Politicians don't want to know anything about what's really happening in the property market: Robert Simeon
When one writes as often about the Sydney property market as we do (thirteen years now) – all I can say is that the current media reporting is simply lazy and embarrassing.
The Sydney real estate market consists of approximately 650 niche suburbs yet for some strange reason they are all thrown in together to represent what’s supposedly happening in the marketplace. I was watching a news bulletin this week which showed a map of where the bushfires were and this reminded me of the Sydney property market where some areas are literally on fire and others performing well, however not out of control.
Today, we have no instant data collection of exactly what or where the buyers for each transaction came from – investor, local or overseas, SMSF, first home buyer or home buyer. Politicians want to know nothing about the property markets preferring to lay the responsibilities solely at the hands of the Reserve Bank of Australia (RBA). The Abbott government considers it irrelevant that we don’t even have an appointed housing minister despite repeated warnings and historical data that shows whenever you have significant gains the following pain is even greater.
Last week the RBA wisely decided to leave the cash rate unchanged at 2.5%. Upon closer examination there were mixed messages on balance, although I see the main debate as strong dollar v bubble risk although for mine the most poignant was Alan Kohler’s RBA critique in Business Spectator – the elephant of scandal in the monetary policy room.
Shadow Board says stomp on housing – “The RBA should consider signalling that its next move will be to raise official interest rates amid fears loose monetary policy might fuel a house price bubble, according to a ‘shadow board’ of prominent economists. Warwick McKibbin believes that capital is being misallocated ‘’across the economy” and that: “To avoid the US experience during 2001 to 2004, when rates were too low for too long, a move to normal interest rates would be advisable.”
There is a very good reason as to why; our markets remain in flat line mode (excluding apartments) and the reason? Look no further than unemployment now 10.4% in September (up 0.3% in a month) and up 4.7% since November 2007 – the term of the ALP government.
In September 2013 an estimated 1.3 million Australians (10.4% of the workforce) were unemployed. This is up 46,000 (0.3%) from last month. The Australian workforce was 12,467,000 (up 90,000) comprising 7,413,000 full time workers (up 71,000) and 1,297,000 looking for work (up 46,000) according to Roy Morgan employment estimates. These figures do not include people who have dropped out of the workforce and given up looking. In my opinion this is the most accurate unemployment model as the Australian Bureau of Statistics’ measure is that if you work one hour a week you are considered to be in full employment.
Mosman has approximately 4,900 houses and the greater percentages are connected to the banking industry where the greater percentage of redundancies occurred. It will take time for households to recover which explains why we have and are seeing so few houses on the market and definitely no signs of a boom.
New listings to the market this week went backwards when compared to the previous week although there was a strong week of Mosman sales. For the first time since we have been recording data Mosman apartments fell below 50 to sit at 48. It was December 6 in 2012 when they were last in triple figures where they sat at 100.If Australia did have an appointed housing minister we could bring to his/her attention that Australia urgently needs to be building more apartments and houses. It is abundantly clear (to those interested anyway) that Australia has failed to keep up with population growth.
Since 2000, state and federal governments have failed miserably to bother to understand this portfolio where we see today the NBN Co taking up the vast majority of the debate. Somewhat strange that there appears little to no concern about what exactly is happening inside the home.
Of course governments prefer to rely on Census data which happens every five years with the next data collection in 2016. The last Census in 2011 revealed Australia had a population of 21,507,717 which represented a +8.3% increase from the 2006 Census.
Yet our elected politicians prefer to say – move on, nothing happening here! Oh dear – if ever there was a more crucial time to gather and understand housing data there would be no better time. A housing minister would be an obvious start.
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.