Ups & Downs

At RWM our commitment is to provide superior service to both the vendor and purchasers alike. We are also highly respected by buyers for giving accurate property information and qualified advice. The statistics below are collected from a variety of sources to ensure the validity of the data. As a special service for our VRN subscribers we provide Suburb Reports - these reports are ideal for people who want statistical information about a suburb they are thinking of buying in, or selling in. Click Here and tell us what suburb you're interested in and we'll email you a suburb report with information on median sale prices, auction clearance rates and population data. This useful service is provided free of charge by the team @ RWM. We also happily provide Property Sales Reports - these reports are for people who want specific information about a property they are thinking of buying or selling. Click Here and tell us what property you're interested in and we'll email you the sales history of the street or unit block. This helpful service is also provided free of charge by the team @ RWM.

Mosman & Neutral Bay Sales Watch

Cremorne
Suburb / Address Type Price
7 OAKS AVE Private Treaty Sold $2,150,000
30/3-7 BARISTON AVE Auction Sold $1,236,500
283 MILITARY RD Auction Sold $650,000
10 BENELONG RD Auction Sold $3,230,000
2/51A GRASMERE RD Auction Sold $2,677,000
PARRAWEEN ST Auction Sold $2,600,000
17/40-48 GERARD ST Auction Sold $1,028,000
Mosman
Suburb / Address Type Price
5/161 MIDDLE HEAD RD Private Treaty Sold $827,000
5/1 ESTHER RD Auction Sold $1,385,000
65 SPOFFORTH ST Auction Sold $2,625,000
63 BOND ST Private Treaty Sold $2,800,000
6/50-56 MUSTON ST Private Treaty Sold $3,200,000
ALBION LANE Private Treaty Sold $345,000
WAITOVU ST Auction Sold $2,100,000
11/105 COWLES RD Auction Sold $1,620,000
12/12 PUNCH ST Auction Sold $825,000
3 HOPETOUN AVE Auction Sold $5,800,000
28 PEARL BAY AVE Auction Sold $3,200,000
1/15 PRINCE ALBERT ST Auction Sold $2,440,000
109 MIDDLE HEAD RD Auction Sold $2,475,000
6/53 SPIT RD Auction Sold $875,000
34 BURRAN AVE Private Treaty Sold $9,800,000
1/4 PARK AVE Auction Sold $3,150,000
Neutral Bay
Suburb / Address Type Price
35 BEN BOYD RD Auction Sold $2,900,000
29 SPRUSON ST Auction Sold $3,175,000
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rsimeon

Sydney has a new property face – you’ll be either happy or angry


With housing affordability now front and centre, it will be a very interesting meeting next week when the Housing Ministers meet to explain what they are doing to address these anomalies to the Treasurer Scott Morrison.

In NSW for example,there are two very big property elephants about to enter the room in November and December that most don’t know about and they will have massive impacts in the clear majority of Sydney suburbs.

The first are the unprecedented reforms to strata laws which commence on November 30, 2016. Presently with strata properties a developer can’t acquire the entire block without the owners being in 100 per cent agreement, but from November 30, the 100 per cent has been reduced to 75 per cent. Now most who live in a house may well say – no big deal there. There is much, much more that home owners need to know, as property developers will start cherry-picking older style small strata blocks with the view to developing the entire site and they will be much higher than what is there now.

In late 2015, the Baird Government set up what is known today, as the Greater Sydney Commission (GSC), headed by Lucy Turnbull who has been tasked with delivering 680,000 new homes by 2031. Local councils have no say in what the GSC approve as they determine what was previously known as Local Environmental Plan (LEP) and Business Control Plan (BCP).Your traditional local council today, merely collects rates, issues parking fines, mows lawns and trims trees, the local planning side of the equation now rests with the GSC.

In December, the GSC will announce nine corridors across Sydney which have been approved for high – density developments. I’m told the nearest to me will be North Sydney/Crows Nest to get the ball rolling and the GSC is smart in that it won’t announce areas that are presently identified as no – go – zones with the lenders.

shadesof

SYDNEY AERIAL PHOTOGRAPHY

Now 680,000 new homes are clearly the biggest roll – out in NSW history where every suburb will have a role to play in some shape or form. This would explain why the NSW Government has just rubber stamped a $2 billion allocation to construct the much-awaited tunnel from the northern beaches to the Sydney CBD. Along all the major roads you can expect high-rise where previously local councils have protected historical architectural building merit, although that now appears to have been lost with the forming of the GSC.

Whilst it would be fair and reasonable to suggest that the major roads are the perfect fit for new high density developments I am much more concerned about the property developers cherry – picking the smaller apartment blocks as these are located off the main roads. You don’t change strata ownership laws where a block only requires 75 per cent approval now to sell to developers – for good reason without an explanation – which has not been forthcoming. These significant changes could see property developers running amok in suburbs across Sydney as the ownership ratio reduction reeks of property developers lobbying to get this through to make the acquisition process much easier.

The unknown part of this is that nobody (aside from developers and the GSC) know just how much of the air space above the current roof lines they will be permitted to subdivide?

Of course, the NSW Government is the major winner here as they will collect billions of dollars in stamp duty and land tax on a scale never seen before. This also all but guarantees a strong economy for NSW for quite some considerable time to come so that needs to be given fair consideration also.

The days of a single property owner holding out against a property developer are soon to be over for some of 2,000,000 people in NSW who reside in an apartment. We need to focus on the 680,000 new homes so allow me to put that into perspective – over the next 24 months approximately 230,000 brand new apartments in Sydney, Melbourne and Brisbane will be completed so that 230,000 is approximately just one third of what Sydney needs to produce over the coming 15 years.

