Why Real Estate Is About To Get Very Interesting

Why Real Estate Is About To Get Very Interesting

Last week we talked about joining the dots now let’s look a bit closer at those dots. Some prefer to look at the small dots (micro) – I much prefer the big dots (macro). The elite property markets are always, by definition, examined by what happens at the top-end and in recent years those happenings have almost been non-existent. History shows that in terms of capital appreciation, this is the Formula One of our property markets. Unfortunately, in recent times, we had the vehicles but not the drivers.

Mosman’s second waterfront sale in a week also set a new street record which is to be expected considering both are pedigree properties. What should also be noted is that these waterfront properties have been sold for well below replacement value. These sales identify that the drivers of our top-end market (well some anyway) agree that this market has bottomed.

Rome was not built in a day and Mosman did not collapse in a day. Everybody’s life was re – calibrated after the Global Financial Crisis (GFC) which explains why, when we jump back on the path of wealth creation, real estate is again, about to get very interesting. Although there is one major thorn in the side that will confuse and possibly contradict the 2012 property markets – I like to refer to it as the “who dares wins” market.

Mr Mooney was back at it again – capturing Spencer Road and Holt Avenue – Mosman’s engine room market. Big things are predicted for this location in 2012/13.


Now to that thorn. There are currently, just 89 houses on the market in Mosman where all new properties will need to be photographed by next Monday and Tuesday to meet Wednesday’s print deadlines. We recommend a four week marketing campaign to commence on Saturday 1 September and close on September 22 because school holidays commence on September 24 and conclude on October 8. This means that the next selling period will commence on October 13 and conclude on November 10 leaving only two more Saturdays before we hit December.

When joining those macro dots, look no further than Australia’s four cities to surge “Australian governments have a 10 – year planning window to preserve the quality of life in the nation’s biggest cities before a population surge, the head of the peak infrastructure body says. The population in both Melbourne and Sydney will hit 7.5 million, with Brisbane reaching 4 million and Perth 3.5 million, as Australia swells to around 38 million people by 2050, Infrastructure Partnerships Australia Chairman Mark Birrell says.” This explains why we should be thinking macro not micro.

Throw in US flexes its muscle on investment after the US government’s Export – Import Bank revealed it would make a record $5 billion in cheap loans to projects here this year, a move that highlights the $1 trillion investment relationship between Australia and the US. The only problem for the US is that the Chinese are by far, the biggest buyers of Australian real estate.

Excessive taxes on the housing industry must be removed to stimulate growth: Harley Dale this is the cancer within the property industry. Interestingly enough the Gillard government is focussed on manufacturing although the property industry which still remains the highest employer in Australia, remains in serious decline. The answer is simple. Set up an Independent Property Commission where GST refunds are approved to building applicants who meet the criteria.

The symptoms of this epidemic are very clear rising rents and lower vacancy rates encouraging property investment: RBA charts simply because Australia has downed tools and stopped building! If you keep joining the dots banks continue battling for deposits given refinancing reaches record level in the year since exit fees ban: ABS this is great news for the property industry. I certainly believe that by mid-2013, the cash rate will start increasing NAB changes tack: rate rises ahead.

I must admit I have become addicted to this weekly measure which allows us to really put the market into perspective. I mentioned earlier, that next week is the cut – off until the next selling window of 13 October and beyond. Today, we have 89 houses on the market – on 13 October 2011 we had 133 which later peaked at 168.

The 2012 Mosman property market is now fascinating.

Source: Domain Property Monitors

    MOSMAN – 2088

    • Number of houses on the market last week– 80
    • Number of houses on the market this week – 89
    • Number of houses on the market this time 2011 – 103
    • Number of apartments on the market last week – 89
    • Number of apartments on the market this week – 85
    • Number of apartments on the market this time 2011 – 98

    CREMORNE – 2090

    • Number of houses on the market last week– 11
    • Number of houses on the market this week – 12
    • Number of houses on the market this time 2011 – 16
    • Number of apartments on the market last week – 13
    • Number of apartments on the market this week – 15
    • Number of apartments on the market this time 2011 – 26

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 15
    • Number of houses on the market this week – 15
    • Number of houses on the market this time 2011 – 9
    • Number of apartments on the market last week – 45
    • Number of apartments on the market this week – 46
    • Number of apartments on the market this time 2011 – 70

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.
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For this week’s open for inspections
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Great to read: A Keen audience: Australian doomsayer goes global – let’s face it, Steve Keen knows next to nothing about Australian property (his predictions have proved that.) Hilarious that he is now focussing (speaking) in countries where property markets are simply cactus.

I’m predicting a much stronger/positive vendors’ market this Spring/Summer (which makes for a pleasant change). Should you wish to debate me on the blog – I suggest you come well prepared 🙂

Cheers ^__^

4 Responses to “Why Real Estate Is About To Get Very Interesting”

  • Ann says:

    Cash rate increasing just before the election? That will be interesting

  • MIKE STOKES says:

    Compelling thoughts Robert Balmoral/Mosman seems the reverse of the Eastern Suburbs (where I m looking )
    …which has an abundance of stock unsold ,an increasing supply and a bottom which is mnot yet visible.Perhaps looking back it was a bonus that Moman got hit hardest and first,….Who knows ??


  • Ann says:

    Mike, I think its different markets as well.

    The traffic and parking are much worse in the Eastern Suburbs, also beach access is much harder

  • Ann – you forget that the RBA dropped a cash rate increase right in the middle of the Howard Government election in 2007. There is a precedent!

    Well its true that the Mosman market was one of the first to take their medicine and get on with it. If you try to compare the Eastern Suburbs with Mosman there is just the one similarity – both expensive!

    The Eastern Suburbs markets consist of about 100 niche markets – Paddington, Point Piper, Elizabeth Bay, Point Piper etc. Mosman on the other hand is a stand – alone market with just 4,900 homes as against the Eastern Suburbs with 750,000 homes (guessing). By comparison on that basis it will take much longer for the Eastern Suburbs to clear their books to then start afresh.

    It is clear on that basis which market will perform the best! 🙂

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