Economic curve balls point to incompetence: Robert Simeon

Robert SimeonDecember 7, 2020

Plenty of economic curve balls are being thrown about at the moment that point directly at incompetence – why are these blunders accepted as the norm?

The Grattan Institute’s assessment: Australia faces a decade of budget deficits with the annual total set to pass $60 billion in 2023 unless governments take tough action to “share the pain”.

In the past 11 years Australia has become one of the most expensive places to live in, costlier than New York, London, Frankfurt and Singapore on everything. The report compiled by Deutsche Bank found Australia is part of a global economy operating in a competitive world. High wages, high input costs including energy and rental costs, the inflation bogey and the tyranny of distance all contribute to the country’s lacklustre productivity and falling competitiveness. But it has reached a point where something has to give.

Deloitte Access Economics is forecasting growth to remain a bit above trend until 2015-16 before rising.

It forecasts: "Western Australia will be hit hardest, even in a benign scenario. In 2013/14 Queensland will replace it as Australia’s engine of growth and by 2015 – 16 it expects even Tasmania to be outgrowing WA. NSW and Victoria are forecast to continue growing about half a percentage point slower than the national growth rate. Job growth would also be subdued, with a net 40,000 manufacturing jobs to go in the next three years, but employment would remain about the same as older workers retire rather than joining the dole queues."

Hooray, we might lose the AAA “a surplus in 2013 – 14 is now impossible, as both political parties have acknowledged. In his sixth and final budget Wayne Swan will bring down a deficit of $10 – 15 billion, saying: “it’s not my fault – the terms of trade made me do it”. That, and too much spending. The budget is structural deficit because Treasury’s forecasts of growth have been out by about 1% a year for four years and the government has been spending to just under revenue forecasts, which have been wrong. On top of this we have seen public service employment outstripping the private sector which will change as the public service faces severe employment adjustments.

The United Kingdom just escaped its first “triple – dip” recession in modern history with its economy growing 0.3% last quarter – the UK is walking a dangerous economic tightrope.

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Solid start for house prices the Fairfax owned Australian Property Monitors said house prices in the southern capital grew 3.6% to $538,922 over the three months while Sydney median grew 1.6% to $673,681. Quite an amazing statistic given a majority of these sales are yet to settle so the sale price still remains confidential – a guesstimate?

Australian Property Monitors (APM) reporting of Mosman sales evidence is riddled with errors based on my analysis. For apartments it shows in the March quarter the highest sale was $5,275,000 although I can find absolutely no evidence of such a sale taking place. For houses in the same quarter they identified the highest sale as being $15,250,000 – which I later pointed out to them was actually $5,250,000. Look at how much this changes last week’s reported data.

MOSMAN HOUSE PRICES MARCH QUARTER 2013

Last week APM reported:

  • Total Sales: 51

  • Total Value: $143,151,500

  • Median Price: $2,250,000

  • Average Price: $2,806,892

One week later –

  • Total Sales: 54

  • Total Value: $135,019,000

  • Median Price: $2,162,500

  • Average Price: $2,500,352

That’s a massive discrepancy! Watch the apartment figures be revised downwards when I point out the highest apartment sale never existed – just as the highest house price did also.

Again the listings volumes are tracking to all time historic lows – I can’t ever before remember seeing such a pattern especially as we have an equally record low cash rate.

Source: Australian Property Monitors

MOSMAN – 2088

• Number of houses on the market this time 2012 – 106

• Number of houses on the market last week – 84

• Number of houses on the market this week – 76

• Number of apartments on the market this time 2012 – 100

• Number of apartments on the market last week – 73

• Number of apartments on the market this week – 75

• Number of houses on the market this time 2012 – 13

• Number of houses on the market last week – 11

• Number of houses on the market this week – 11

• Number of apartments on the market this time 2012 – 34

• Number of apartments on the market last week – 20

• Number of apartments on the market this week – 19

NEUTRAL BAY – 2089

• Number of houses on the market this time 2012 – 14

• Number of houses on the market last week – 6

• Number of houses on the market this week – 5

• Number of apartments on the market this time 2012 – 61

• Number of apartments on the market last week – 37

• Number of apartments on the market this week – 32

These statistics will be all the more fascinating over the coming winter months where I predict the number of houses and apartments in Mosman could see listing volumes fall below 50. Given the higher rental yields investors are not selling which is to be expected given the record high rental rates. Apartment buyers are paying well above what investors are prepared to pay which all but guarantees that rents will continue to increase.

As for what houses will do is anyone’s guess.

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.

 

 


Robert Simeon

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.

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