This will affect everyone in NSW with Sydney copping the brunt of this building bonanza. So, when Scott Morrison meets with the Housing Ministers next week no doubt he will be smiling along with every property developer in NSW.

Keep an eye out for the GSC announcement in December which should be made public on Christmas eve or sometime after Christmas and before New Year’s Eve – as we all know how Governments work when it comes to handling and announcing such sensitive matters.

MOSMAN – 2088
Number of houses on the market this time last year – 75
Number of houses on the market last week – 63
Number of houses on the market this week – 59
Number of apartments on the market this time last year – 60
Number of apartments on the market last week – 47
Number of apartments on the market this week – 45

CREMORNE – 2090
Number of houses on the market this time last year – 6
Number of houses on the market last week – 9
Number of houses on the market this week – 7
Number of apartments on the market this time last year – 17
Number of apartments on the market last week – 23
Number of apartments on the market this week – 21

NEUTRAL BAY – 2089
Number of houses on the market this time last year – 6
Number of houses on the market last week – 8
Number of houses on the market this week – 5
Number of apartments on the market this time last year – 30
Number of apartments on the market last week – 23
Number of apartments on the market this week – 26

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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Source: pricefinder

rsimeon

Property debate is barking up the wrong tree

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It is only when politicians enter the property debate that we get a clear position on just how very little they actually know about this topic. Whilst encouraging that they want to participate in this highly contentious debate one would expect that they also may do some research. The real reason why they are now jumping (or falling) into this debate is that internal polling has clearly identified this as becoming a significant electoral issue.

Yes, one of the remedies is supply, as the politicians have identified, although they are comprehensively wrong on this issue. The real reason as to why we are witnessing record property prices is because we have a major fail with the supply of transport infrastructure.

Sydney is bursting at the seams simply due to the inability of politicians to recognise the all-important transition from the Sydney we know into the creation of the Greater Sydney that we need to know. What is happening today, is the approvals for new housing across Australia is booming with no real announcements to meet these approvals with transport infrastructure reforms.

As I have written on countless occasions the only way to combat this urban sprawl is to connect Sydney with Wollongong, the southern highlands, the Hunter Valley, Gosford and Newcastle. That can only be achieved with very fast trains that will enable commuters to get to Sydney within a 30-minute time frame. We are not talking rocket science here as most advanced countries have already addressed these issues.

construction-sydney-aerial-photography

SYDNEY AERIAL PHOTOGRAPHY

It is all very well for the treasurer Scott Morrison to wield his big treasury stick, although I did note in his recent running commentaries that he failed to mention addressing new construction off – the – plan selling ratios. Yes, the ratio where 100 per cent of all new developments can be sold directly offshore. Why is this ratio not returned to the December 2008 ratio of 50 per cent only sales to off – shore buyers? Surely such an initiative would slow down demand.

Eighteen months ago, I started ringing the alarm bells that this newly created investor market of new apartments would only have one ending – a crash. Since then we have seen our banks tighten and then block all loans to offshore buyers who now look like they will walk away from these contracts.

The Australian Taxation Office has entered this debate by announcing that “Under subsections 15(4) and (5) of the Foreign Acquisitions and Takeovers Act 1975, a dwelling is considered to be sold when an agreement becomes binding.” Meaning “If a property is on sold after the contract becomes binding, and prior to settlement, then this is considered to be an established dwelling.”

Developers are now up in arms over this announcement with many offshore buyers trying to flip their existing contracts to other buyers.

We know that the clear majority of these sales came from offshore buyers so will the treasurer intervene in this? I seriously doubt it as his fingerprints are all over these offshore sales as he is the sole person who regulates the offshore buyers legislation. Although to soften the landing he could reduce the selling ratio back to 50 per cent where most (except developers) would argue that this requires urgent attention.

Fascinating to see this week discussions regarding stamp duty being abolished in NSW with broad – based land taxes to be introduced, in an attempt (as they say) to relieve chronic pressures on the market. What another load of rubbish – we all know that the real reason is that the NSW government is now recognising what I have been forecasting for years – a significant decline in stamp duty revenues. Data from the NSW Office of State Review identified that for July, August and September 2016 both the number of land related transactions and total stamp duty collected from those transactions is less than for that period last financial year. I’m surprised that the NSW government hasn’t imposed a renovation tax for all those households who opted to renovate over paying stamp duty on their replacement property. The NSW government is being punished by households who simply refuse to pay exorbitant property purchase fines (stamp duty).

In the meantime, Sydney house prices are on the upward move again where Sydney’s median house price now sits at a record $1,068,303 according to the September quarter Domain Group data. I am most sure that this will climb even higher over the December quarter. To identify just how much prices have climbed in 2003 the Sydney median house sat at $454,250.

There is no road to recovery unless the federal and state governments formulate a transport blueprint for the new Greater Sydney. The only problem being is that our elected politicians can’t see the forest for the trees – which explains why they have not the slightest idea on where to start. To remedy the property markets high demand will require tens of billions of dollars not to mention that it would take some considerable time in planning to make sure they get it right.

MOSMAN – 2088

Number of houses on the market this time last year – 70
Number of houses on the market last week – 59
Number of houses on the market this week – 63
Number of apartments on the market this time last year – 63
Number of apartments on the market last week – 46
Number of apartments on the market this week – 47

CREMORNE – 2090

Number of houses on the market this time last year – 14
Number of houses on the market last week – 9
Number of houses on the market this week – 9
Number of apartments on the market this time last year – 16
Number of apartments on the market last week – 16
Number of apartments on the market this week – 23

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 8
Number of houses on the market last week – 9
Number of houses on the market this week – 8
Number of apartments on the market this time last year – 31
Number of apartments on the market last week – 24
Number of apartments on the market this week – 23

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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Source: pricefinder

rsimeon

The bubble, the bureaucracy, bungles and no vision

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Yes, an apt description for our property markets on the east coast of Australia today. We keep reading about Australia’s housing affordability crisis, the almighty property bubble together with our massive household debt with very little said as to what caused this and how do you fix it? A subject our politicians refuse to discuss in any detail despite being complicit in causing the problems that we see today.

