Property markets need more truth, less dare: Robert Simeon

Some of you may remember a television advertisement that appeared many years ago that went like this – “So you think you’re a good driver? Try this quick quiz.”

In many ways this applies to the real estate industry and what some of us apply to working out just where our markets are headed. Just like a motor vehicle we constantly check the fuel gauge to see how much fuel is in the tank.

You can’t rely on many of the commentators given at best their analysis is weak and lacks clarity and confirmation, given a large proportion is at best guess work. So how do some real estate agents try to better understand how and where the market is headed? Simply we go straight to a major information data source that being the dominant home loan companies who finance the property markets.

This week, I spoke with Alex Nochar who is Managing Director of Shore Financial who are one of the biggest lenders in our market demographic. First question – how many millions of dollars of housing loans do you presently have on your books that are pre – approved and actively looking to buy? The answer just over $270 million. Second question – what is the pre – approved value for Mosman and the adjoining areas? That number is just over $80 million.

That does not include the many applications that are awaiting approval and being processed although what we do take from this is that this is just one individual lender and does not include the big banks and or private banks. We will be attempting in coming weeks to find out just how many millions of dollars there are in pre – approved loans for Mosman real estate.

This tells us that there is still plenty of growth in our markets although it is quite surprising that one never hears of this method of better understanding our property markets. Can you imagine what the figure would be for the total Sydney area and how interesting this would be if the total numbers for each real estate demographic market were published on a weekly basis?

There is no clear patterns emerging across Sydney given some are experiencing strong stock levels and many others weak stock levels. For example, over the last four years we are seeing housing stock numbers declining in Mosman. This week there are 56 houses on the market, this time last years there were 65 houses on the market, the same week in 2013 there were 77 houses on the market and the same week in 2012 there were 120 houses on the market. In 2012 Mosman recorded 33 weeks with more than one hundred houses on the market. In 2015 it is looking like we won’t crack one hundred houses on the market once – the highest number this year so far has been 84 back in March.

With interest we should be watching the stock market in China which has lost approximately 40 per cent in the last three months, where when we see stock market corrections money is then diverted into real estate. The latest Foreign Investment Review Board (FIRB) annual report showed that the total value of investment proposals in 2013/14 soared to $167.4 billion which is an increase of 23.4 per cent. No surprises to note that China is now the biggest player foreign based buyer of Australian real estate with foreign investment in commercial and residential real estate doubling from $37.5 billion to $74.6 billion.

Recently a research paper was released that Chinese purchases totaled just 2 per cent of all transactions in 2014 according to data from the FIRB. Well that’s interesting although the real story is what the Australian Taxation Office reveals once they have completed their forensic investigation into illegal overseas acquisitions. Those who acquired property illegally have until 1 November 2015 to come forward and avoid prosecution. It will be very interesting to see how many are prosecuted and the numbers of apartments and houses that come back onto the market. I’m predicting that this number will be significant and illegal purchases will be much higher than first envisaged. Watch this space!

I wouldn’t be overly concerned with the recent use of that ‘recession’ word given it’s hard to see this happening anytime soon. We know that to technically be in recession the next two quarters in real GDP will need to return two quarters of negative growth in GDP. The next quarter’s GDP results are out on December 2 and the next on March 2 – so let’s wait until then before we start using that “R” word.

MOSMAN – 2088

• Number of houses on the market this time last year – 65

• Number of houses on the market last week – 66

• Number of houses on the market this week – 56

• Number of apartments on the market this time last year – 47

• Number of apartments on the market last week – 47

• Number of apartments on the market this week – 49

CREMORNE – 2090

• Number of houses on the market this time last year –10

• Number of houses on the market last week – 4

• Number of houses on the market this week – 6

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

• Number of apartments on the market last week – 19

• Number of apartments on the market this week – 20

NEUTRAL BAY – 2089

• Number of houses on the market this time last year – 7

• Number of houses on the market last week – 5

•Number of houses on the market this week – 2

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

• Number of apartments on the market last week – 35

• Number of apartments on the market this week – 37

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.