Governments crying poor, some booming – if uneven – results in the housing market
I’m not sure about you, but it seems to me here we are in 2012 and every government in Australia is crying poor. Without drilling too deep, the common denominator is usually bad management and policies. So why are they stone motherless broke?
In fairness, it is not unique to Australia, it is a worldwide epidemic. Why is it that we have in our businesses and homes state-of-the-art technologies with the world’s highest electricity prices? This reminds me of the saying “politicians and nappies have one thing in common – both need to be changed regularly, and for the same reason”. Best practice is replaced with best guess where budgets are premised on a wing and a prayer.
State budgets face deficits on commodity prices the WA and Queensland budgets could be thrown into deficit to the tune of nearly $2 billion dollars as falling commodity prices hit their resources dependent economies. The lies that blind and mining suffers – “When is the duty of a state premier, or any leading minister, to tell the public the whole truth?” All we see with mining companies is the government's now taxing the bejesus out of them, so little wonder that pipeline of investment starts to be scaled down. Australia's politicians now find themselves in the position where after the promises, now it’s time to do the sums.
Businesses are furious over government cuts to tax breaks. Corporate Australia has reportedly been told (despite its protests), Labor is planning to go ahead with cuts to tax breaks and incentives worth a total of $6 billion to help achieve budget tax savings. The federal budget has, collapsed which would explain why Gillard is arming Labor for early election with new committee, and the word on the street is a March election. The Gillard government won’t go to the polls after the May budget in 2013 due to a massive blow-out! This is the bust that Swan didn’t see, and remember where you heard it first!
In real estate talk Altona (pictured above) is spoken as Australia’s premier property given its amazing pedigree.Altona, the Point Piper harbourfront, has been officially listed at $US56.9 million, which is an amazing revelation or one huge faux pas on behalf by one listing agent, considering that up until now, the asking price has been somewhat of an industry secret.
Shock horror – residential property capital growth has stalled in five years since GFC, says RP Data’s Cameron Kusher. Apart from the economic factors, the slowdown in capital gains can also be attributed to the fact that consumers have increased their level of savings and have subsequently reduced their levels of spending (particularly for housing).
Unit starts boosted residential construction in June quarter, but house starts fell to 11-year low. There has been absolutely no government enquiry (to date) as to why. The pressure test for the top-end Sydney markets were dumbfounded this week when Pacific Bondi Beach buyers riding the property wave through to the 2015 tide, where the first release (last weekend) resulted in 74 of the 76 apartments selling for the asking prices. The sales ranged from one-bedroom apartments for $1.9 million (70 square metres) to penthouses for $10.3 million. These are boom market results, although I agree with BIS Shrapnel's Frank Gelber that new housing construction recovery a year off and will be uneven.
With interest rates and unemployment low, there are economic positive signs all around, says YBR's Mark Bouris, which leads me to explain why. There is too much emphasis on what the Reserve Bank of Australia (RBA) does with the cash rate. Interest rates should be organically controlled through completion. This week, the home loans war got angrier when ME Bank cut its three-year rate to 5.39%, which is about 0.5 percentage points below the major banks. No RBA intervention because the bank knows rates will go a lot lower. ME Bank left the first clue – without RBA intervention.
The Mosman September marketing campaigns conclude over the next week (from Saturday) before the school holidays commence (again). If I’m reading the market correctly, the 120 houses on the market this week should start reducing.
Robert Simeon is a director of Richardson Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog Virtual Realty News since 2000. The RWM real estate model has sold in excess of $1 billion in database sales globally.
The Mark at Sydney's Central Park
Now, all signs point south for this market. A year ago vacancies were near zero but today they’re approaching 5%. Price growth has stopped and, according to Australian Property Monitors’ price graph, has started to dip below the red line.
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