The problem at the moment being that Australia has approximately 10,000,0000 dwellings with a value nearing $6.000 trillion with the majority wanting to live on the east coast of Australia. To try to add some perspective nobody was talking about housing affordability eight years ago when we were battling the Global Financial Crisis (GFC) where home values fell 30 per cent and unemployment was the market enemy. The cash rate was sitting around 7.25 per cent where today as a result of the GFC it now sits at 1.50 per cent and headed lower.

According to the Australian Bureau of Statistics (ABS) – at 30 June 2009, the estimated resident population of New South Wales (NSW) reached 7.13 million people, representing about a third of Australia’s population. NSW experienced the largest population growth of all Australian states and territories, with an increase of 119,500 people since June 2008. The NSW growth rate of 1.7% in 2008-09 was higher than the average annual growth rate of 1.2% for the five years to June 2009.

littleboxes

SYDNEY AERIAL PHOTOGRAPHY

Now fast forward to 2016 where the population of Sydney will hit 6.00 million people with pretty much the same traffic infrastructure when we look back to 2008. This would probably explain why our elected politicians make real estate a no go territory.

There are two significant markets in Sydney – the traditional place of residence and the investment/negative gearing/off – the – plan/foreign buyer markets. Now we need to add some perspective to these markets in that the investment/negative gearing/off – the – plan/foreign buyer market is now into over supply territory. The good news from that is that rents will significantly come down in the areas of oversupply. The bad news is that values will also come down as this is historically what happens when supply far exceeds demand.

Now when we look at the traditional markets which are in historic under-supply, if we take Mosman for example where in total there are approximately 16,905 properties and 106 properties on the market today, three years ago there were 190 properties on the market. Mosman has 5,813 houses with just 59 available for sale and 9,075 apartments with 47 available for sale according to RP Data. You can’t have values going down when you have an under-supply together with steady employment. It has been well documented that rising unemployment and an oversupply of stock are the drivers for price corrections.

Across Sydney today we are watching house prices spiraling upwards to levels never seen before due to record low stock levels. So why record low stock levels with a record low 1.50 per cent cash rate? Well that’s because stamp duty is now at record highs and households are refusing to pay $200,000, $300,000, $400,000 etc, house fines in the form of stamp duty. Instead opting for Plan B which is to renovate the existing house.

So there are two alternatives;
1. Significantly reduce the stamp duty formula and we know that won’t happen even though this tax was supposed to be removed when the GST was introduced in 2000.
2. Embark on a massive unprecedented transport infrastructure spend for Sydney and we know that won’t happen either as governments are crying poor. With money at the cheapest levels ever it would make sense to get Sydney moving by linking Newcastle/Gosford with a very fast train to Sydney and Wollongong and the Southern Highlands to Sydney as well as the Hunter Valley.

I find it quite embarrassing that Australia’s elected politicians have no answers nor vision. Rest assured this will happen one day when an opposition party starts talking infrastructure on a massive scale.

In the meantime, traditional property prices in Sydney won’t be coming down any time soon.

MOSMAN – 2088

Number of houses on the market this time last year – 64
Number of houses on the market last week – 54
Number of houses on the market this week – 59
Number of apartments on the market this time last year – 60
Number of apartments on the market last week – 40
Number of apartments on the market this week – 47

CREMORNE – 2090

Number of houses on the market this time last year – 10
Number of houses on the market last week – 8
Number of houses on the market this week – 9
Number of apartments on the market this time last year – 22
Number of apartments on the market last week – 17
Number of apartments on the market this week – 16

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 10
Number of houses on the market last week – 10
Number of houses on the market this week – 9
Number of apartments on the market this time last year – 33
Number of apartments on the market last week – 25
Number of apartments on the market this week – 24

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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Source: pricefinder

rsimeon

It’s time for some very BIG property decisions


Kudos to the NSW government by becoming the first elected government in NSW to achieve a cash positive financial position – quite amazing that never before has this been achieved. The words ‘debt free’ don’t exactly go hand in hand with governments these days as we have become too accustomed to the monetary phrases of debt and deficits.

NSW Treasurer Gladys Berejiklian confirmed this week that NSW would post a $4.7 billion surplus in 2015/16 which just so happens to be $1.3 billion more than predicted in the June budget just four months ago. Still a massive turnaround from 30 June 2015 when net debt sat at $5.5 billion to a $57 million surplus as at 30 June 2016.

No doubt reassuring for the government who pledged a further $20 billion in infrastructure at the 2015 election, which includes a second harbour crossing. Now to a big property decision which is the elephant in the room in the form of stamp duty. Sydney’s new market which is the tens of thousands of new apartments under construction which have handsomely rewarded the government in the form of stamp duty. There would be significant question marks over foreign purchasers completing once these projects are finished.

It is worth noting that the treasurer is expecting stamp duty growth of 4.4 per cent per annum over the next four years whilst also predicting stamp duty revenue would hit $8.9 billion in 2016/17. As to that prediction I offer just two words – Good Luck!

palm_beach-sydney-aerial-photography

SYDNEY AERIAL PHOTOGRAPHY

Investors would be no doubt observing the recent commentary by the Reserve Bank of Australia (RBA) who noted “growth in rents is the slowest for decades”. So one then can only presume that the bait rent projections provided to the tens of thousands of off – the – plan buyers have next to no chance of coming to fruition? Furthermore, these rental projections play an intricate role in determining the amount of borrowings leveraged against each investor property.

