Why We Have Less Property On The Market

Why We Have Less Property On The Market

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The problem (as I see it) with commentaries about the Australian property markets is the diverse opinions about which way it’s headed. I see the main hurdle being interest rates, not a booming market, given the former is actually the handbrake on property prices. Prepare for interest rates rising sooner than expected if America raises their debt ceiling, it could impact funding costs in the Australian home loan market. It was pointed out that should average variable interest rates return to normal levels of 7 per cent borrowers would be slugged an extra $755 million of extra repayments collectively. The Reserve Bank of Australia advises that almost a quarter of lenders’ monies are sourced from offshore so it’s inevitable that these increased costs are passed on to the borrowers.

Nobel Prize winner Robert Shiller warns of ‘bubbly’ global home prices “This financial crisis that we’ve been going through the last five years has been one that seems to reveal the failure to understand price movements.” Well that’s true in a sense although the accelerator that caused the most damage in the GFC was the shoddy home loans where the lenders in America have absolutely no re- course should a borrower default. Unlike in Australia where, should you default, the lenders immediately commence legal action to recover the outstanding debt.

If you take a moment to look at the Australian Bureau of Statistics (ABS) you will see over the past ten years Australian house prices have risen by a staggering 64 per cent. Savings also grew by 61 per cent and the Australian share market delivered gains in the order of 60 per cent. Based on that data one should hardly be concerned about the current machinations of the Australian property market.

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SYDNEY AERIAL PHOTOGRAPHY 

BUY PRINT

The minutes from the RBA October meeting were released this week where it was again revealed that they have not ruled out further cuts – although I see this as being highly unlikely. Although the elephant in the room economic growth loses momentum Australia’s economy has suffered a significant loss of momentum since the start of the year as its transition away from mining investment – led growth gets bumpy.

The Westpac/Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 3.2 per cent in August, down from 4 per cent in July but marginally above its long term trend of 2.9 per cent.

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First home buyer lending drops to lowest point since 2004 – well we also have the lowest cash rate ever and lenders are telling the first home buyers to do the calculations for their repayments at 7.00 per cent which explains why they have opted out of the market. You see despite all the ongoing conspiracy theories there is a simple explanation for everything. To further add to the confusion Sydney home prices forecast to rise by 19 per cent – well this is nothing more than a guesstimate which would have been based on the cash rate remaining at or about its current level. It is also a projection over three years so that would be 6 per cent per annum.

This week’s sales were mild to say the least although we are seeing a very interesting trend – two years ago Mosman had 147 houses on the market and last year 116 and this week it’s 88. The simple truth is that following the GFC households have toned down their exuberance to play the property markets. In apartments two years ago there were 100 on the market, this time last year 104 and this week 50. The reason why is that we have more investors in the market and they are holding. There are 4,900 houses in Mosman and before the GFC the market would trade at approximately 10 per cent per annum – today this figure sits between 5 and 7 per cent.

MOSMAN – 2088

• Number of houses on the market this time 2012 – 116
• Number of houses on the market last week – 80
.Number of houses on the market this week – 88
• Number of apartments on the market this time 2012 – 104
• Number of apartments on the market last week – 50
.Number of apartments on the market this week – 50

CREMORNE – 2090

• Number of houses on the market this time 2012 – 14
• Number of houses on the market last week – 11
.Number of houses on the market this week – 10
• Number of apartments on the market this time 2012 – 22
• Number of apartments on the market last week – 16
.Number of apartments on the market this week – 17

NEUTRAL BAY – 2089

• Number of houses on the market this time 2012 – 18
• Number of houses on the market last week – 6
.Number of houses on the market this week – 8
• Number of apartments on the market this time 2012 – 65
• Number of apartments on the market last week – 35
. Number of apartments on the market this week – 32

Source: Australian Property Monitors

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
Click Here

For this week’s opens for inspection
Click Here

Aussie’s the world’s richest people and Australian super ranked third in the world so given all the doom and gloom we have some light at the end of the tunnel.

For mine the biggest announcement of the week Hockey flags tax reform agenda which is exactly what the Labor government should have done with the Carbon Tax. The previous government sat on the Henry Report into Australia’s taxation system and in turn ignored all the recommendations. At the next election in 2016 voters will have their say – where I would not be surprised if Negative Gearing cops an enormous hit.

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.That’ll give you something to think about.

Cheers ^__^

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