Consumers frustrated by the longest election period ever seen: Robert Simeon

Historically real estate markets never over–perform during elections so it comes as no surprise consumers are confused and frustrated as Australia endures the longest election period ever seen before.

Given September 14 has now been ruled out (following its February announcement) it is anyone’s guess when Australia is headed to the polling booths.

This was confirmed by the Melbourne Institute and Westpac this week when they announced consumer sentiment had edged down by 0.05 % in July from June, when it rose 4.7%.

There is a very strong and loud argument that the upcoming election must be held sooner rather than later, given such delays historically impact consumer sentiment and furthermore stall the economy from natural growth.

The unemployment figures were released this week to reveal that the rate rose to 5.7 % from an upwardly revised 5.6% in May which is the highest level since September 2009. The true unemployment figure is actually 13% which was also revealed by the Australian Bureau of Statistics (ABS) this week.

This new analysis combines the official unemployment rate with “discouraged” jobseekers, the “underemployed” and those who want to start work within a month, but cannot begin immediately. This new analysis is much more accurate than counting people as employed should they work more than one hour a week.

The ABS report shows the labour under – utilisation rate fell steadily between 2001 and 2008 but “increased sharply” when the global financial crisis hit in 2009, from 10.6 % to 14.3%.

So it would be fair to assume that in 2013/14 the Australian economy won’t be setting any growth records given it’s becoming very clear that the mining industry has peaked and our economy adjusts. The Fairfax Media half–year economic survey identified that the Australian economy is unlikely to reach its official growth forecasts. The survey was compiled from the views of 27 economists.

Here are the findings:

• The panel is far less optimistic about export prices. While Treasury predicts that the terms of trade – the ratio of export prices to import prices – will largely hold its ground in the next 12 months, declining only 0.8 per cent.. The panel predicts it will fall by 4.9%, implying further pressure on Australia’s high – cost mines.

• The budget assumed that the peak of the mining boom is still ahead, tipping business investment to rise a further 4.5% in 2013-14, generating an extra $12.5 billion of output. Since then, the March – quarter national accounts have shown business investment peaked last September, making the panel far more pessimistic On average, the panel forecast business investment to decline by 0.6 %in 2013 – 14, cutting $1.5 billion off the nation’s output. After a decade in which business investment grew on average by more than 10% a year, that would be a dramatic change, especially in the resource states.

• Treasury budget forecasts assumed that lower interest rates would reignite consumer spending, which it predicted would grow by 3% in 2013 – 14. Again, recent data suggests the ‘green shoots' celebrated in January and February have withered since. The panel is less sanguine than the budget, on average tipping consumers to buy only 2.4% more in 2013 – 14 than they did last year.

Interesting to see what happened to Mosman apartments for the period 1 January 2013 to 30 June 2013 then compare the results to the same period in 2012. Only a minimal change which confirms our previous predictions that prices overall remain in a holding pattern.

MOSMAN APARTMENT SALES TO 30 JUNE 2013

• Total Number of Sales – 191

• Total Value Sold – $181,629,964*

• Median Price – $722,500*

• Average Price – $950,942*

• Auction Clearance Rate – 66%

• Adjusted Clearance Rate – 58%

MOSMAN APARTMENT SALES TO 30 JUNE 2012

• Total Number of Sales – 216

• Total Value Sold – $186,321,820

• Median Price – $661,500

• Average Price – $862,601

• Auction Clearance Rate – 37%

• Adjusted Clearance Rate – 26%

*Denotes this figure will increase as Confidential Prices are recorded.

Who would have thought that Mosman houses would for the very first time since we started recording this data drop below 60 houses on the market? Again, (I keep saying this) it will be interesting to see how low this figure goes as we don’t anticipate to see increased stock levels until early – mid August.

Source: Australian Property Monitors

MOSMAN – 2088

• Number of houses on the market this time 2012 – 70
• 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 2012 – 83
• Number of apartments on the market last week – 54
• Number of apartments on the market this week – 54

CREMORNE – 2090

• Number of houses on the market this time 2012 – 9
• Number of houses on the market last week – 7
• Number of houses on the market this week – 7
• Number of apartments on the market this time 2012 – 18
• Number of apartments on the market last week – 14
• Number of apartments on the market this week – 15

Neutral Bay – 2089

• Number of houses on the market this time 2012 – 14
• Number of houses on the market last week – 9
• Number of houses on the market this week – 5
• Number of apartments on the market this time 2012 – 54
• Number of apartments on the market last week – 36
• Number of apartments on the market this week – 34

It’s that time of the year where I take a couple of week’s break so hopefully Steve and Richard will write the weekly editions in my absence. Hopefully, early next week we will roll out our latest media platform which has some amazing new technologies. I must admit one of the most exciting parts of running a big online platform is reinvesting into smarter and newer technologies.

After all – media platforms are all about pleasing and enticing the consumers.

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.