According to realestate.com.au figures numbers of Chinese buyers looking to buy in Sydney have fallen by 9 per cent over the past twelve months. Many (including myself) expect these numbers to keep falling as a direct result of the NSW government’s recently introduced Foreign Investor Surcharge.

NSW Treasurer Gladys Berejiklian has announced that the June 21 NSW Budget will include the introduction of foreign investor surcharges on stamp duty and land tax on residential real estate.
The measures are expected to raise more than $1 billion over four years and will fund essential services across NSW. “These new measures will ensure NSW’s property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future,” Ms Berejiklian said.

This initiative has not gone down well with foreign investors. One only has to look at what happened to the foreign buyer tax in Vancouver which saw a very hot market transition almost immediately to a frozen market overnight once the 15 per cent tax was announced. For example, property prices collapsed 33 per cent in September from a year ago.

Now for some other very big questions that are being asked and answered within the real estate industry currently that do require special consideration.

When you look back at the history of real estate in Australia a distinct observation has been the popularity of real estate franchises. In 2016 we have seen the lowest volumes of stock levels ever seen before, for example this week in Mosman there are 32 houses for sale, in 2015 there were 49, in 2014 82 and in 2013 there were 119 houses on the market that week.

Now a franchise office that operates within the one allocated postcode simply can no longer survive on these reduced stock levels as salespeople will look for work with businesses that offer unlimited or much larger farming areas. There has also been heated discussions about franchise fees which are performance based much like income tax. The more you sell the larger the franchise fee – in 1994 we went over to a flat fee so many franchise offices are demanding that fee structure.

Somewhat ironic that stamp duty was a blessing in disguise for the NSW government’s finances yet it is the reason why fewer homes are now on the market as owners have opted to invest the amounts they would pay in stamp duty into renovations. This also means that the selling cycle changes will blow out significantly as home owners will stay much longer in the principal place of residence.

So from Christmas on you can expect many franchise offices to rebrand (and no I’m not talking about my office) simply because we are seeing fewer and fewer properties on the market. Change is inevitable although it takes a long, long time to see tax changes from elected governments. Ping: The Henry Tax Review and NSW stamp duty to name just two examples.

In the meantime, businesses will re-calibrate and make the economic decisions required to stay afloat and progress down that path of longevity. I predict major changes to the Australian real estate franchise landscape from 2017.

MOSMAN – 2088

Number of houses on the market this time last year – 49
Number of houses on the market last week – 32
Number of houses on the market this week – 34
Number of apartments on the market this time last year – 60
Number of apartments on the market last week – 32
Number of apartments on the market this week – 34

CREMORNE – 2090

Number of houses on the market this time last year – 13
Number of houses on the market last week – 15
Number of houses on the market this week – 13
Number of apartments on the market this time last year – 23
Number of apartments on the market last week – 15
Number of apartments on the market this week – 13

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 9
Number of houses on the market last week – 5
Number of houses on the market this week – 7
Number of apartments on the market this time last year – 23
Number of apartments on the market last week – 22
Number of apartments on the market this week – 22

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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Source: pricefinder

rsimeon

You want an Inquiry? Have one on Australian real estate

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Forget about a royal commission into our banks – what Australia really needs is a full and transparent inquiry into the Australian property markets. For example, Australia’s population currently sits at 24 million people. By 2026, our single households are projected to increase by a staggering 38.7 per cent. Just imagine the terms of reference?

Why is Sydney in a pattern where presently we see the lowest amount of homes (established) on the market? Why are we seeing the lowest ever number of first home buyers recorded sales? What exactly is the impact of negative gearing on Australian residential real estate? What is the precise impact of state taxes on our property markets? Why does the federal government offer 100 per cent of off – the – plan sales to foreign buyers? What transport infrastructure needs to be implemented to meet this growing demand? What needs to be implemented to ensure we have healthy cities?

There would be thousands of questions and they need answers although the only problem as I see it is that such an inquiry would deliver scathing findings on federal and state and territory governments. A recent planning report found that within the Greater Sydney basin just 340,000 potential housing lots remain.

This is the conversation that has been so overdue, although for inexplicable reasons nobody wants to start this conversation. How many decades behind are the states and territories from delivering a transport infrastructure to meet and satisfy taxpayer expectations?

sydney_early_sydney_aerial_photography

SYDNEY AERIAL PHOTOGRAPHY

Brisbane, Sydney and Melbourne remain the hotspots for new arrivals capturing a record 85 per cent of Australia’s total population growth. Sydney at present is also setting the wrong records with workers in the age bracket of 20 to 29 years of age packing up and leaving. Earlier this year the population for NSW soared past 7.7 million and we don’t have to guess where that vast majority want to live.

Why does Australia not have a single major transport infrastructure model in place for discussion? Why has net overseas immigration been allowed to accelerate into New South Wales and Victoria only? Why is Australia’s housing affordability now at crisis levels? Why has the average price of a Sydney home jumped a staggering 44 per cent since 2013 – when real wages have only managed a 2 per cent increase?

Why have foreign student numbers increased by a record 11 per cent in the year to July 2016? Why are foreign students allowed to purchase real estate at no price restrictions whilst studying? Why has the Australian federal government never policed the sales of these properties when the students complete their studies?

The list just goes on and on simply because in federal government we don’t even have an appointed federal housing minister. I know it, you know it, so why don’t our elected politicians want to know anything about these problems?

The only ever time that we collectively hear about such problems is in the run – up to a federal election. So why do we then hear nothing until the next federal election?

Why have the baby – boomers decided to stay put in their principal place of residence? When and what caused these changes in homeowner behavior?

What is the best housing practice – a principal place of residence that allows for tax deductions on all outgoings and a tax charged on the sale? Or a principal place of residence that attracts no tax deductions and no tax payable on the sale?

