’ says it is “hopeless” (and nothing has changed) the Real Estate Institute of NSW needs to fix the problem and a few journalists need to read Alan Kohler’s article. Cheers ^__^

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