Interest Rates | Teamrw Seaforth / Balgowlah

R&W blog is back in action…

After a couple of weeks rest in the Northern Hemisphere escaping winter and the rain, the R&W blog is back in action!

Many of you will be experiencing school holidays and we hope that you have many activities planned in this very wet weather!

As mentioned in our early June post – we saw a change in the market in late May – we are now seeing buyers & sellers adjusting to the new conditions and the Northern Beaches property market is now gaining greater comfort and an additional understanding of the new more balanced market place.

Following the stabilisation of interest rates in June & July, the question on many people’s lips – is will we see a continued pause or another increase during the election campaign?

Time tells all things – Harry Triguboff of Meriton Apartments has suggested again this week that Australia’s property shortage will not be properly addressed until interest rates fall again, if this is the case then it maybe some time before it will be addressed.

Looking at the most recently released economic data – The Australian economy is emanating mixed signals at present, ensuring that the Reserve Bank will stay on the interest rate sidelines for another month.

Some are asking if the current sovereign debt problems afflicting Greece and Portugal – could create a GFC Mark II. In reality the main risk that this creates is pessimism, which often becomes self-perpetuating.

Reading into Macquarie Banks recent comments regarding the property market losing momentum… “Like an in-form thoroughbred, the Australian economy enters the second half of 2010 in good shape, but is likely to be carrying much more lead in the saddle-bags as it heads into 2011. This principally reflects the impact of higher interest rates on household spending, as well as the gradual withdrawal of fiscal stimulus. Business confidence has been shaken by the impasse between the government and resource firms over mining taxation. And while that has now been resolved, confidence could continue to be undermined by other concerns, such as ongoing sovereign risk issues in the peripheral European economies and significant global financial market volatility. While we are ultimately optimistic that bullish investment plans will be realised, the transition from consumer and government-led growth to investment-led growth could be rocky, and is likely to be consistent with slower growth overall.”

We don’t see anything unusual in the annual pattern that generally see’s a slowdown with the inclement weather. Active buyers will be aware of the low numbers common for this time of year – as always certain segments of the market are a lot stronger than others.

This week we have enjoyed a very strong response to the property at 12 Daisy Street North Balgowlah – after bidding started to stall in the early $900,000’s another wave of enthusiastic bidding took the final result to $1,022,000!

Also this week Maria Cassarino set a new Street Record for Illalong Avenue in North Balgowlah, selling number 5 which sold prior to auction for $1.875 Million! Making it the second highest residential sale achieved in North Balgowlah!!

We appreciate that there is conflicting information out there to prospective vendors and buyers and a lot of industry jargon! This compiled with the end of the financial year can leave you with questions still remaining unanswered for your own property goals and real estate needs.

Therefore we will are offering a confidential FREE No Obligation – End of Financial Year Property Market Update to anyone who has any further questions about their property or the market in general. If this is of interest or you have any further questions – please give us a call at the office 9948 7080 or drop in and say hi and meet the team!

Wishing you all the best in your property goals,

The Team at Richardson & Wrench Seaforth Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 8/07/2010

Another tax for NSW

Last week we commented that there was a lot of news & no real impact on property from the implementation of The Henry Review.

It would appear that the Federal government may not be implementing much of the Henry Review, but the NSW State Governement are happy to go for another tax grab where ever they can sneak it in. As most will already be aware, a new property tax has been pushed through the NSW parliament, effective from the 1st of July 2010. The tax announced by Lands Minister Tony Kelly was included in the Federal Budget and will be applied to properties selling for more than $500,000.

Starting from $200, the tax on a $1 Million property will be $1,000 & a higher rate of 0.25% of the purchase price will be charged for all properties over $1 million.

The Property Council of Australia has also urged the NSW government to reconsider the tax, stating that it will damage growth and investment. NSW acting executive director Glenn Byres has said “NSW has a fragile investment climate and construction levels are only beginning to creep back from 50-year lows. We should be looking to wind back taxes, not add to the burden of homebuyers and investors.”