Why do Australian property prices always figure as up there with the most expensive in the world?

Why is the federal government and the states and territories so intent on driving new red tape initiatives through businesses? Yet have absolutely no accountability for the way they manage their own economies of scale?

There has never been a better time to hold such an inquiry – the only problem is that it has never before happened simply because these questions fall on deaf ears.

MOSMAN – 2088

Number of houses on the market this time last year – 48
Number of houses on the market last week – 47
Number of houses on the market this week – 32
Number of apartments on the market this time last year – 60
Number of apartments on the market last week – 32
Number of apartments on the market this week – 32

CREMORNE – 2090

Number of houses on the market this time last year – 7
Number of houses on the market last week – 7
Number of houses on the market this week – 8
Number of apartments on the market this time last year – 23
Number of apartments on the market last week – 15
Number of apartments on the market this week – 15

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 9
Number of houses on the market last week – 7
Number of houses on the market this week – 5
Number of apartments on the market this time last year – 21
Number of apartments on the market last week – 22
Number of apartments on the market this week – 22

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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Source: pricefinder

rsimeon

Some markets are correcting – other markets booming

As many predicted some time ago, the newly created investment market, where we have seen approvals for high-rise apartments hit levels never seen before, will now see a massive correction. In December 2008, the rules for off-the-plan apartments had a significant change when the ratio for foreign investors was moved from 50 per cent to 100 per cent. Developers could not believe their luck, as this decision created new rivers of gold, albeit an eight year run.

The governments then got involved by increasing stamp duty for foreign buyers, the Chinese government shut down the facilities permitting vast amounts of monies to be withdrawn from China and the major Australian banks stopped lending to foreign buyers. When combined, this has created the perfect property storm although the gamble of relying on foreign buyers acquiring the majority of these new apartments was always fraught with danger.

What we will see in 2017 is thousands and thousands of apartments off-the-plan coming back onto the market and the big question that remains unanswered is; what will be the percentage drop from the original contract prices? It has already been mentioned that analysis of every new development in Australia that settlement defaults will be between $1 billion and $1.5 billion every month over the next twelve month window.

thornton_penrith_sydney_aerial_photography

SYDNEY AERIAL PHOTOGRAPHY

A saving grace will be that the existing housing market will continue to go on-wards and upwards simply because fewer and fewer households are selling due to the exorbitant selling costs – namely stamp duty. If you look at the approximate 700 hundred suburbs that make up Sydney – it would be fair to suggest that at least 70 per cent of these suburbs are not creating any new houses for consumption. The NSW government has gone down the track of high density with next to no new infrastructure to absorb this construction so in many areas our roads will become gridlocked.

At some stage an independent body will commission a report to look at all the bushland within Sydney to then ascertain how many tens of thousands of residential building blocks can be created to ease the demand of all those wanting to live in Sydney. We need to bear in mind that the population within Sydney will hit 5 million in a matter of months and our population growth is years ahead of initial projections. Building tens of thousands of apartments does not in any way, shape or form ease the demand for established houses.

Of course, there is always a few who throw in that recession word and don’t forget that a few some years ago suggested that 2016 would see Australia fall into a long overdue recession. They would have been somewhat aggrieved when last quarter Australia posted 25 years of economic growth.

Many property forecasters were quick to say, at or about this time last year, that the Sydney property market was easing (which it did) and that this was the start of a price correction. As a few of us pointed out this was more the case of buyer fatigue (which it was) with 2016 posting greater price growth than 2015. Whichever way you want to look at this the heart of the problem is that demand for established housing far exceeds supply.

A significant correction in the new apartment market will have next to no effect on the established housing markets because they are two different buyers. Secondly, the vast majority of the new apartment investor markets are foreign buyers so if they default there is absolutely no knock on effect into the established housing markets.

If anything, we will see the Australian buyers cherry-pick this market, given the cash rate will go lower and then, in turn, will chase returns. The family home is at record highs so via negative gearing households will be mopping up the newly created apartment markets at much lower entry levels with so many apartments expected to default.

Some will be saying what could possibly go wrong following Australia’s unprecedented 25 years of economic growth? Wages have fallen from 3.5 per cent growth in 2012 to 2 per cent in 2016. A positive sign is that population growth in 2012 was 1.8 per cent and in 2016 it dropped to 1.3 per cent. Household income growth and consumer spending are in decline so those economy drivers will be closely monitored in the September quarter of 2016.

Whilst some are saying retirees are doing it tough, we need to keep in mind that their homes are at presently at the highest value ever so many are taking advantage of that by taking out reverse mortgages – otherwise known as spending the kid’s inheritance (SKI).

The major problem with Sydney house prices is that planning by state governments, at best, has been appalling. Even today there is no plan – rather, approve thousands and thousands of new apartments, sell them offshore and bank the stamp duty and land taxes.

So next time you are caught in traffic, just think, how is Sydney going to cope with all these thousands of new apartments under construction?

MOSMAN – 2088

    • Number of houses on the market this time last year – 52
    • Number of houses on the market last week – 52
    • Number of houses on the market this week – 47
    • Number of apartments on the market this time last year – 51
    • Number of apartments on the market last week – 34
    • Number of apartments on the market this week – 32

CREMORNE – 2090

    • Number of houses on the market this time last year – 7
    • Number of houses on the market last week – 9
    • Number of houses on the market this week – 9
    • Number of apartments on the market this time last year – 22
    • Number of apartments on the market last week – 12
    • Number of apartments on the market this week – 14

NEUTRAL BAY – 2089

    • Number of houses on the market this time last year – 3
    • Number of houses on the market last week – 11
    • Number of houses on the market this week – 4
    • Number of apartments on the market this time last year – 29
    • Number of apartments on the market last week – 21
    • Number of apartments on the market this week – 19

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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Source: pricefinder

rsimeon

Will the RBA governor go out with a bang?

