Mandolong House listing set to test Mosman market after banking bonuses dry up

By Jonathan Chancellor
Monday, 27 February 2012

The ongoing decline in bonuses among merchant bankers and financial sector executives has serious implications for prestige property markets.

This is especially true for Mosman, the Sydney suburb that headlines the prestige markets that previously relied on bonus recipients buying and selling houses.

Until the global financial crisis, vendors enjoyed the home-buying spree in the merchant banker belts that followed, like clockwork, the cash-dominated bonuses.

But the bonus-inspired property purchases disappeared during the depths of the 2008 and 2009 financial crisis, and the after-effects linger.

Salaries may have risen, but bonuses have shrunk given the fallout from government bailout packages, and are typically now tied to company stock incentives.

So estate agents struggle to get competitive buying interest for the top-end listings.

The main challenge for Mosman is the double-digit-million market.

Mosman’s first big test on 2012 comes with the 1885 Mandolong House (pictured above), a renovated hillside residence listed with $17 million reported hopes – a suburb-record price for a non-waterfront residential property, which currently stands at $15.25 million for a Stanley Street residence.

The Mandolong Road property is situated in a 2,909-square-metre location high on the slopes of Balmoral and comes with a north-south tennis court and swimming pool. It is the home of businessman Barry Roberts-Thomson and his wife, Victoria.

The property last traded for $3,375,000 in 1989.

Last year’s top Mosman sale was the $19 million sale of a Hopetoun Avenue waterfront property to neighbour Ros Oatley of the Oatley wine family. Its price reflected a serious price weakness, since it had traded at $22.5 million in pre-global financial crisis 2007.

The Mandolong House listing comes at a time that Richardson & Wrench Mosman agent Robert Simeon notes “a significant increase in Mosman house listings”.

But Simeon adds it’s well below the spring 2011 peak of 168 house offerings.

“We may now hit 140 houses on the run up to Easter,” he forecasts.

Simeon’s most recent critique of the Mosman house market noted 2011 sales results surpassed 2010. Over the Christmas break the number of Mosman houses on the market dropped to 83, and it had peaked in mid-November at 168 house listings.

“The only statistic that went down during 2011 was the auction clearance rate – Mosman is a private treaty/expressions of interest market, which is clearly evidenced by the figures,” he says.

2010 Mosman Median Price – $2,250,000
2011 Mosman Median Price – $2,275,000
2010 Mosman Average Price – $2,684,319
2011 Mosman Average Price – $2,711,657
Total House Numbers Offered in 2010 – 289
Total House Numbers Offered in 2011 – 324
Total Houses Offered By Private Treaty in 2010 – 193
Total Houses Offered By Private Treaty in 2011 – 226
Total Houses Offered By Auction 2010 – 40
Total Houses Offered By Auction 2011 – 115
Adjusted Clearance Rate 2010 – 25 percent
Adjusted Clearance Rate 2011 – 24 per cent
Total Number Sold 2010 – 233
Total Number Sold 2011 – 266
Total Value Sold 2010 – $499,283,500
Total Value Sold 2011 – $623,681,292

Source: Richardson & Wrench

“It will finish at close to $700,000,000 when all sales are recorded,” Simeon suggests.

“Bear in mind that at close to $1 billion our market is a boom level.

“This coincides with my previous thoughts that the Mosman market has bottomed,” Simeon adds.

Much of Mosman’s strength and weakness is the so-called Mosman merry-go-round.

As Simeon says, families move within the 2088 postcode, they don’t move out.

Remuneration consultant John Egan of Egan Associates says pay structures in investment banking had changed dramatically since the global financial crisis.

Whereas previously, a top banker's base pay would be in the $300,000 to $400,000 range, the bonuses were often five to 10 times the base.

He suggests salaries might have risen about 50%, but bonuses are now only one to two times the base, he told the Weekend Australian.

Mosman has also been hurt with fewer upgrading local buyers but also the disappearance of the expatriate given the currency situation.

At weekend auctions, a three-bedroom home with harbour views in Parriwi Road, Mosman, was passed in on a $3.9 million vendor bid despite four contracts having been issued pre-auction.

Mosman agent Sandie Dunne had previously exchanged contracts at $4 million but the client got "cold feet".

It last sold for $3.85 million in 2008.

Mosman's most significant waterfront listing is a relisting of a Curraghbeena Road property that was the home of the London-based Greg Clarke, who once headed Lend Lease, and his wife, Anne.

Offers close this week through agent Paul Gotch who tried to get $12 million plus on its 2010 marketing.

The property last traded in November 2007 for $14.5 million when it was sold by retired Deutsche banker Ken Borda and his wife, Ellen.

This time Gotch has been reluctant to put a price estimate on the 933 sq m property, merely noting it was paid for in British pounds when the exchange rate with the Australian dollar was much stronger.