It is unlikely that an extra $1,000 or even a few thousand is going to make a real difference to the property market, but it is still likely to leave a bad taste in purchasers mouths from the first of July.

Perhaps it’s a good reason to purchase the right property prior to the 30th of June!

Overall looking at the property market this week with a fiscally conservative budget & uncertainty remaining in Europe there should be enough data for the Reserve Bank to choose to pause on interest rates rises. Good news given the extra money you may need to find to hand over to the NSW government.

We look forward to seeing you at our opens! Click Here for our inspection times.

Best Wishes,

The Team at Richardson & Wrench Seaforth Balgowlah.

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 13/05/2010

A lot of news, still waiting on any impact…

The Henry Review has ended up with surprising little on impact property – given the voluminous 138 recommendations; the expectation was for a far greater impact.

One of the key recommendations of the Henry Review related to the tax on savings and how the current legislation distorts people’s savings and investing behaviour. The Review focused particularly on current trends of negative gearing property taking advantage of the tax rules and how this has encouraged households to take on too much debt and risk when undertaking investments.

The review proposed a more consistent approach to taxing savings – with the specific recommendation being to apply a 40 percent discount to most interest income, net residential rental property income, capital gains and interest expenses.

The view was that our tax system actively encourages risk-taking and perhaps to an excessive degree. More problematic is that it penalises investors who are more cautious and risk averse.

With no changes at this stage being implemented, the current property trends are likely to continue unaffected by the Review, perhaps a different story for Western Australia who has seen their market driven largely by the mining sector. With the 40% tax grab on the mining industry’s profit, there may still be some ripples to be felt closer to home.

The trend for interest rates continued with the 6th increase in a row, taking the cash rate up another 25 basis points to 4.5%. As indicated in past blog posting this move starts to place interest rates back to the Reserve Banks (RBA) neutral territory with the Standard Variable loans now in the mid7%. It will be interesting to monitor if this is enough for the Governor Glenn Stevens & the RBA to pause and watch for full effect prior to any further interest rate movement.

*The above graph from the SMH commentry on the May interest rates decision.

Supporting this is the Australian Bureau of Statistics (ABS) release of Retail sales having a lower-than-expected 0.3% to a seasonally adjusted increase to $19.92 billion in March from $19.85 billion in February, With retail sales being weaker than expected this may be enough to put rates on hold for a little while.

Today The RBA will publish its quarterly Statement on Monetary Policy where there are expectations that they will upwardly revise the medium-term forecasts for both inflation and economic growth.

As we saw pre-GFC the Reserve’s focus has been very strongly focused on keeping inflation firmly in the 2 – 3% range, hopefully this cycle they do pause to monitor effects rather than continue increasing till the cracks start to show in the economy. Most of us learn from our mistakes, but time tells all things.

Confidence in property has remained strong even with a number of new listings on the market; there is still a relatively low supply of properties for sale relative to the strong demand. It has been interesting to note a number of buyers comments that they hoping for a couple more interest rate rises to knock out some of the competition, particularly in the lower price brackets.

Till we meet again, wishing you all the best in your property search!

The Team at Richardson & Wrench Seaforth/Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 6/05/2010

Interest Rates – April commentary

It seems to depend on who you chat to and which articles you read at the moment as to whether interest rates are moving up or staying put, when the reserve bank meets on the 4th of May.

On one hand, a recent online survey of 3500 people shows that over 70 are expecting an increase again next month.

With headline inflation rising by 0.9% in the March quarter, there is argument for another rise now, before pausing to monitor how the Australian economy performs back at the lower level of ‘neutral interest rates’.

On the other hand, there is a level of uncertainty which may prompt the Reserve Bank to keep the cash rate at 4.25%, particularly in light of the instability in the European Union and the repercussions of Greece’s crumbling economy, as an article in yesterday’s Daily Telegraph “Greece rates gift” suggests.