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That’s the big question that many are thinking with his current running commentaries on the Australian economy – but will he tee – off on exactly what are the major problems facing our economy? I hope he does with his ten-year term expiring on 17 September having taken over as the Head Teller back on September 18, 2006. Interesting to note that over that time he has left the cash rate alone on sixty-seven (67) occasions, cut the cash rate on twelve (12) occasions and increased the cash rate on six (6) occasions. Surprising how time flies when you’re having fun as the last cash rate increase was back on November 3, 2011 so in essence he has spent his last term as Head Teller cutting the cash rate.

One really could not blame him for cutting the cash rate this month to a record low of 1.50 per cent – “whilst prospects for growth were positive, there was room for stronger growth, which could be assisted by lower interest rates.” It is irresponsible to use last week’s record Sydney clearance rates as a consequence for the latest rate cut as this was always going to happen and I will get to that a little later. A big problem is the Wage Price Index where seasonally adjusted, private sector wages grew 0.5 per cent and public sector wages grew 0.6 per cent in the June quarter 2016. On an annual basis that equates to private sector wages growing 2.0 per cent and public sector wages growing 2.4 per cent annually. Trying to create and then increase consumption has been the biggest challenge for central banks globally. On the other hand, controlling property prices can be achieved although this task is beyond the control of the Reserve Bank of Australia (RBA) which may explain why Glenn Stevens appears an angry man.

HMASsydney

BUY PRINT

As I wrote last week, Blame the Governments for high property prices maybe somebody might like to explain why the latest Australia Bureau of Statistics survey reveals that last year 93,000 Australians moved overseas in the last twelve months, which is four times the average. Fifty per cent were in the 25 to 35-year-old category which is a telling statistic. According to the latest Household, Income and Labour Dynamics in Australia (HILDA) survey that was recently released by the Melbourne Institute, home ownership rates among those aged 25 to 34 years fell from 39 per cent in 2002 to 29 per cent in 2014. Home values are increasing and banking regulations are demanding twenty (20) per cent deposits which highlights the dilemma facing young Australians. The writings have been on the wall now for decades and sad to say our elected politicians have done nothing to address these problems.

Housing Affordability 1

The March quarter for 2016, the Sydney median house price dropped 1.5 per cent to $995,804, while the Sydney apartment median price fell 0.7 per cent to $656,166. I would expect that both reversed that trend in the June quarter by heading back to positive territory. Over the past five years house prices have jumped almost fifty (50) per cent.

In search of answers I found this remarkable report by Professor Frank Stilwell, School of Economics and Political Science, University of Sydney. Submissions to the Productivity Commission Inquiry into First Home Ownership. This report looks at Sydney and NSW country property prices from 1986 to 2003 where property prices then rose nearly fivefold in Sydney and threefold for the rest of NSW.

Please make a point of reading the Executive Summary as this is a mirror image of what then happened over the next decade from 2006 to 2016.

“Average wages have not increased in line with inflation in land and housing. Consequently, housing affordability has declined sharply: a typical house in Sydney cost just under 4 years of average earnings in 1986, while in 2003 it cost over 12 years’ worth of earnings.”

“It is only by addressing these issues of tax reform that the pressures causing a crisis of affordability for many aspiring first home buyers can be resolved.” Yes, politicians and tax reform – as we saw at the last federal election they are petrified of those two words – tax reform.

NSW Listings

I’ve lost count how many times I have written about why Sydney property markets are recording declines in stock numbers which drives prices higher. Back to the Executive Summary for an explanation.

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“Stamp duty has become a fundamentally important source of State revenue and could not be reduced unless an alternative revenue source was found. That alternative could be land tax. Although less in the political spotlight, land taxation and interaction with the housing market could hold an important key to resolving the housing affordability crisis.”

This submission was prepared thirteen years ago and nothing has been done although Sydney house prices since that submission would have increased on average another three, four and five times depending on the area.

Little wonder first home buyers are leaving and no longer refer to Australia as being the “lucky country.” More importantly when are our politicians going to listen and act – or possibly understanding what needs to be done is too hard for them to fathom.

If parliamentary pensions could be docked for inactivity they would all be listening and acting. When Glenn Stevens delivers his final speech he must shoot from the hip and take no prisoners.

MOSMAN – 2088

Number of houses on the market this time last year – 53

Number of houses on the market last week – 51

Number of houses on the market this week – 52

Number of apartments on the market this time last year – 41

Number of apartments on the market last week – 44

Number of apartments on the market this week – 45

CREMORNE – 2090

Number of houses on the market this time last year – 2

Number of houses on the market last week – 10

Number of houses on the market this week – 10

Number of apartments on the market this time last year – 15

Number of apartments on the market last week – 16

Number of apartments on the market this week – 14

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 4

Number of houses on the market last week – 8

Number of houses on the market this week – 10

Number of apartments on the market this time last year – 25

Number of apartments on the market last week – 20

Number of apartments on the market this week – 21

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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Source: pricefinder

rsimeon

Blame our Governments for high property prices

With another federal election now passed all the political rhetoric about infrastructure will be buried until the next election in three years’ time. Sadly, in Australia our elected governments are only interested in the one thing – taxes.

Since the early 1980’s politicians have conveniently discussed the construction of a high – speed rail link along the east coast where typically nothing has happened, although you can be guaranteed that it will be mentioned again prior to the next federal election. In 2013 the High Speed Rail Study Phase 2 Report estimated that a conventional High Speed Rail Express trip from Sydney to Melbourne would take 2 hours and 44 minutes (about the same time it takes to check into an airport). Sydney to Brisbane would take 2 hours and 37 minutes. Again these reports end up in the too hard basket.

