I’m struggling to find a time when the bureaucrats and politicians struggled as much as they presently are when trying to define what exactly is happening to the Sydney property markets – please note that I have used plural as against the popular and misrepresented singular definition.
Australia’s head cashier Joe Hockey is having an absolute shocker given he hails from a family that has a rich real estate heritage. For example, last week he stated that more houses were needed to fix the home affordability issue. “I like many others, if you have a home, if you’re already there with a mortgage; you wonder how your children are going to get into it.” Well Joe, for starters I would immediately slash the foreign buying policy where you allow 100% of all new housing developments to be sold offshore to foreign buyers.
The real truth of the matter is that the Coalition and ALP don’t care about the buyers, or where they come from for that matter, this is all about strengthening the economy where real estate is now doing all the heavy lifting. The crux of the matter is that the property sector now contributes more to Australian gross domestic product (GDP) than mining. The property sector is estimated to generate 11.5% of GDP, employs 1.1 million Australians and pays $72.1 billion in state, federal and local real estate taxes each year.
Then we have Australia’s head teller Glenn Stevens pointing at another rate cut due to a weak economy given that the Australian economy is now weaker than forecast two years ago. In 2013 the projection was that the economy would be growing at a rate of 2.5% to 4% although by mid-2015 it will be lucky to post a growth rate of 2.5%. Stevens also commented this week that he is concerned about Sydney’s booming house prices – you see he used the term house although houses in certain parts of Sydney are not doing that well when compared to apartments.
Our research division has been recording some interesting Mosman ‘house’ sales.
The problem is purely that house prices are bundled as against separating houses from apartments and investors from owner occupiers. Let’s not start on what part the foreign buyers play in this equation given nobody has really bothered to measure this participation rate but I would add that it’s huge and much, much higher than the federal government ever envisaged (when they do get around to looking).
Glenn Stevens was using the HSBC research that found Australian house prices had risen 24 per cent in the past three years, though the gains had been mostly confined to Sydney and Melbourne – so why then call this Australian house prices? Sydney had jumped 39 per cent and Melbourne prices were up 22 per cent bringing the average price growth for the rest of the country at 10 per cent.
The real problem Australia is facing is getting the economy stimulated and thus far all the monetary measures have been a dismal failure. Yet again, the problem is contained directly in Canberra and the refusal to implement reform so on that basis I can see where Glenn Stevens is coming from.
Cast your mind back to 2008 when Ken Henry presented the Henry Tax Review (the Rudd government held on to it until 2010) – we need to remember what Ken Henry said at the time “Ken Henry warns of looming taxation crisis”, and said that need to change is urgent. In 2014, he warned that the Abbott government urgently needs a tax and welfare package to head off an imminent budget crisis.
Well we have a budget crisis and no tax reform and as Ken Henry put it “there will be a day of reckoning.” One only has to ask a simple question – where would the Australian economy be today had the Henry Tax Review been implemented?
So what we have is politicians only interested in re – election so any thought of reform is immediately removed until we get hit with a major economic downturn. The Henry Tax Review was designed to drive the economy and therefore minimise the likelihood of another economic downturn as experienced with the Global Financial Crisis. Governments don’t pay payroll tax however if you asked businesses what they would do with the savings if it were to be abolished – you would see a much different Australian economy than we are seeing presently.
• Number of houses on the market this time last year – 85
• Number of houses on the market last week – 61
• Number of houses on the market this week – 55
• Number of apartments on the market this time last year – 66
• Number of apartments on the market last week – 38
• Number of apartments on the market this week – 41
• Number of houses on the market this time last year – 8
• Number of houses on the market last week – 6
• Number of houses on the market this week – 7
• Number of apartments on the market this time last year – 9
• Number of apartments on the market last week – 13
• Number of apartments on the market this week – 11
* Number of houses on the market this time last year – 5
• Number of houses on the market last week – 5
• Number of houses on the market this week – 3
• Number of apartments on the market this time last year– 46
• Number of apartments on the market last week – 23
• Number of apartments on the market this week – 29
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.
Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.
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