Sydney is now recording the highest prices ever recorded with no signs of easing as the official cash rate keeps going down and this will be the case for easily the next decade. What is urgently required is a high – speed rail link from Sydney to Newcastle and Sydney to the Southern Highlands then to Wollongong. This is the only feasible way that property prices will ease given it’s now urgently required that these three cities are inter – connected.

CentralSYDNEY AERIAL PHOTOGRAPHY

In 2013 CoreLogic reported that the number of Australian suburbs with a median home value in excess of one million dollars was 264. Their latest data now indicates that this has now jumped to 570.
To provide a frightening case study in June 1992 I sold a home in Ourimbah Road Mosman for $320,000. Every two years I provide the owners with an updated weekly rental and value as the subject property is in a Superannuation Fund. In 2002, our estimated value was $775,000 to $800,00 with a rental of $600.00 to $700.00 per week. In 2006, our estimated value was $1,150,000 to $1,250,000 and the rental $900.00 to $925.00 per week. In 2014, our estimated value was $1,550,000 to $1,600,000 and the rental $1,500.00 to $1,600.00 per week. This week I assessed the property for 2016, our estimated value was $2,300,000 to $2,500,000 and the weekly rental was now $1,800.00 to $2,000.00 per week.

Little wonder the retiring Reserve Bank of Australia governor Glenn Stevens had plenty to say this week on the Australian economy in his farewell speech. Ultimately, low interest rates could only do their job when “someone somewhere has both the balance sheet capacity and the willingness to take on more debt and spend.” Obviously aimed at the federal government to start building better infrastructure in Australia. Private sector debt in Australia for companies equates to 125 per cent of GDP where the government’s debt sits at 40 per cent of GDP.

It’s quite simple that the Sydney property market needs to expand to Newcastle, Hunter Valley, Southern Highlands and Wollongong. Our federal government is spending money on public servants and social services with very little going into new infrastructure which would then drive development, employment and ease the ever growing property prices. Sydney in this instance would be the perfect test case to identify that if you get all the market machinations right you can ease property prices.

The only problem with this is that nobody wants to push and prod the elected governments of the day into direct action. It’s high time politicians became accountable instead of prime ministers claiming the mantle as being the infrastructure prime minister. In a report on High Speed Rail I read: “fast trains to connect the eastern seaboard cities of Melbourne, Canberra, Sydney and Brisbane are feasible, practical and profitable today. The project can be done for about $30 billion, about a quarter of the cost estimated on old paradigms in 2013. And it can be done in less than seven years, not the 30 to 35 years previously suggested.”

“The trains could be the 21st century equivalent of the Snowy Mountains Scheme, and would need little or no direct government funding.”

So one needs to ask the question – why then is nothing happening? Unfortunately, the answer may well be that Australian politicians have no train of thought.

MOSMAN – 2088

Number of houses on the market this time last year – 47

Number of houses on the market last week – 42

Number of houses on the market this week – 51

Number of apartments on the market this time last year – 41

Number of apartments on the market last week – 41

Number of apartments on the market this week – 44

CREMORNE – 2090

Number of houses on the market this time last year – 2

Number of houses on the market last week – 7

Number of houses on the market this week – 10

Number of apartments on the market this time last year – 18

Number of apartments on the market last week – 17

Number of apartments on the market this week – 16

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 2

Number of houses on the market last week – 7

Number of houses on the market this week – 8

Number of apartments on the market this time last year – 25

Number of apartments on the market last week – 20

Number of apartments on the market this week – 20

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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Source: APM Price

rsimeon

Time for Governments to Roll Out Incentives

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I was reading a piece this week at MacroBusiness where it was pointed out that it has been 24 years since we went through the global recession. Then 8 years later we went into the Tech Wreck, then 8 years after that we hit the Global Financial Crisis (GFC) and now 8 years on we have hit Brexit – or as Australians will soon call it Bex – it (as it will probably cause some major headaches.)

Whilst Australia continues to post some very positive data, we need to pay closer attention to the data post June 30 as we now enter a period of uncertainty. Having said that, this should also be viewed as an exciting time as it is now clear that every eight years businesses need to adapt and recalibrate in order to survive.

One statistic we can’t hide from when the GFC hit in 2007 is that debt has grown much faster than GDP in every country. Some may say that this is an economic consequence as globally cash rates have been crashing down where in Australia we sit at a record low 1.75 per cent. Furthermore, many commentators are now stating that the cash rate in Australia will come down even more as a direct result of Brexit.

Whenever an economy reaches that financial standoff, and investors hate uncertainty, we need to be overly protective of investors as they are a particular and crucial economy driver. So there needs to be closer scrutiny as to why the ALP want to change the Negative Gearing goal posts, which will definitely drive up rents, and why the NSW Government wants to drive foreign investors from our property markets with their 4 per cent surcharge plus a 0.75 per cent land tax surcharge on residential real estate only.

Nth-Narrabeen-Rock-Baths

Makes one seriously question exactly where governments expect the new buyers to evolve from? The real estate industry is hearing foreign investors are moving away from our markets in droves. Once again we need to be mindful of Brexit and life and results after June 30. Australia is now all but guaranteed that lending will now tighten, which is a good thing, however if we cast our minds back to the GFC we kept hearing two words – “green shoots”.

The sad part about emerging “green shoots” is that governments immediately see them as a new form of taxation – this in turn will bring about market stagnation which is the last thing our economy needs.

Having said that, existing property markets, otherwise known as the established household markets, are now 60 per cent down when compared to property listings two years ago. This is good news for established houses – we are now seeing record low listings which only strengthens the markets. For example, when I go back five years for Mosman houses you will see the pattern that has emerged.

  • 30 June 2011 – 97 houses on the market in Mosman
  • 30 June 2012 – 80 houses on the market in Mosman
  • 30 June 2013 – 68 houses on the market in Mosman
  • 30 June 2014 – 63 houses on the market in Mosman
  • 30 June 2015 – 43 houses on the market in Mosman
  • 30 June 2016 – 42 houses on the market in Mosman

What this tells us, and we should point out that these results are reflective across Sydney, is that since the GFC homeowners are taking advantage of record low cash rates by paying down debt faster. On the flip side they are renovating over selling as they see no economies of scale in donating a few hundred thousand dollars to our NSW Government in the form of Stamp Duty. In other words, the Stamp Duty component is then redirected to home renovations.

The NSW Government will recognise very quickly that it has a cash flow problem when the effect of the new surcharge stamp duty and the already declining established markets see the property market transactions coming to an abrupt halt. Don’t be surprised to see a total back-flip with the foreign buyer surcharges but not the land tax.

As for the established household markets the NSW Government should look at the amount of stamp duty previously paid on the past acquisition and give that household a 33 per cent deduction from the next stamp duty so long as that household has been in that property between five and ten years.

In business you offer incentives – it’s a shame governments struggle with the concept of that word.

MOSMAN – 2088

Number of houses on the market this time last year – 36

Number of houses on the market last week – 48

Number of houses on the market this week – 42

Number of apartments on the market this time last year – 33

Number of apartments on the market last week – 41

Number of apartments on the market this week – 33

CREMORNE – 2090

Number of houses on the market this time last year – 3

Number of houses on the market last week – 11

Number of houses on the market this week – 7

Number of apartments on the market this time last year – 16

Number of apartments on the market last week – 18

Number of apartments on the market this week – 17

NEUTRAL BAY – 2089

Number of houses on the market this time last year – 2

Number of houses on the market last week – 10

Number of houses on the market this week – 10

Number of apartments on the market this time last year – 39

Number of apartments on the market last week – 22

Number of apartments on the market this week – 23

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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Source: APM Price

rsimeon

Home truths needed on housing debate

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Enter housing price growth into the topic although make sure if you want to be right that you always select the plural. For example, those in the real estate industry always focus on suburban or post code housing price growth. What we are reading now are housing price growth predictions of significant drops for Sydney and Melbourne which just so happen to be Australia’s largest and most active markets.

Allow me to put this into perspective given most have failed miserably in educating readers as to what exactly this means. Let’s say for the sake of this argument you own a house in Mosman – in six months’ time the value of your home will in all probability have gone up due to record low stock levels. However, if you had recently acquired an investment off – the – plan apartment, in six months’ time that would have definitely dropped well below the purchase price.

Recently we learnt that the Australian banks are no longer lending to foreign buyers and many areas across Sydney have now been black listed from obtaining any loans due to a significant oversupply of property. We need to bear in mind that whenever we see major price adjustments to real estate this can only happen when you have an acute oversupply.

The final nail in the housing investment market was delivered this week in the NSW budget when stamp duty payable by foreign buyers would be hit with a new four (4) per cent surcharge. On top of that they will also be hit with an additional 0.75 per cent land tax surcharge on residential real estate. If ever these tens of thousands of foreign buyers needed a reason to walk away from their deposits they certainly have one now.

BareIslandSYDNEY AERIAL PHOTOGRAPHY

To add further confusion to this potential housing catastrophe nobody can answer does this surcharge apply to those investors who have already paid their deposit and are yet to pay stamp duty? If history is anything to go by then you would say confidently that it does. The major lenders would be hoping that it does as they would be hoping that many of their new lending clients walk away from their deposits as that significantly reduces their exposure. Although this can be a double whammy if they are also funding the developer – so this is the double – edged property sword.

We should also clean up some incorrect speculation from commentators that this new surcharge will have a significant effect on home prices too. Well it won’t because these foreign buyers can only buy off – the – plan so it won’t play any part in the established housing markets.

One would have to say that the new surcharges will be a total failure although it is disappointing that the NSW government did absolutely no due diligence with what the long term effect would be on the housing markets other than to drive the investment real estate markets values down. The tax that should have been brought down was a tax against those investors who land bank because they would make plenty from that given a large percentage of foreign buyers leave these properties vacant.

The NSW government would be very concerned that stamp duty received from the established property markets is in significant decline although there is no mention of that as all the revenue has arrived thanks to a robust investment market, hence the new surcharge. Should the new surcharge tax turn out to be a dismal failure which I believe it will then the NSW government will be forced into hopefully a complete review of property taxes.

Everyone in the real estate industry knows full well that the reason for record low stock levels is entirely due to home owners baulking at paying exhorbitant stamp duty, so instead they are renovating. One day the NSW government will explore a broad based land tax paid annually by home owners as a logical replacement to stamp duty with Australian residents receiving a discounted rate.

One would think by now that policies on the run are usually always met with disaster where the last example was the failed and now abolished mining tax.

 

 

MOSMAN – 2088

 

Number of houses on the market this time last year – 55

 

Number of houses on the market last week – 51

 

Number of houses on the market this week – 48

 

Number of apartments on the market this time last year – 66

 

Number of apartments on the market last week – 41

 

Number of apartments on the market this week – 41

CREMORNE – 2090

 

Number of houses on the market this time last year – 13

 

Number of houses on the market last week – 10

 

Number of houses on the market this week – 13

 

Number of apartments on the market this time last year – 11

 

Number of apartments on the market last week – 18

 

Number of apartments on the market this week – 18

NEUTRAL BAY – 2089

 

Number of houses on the market this time last year – 3

 

Number of houses on the market last week – 8

 

Number of houses on the market this week – 7

 

Number of apartments on the market this time last year – 29

 

Number of apartments on the market last week – 19

 

Number of apartments on the market this week – 19

 

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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Source: APM Price