Some turbulence is being felt in the financial markets with the news of Greece’s credit rating being moved to “Junk” status with a $430 billion national debt. Portugal & Spain are also in the firing line with fear of the debt crisis spreading.

Realistically, whether the bank increases the cash rate this month or they wait a little longer, our feeling is that the trend will continue with a couple more eventual increases to push interest rates firmly back into the Reserve Bank’s ‘neutral territory’.

Meanwhile, mortgage stress seems to be coming back into the popular media vernacular. It is more likely to be felt by the first home buyers who extended themselves to purchase their first home & who are feeling for the first time the extra pressure created by the upward jolts of interest rates. For seasoned property market players who have been through the rate cycle before, it is familiar territory where interest rates are required to trend up significantly before the ‘mortgage stress’ term starts to truly become appropriate – particularly for our lovely part of the world.

Confidence continues to be strong, as seen in the ‘Consumer Sentiment & Business Confidence’ graph below.

April Confidence

With many savvy buyers having already factored in interest rate increases when setting their budget, and with confidence levels remaining in very positive territory, we see no reason for the market not to continue on its current positive trend.

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 29/04/2010

Schools not the only controversial topic for grades…

An article in last weekends Financial Review caught my attention “Positive Credit Ratings – Will You Make The Grade?”.

Delving into what this is all about the article talks about the 22 year old privacy laws being swept aside & allowing individuals to receive ratings in a similar way to the way government bonds are rated.

What's your grade?

There is talk of the banks changing their lending model so that the less / more risky you are then the more / less you will pay for your mortgage. Obviously this is already a reality with the way banks segment and charge a higher interest rate on what they deem higher risk loans. Soon we may have higher margins for those with a few missed payments.

The Australian Government has already indicated the go ahead on this new set of rules which will allow credit bureaus to compile a much more detailed ‘credit history’ and share this with the lenders for each & every one of us.

As with all changes there will be the winners and the losers. Those with a squeaky clean credit record should, in theory, be rewarded for this & enjoy a lower interest rate payable on their mortgage. In reality with a longer term relationship with an institution or a solid balance sheet borrowers are probably negotiating the discount that they would supposedly get from this new system.

In reality this is more likely to be a system for the banks to identify and significantly penalize those who pose a greater risk.

Up until now the privacy laws have kept credit bureaus like Dun & Bradstreet and Veda Advantage on a very tight leash as to what they can collect & share – essentially only being able to compile a relatively bare bones history, currently your name, address, employer, any loans you have defaulted on, cheques that bounce of $100 or more & any filings for bankruptcy.

With all this information soon to be at their fingertips the banks are gleefully rubbing their hands in anticipation of what might soon be unleashed.

The main change will realistically be that those that have been able to hide their mortgage stress or poor financial management will soon have no where to hide & will be additionally punished for getting themselves into their current situation.

If your credit rating is going to come up as “AAA” then there is no need for concern about this. Very little will probably change and perhaps you might even get a slightly better deal. If you’re slipping down the grades then the effect is likely to be a lot more noticeable & expensive.

There will be some buildin protection mechanisms into these changes in that banks will only be able to access the extra information once a consumer applies for a loan – they can’t get information from the credit bureaus for their targeted marketing campaigns.

Our thoughts are that with this increased information about to start being compiled it is probably time to automate some of your payments, if you haven’t already, and ensure that you are paying the bills on time. BIG BROTHER IS WATCHING!

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 16/04/2010

Information Overload! What does it all mean?…

With a barrage of articles & contradictory information on the real estate market, economy and interest rates this week, it’s tough to get a feel of what is actually happening out there!

We have a general consensus, as discussed in previous editions of “Real News”, that NSW is thousands of homes under supply & the current demand is forcing prices up. While one article in yesterday’s Daily Telegraph suggests that new housing builders are doing it tough – “Taxes shut door on new housing” – with Monarch homes losing $20,000 per home built & sold in 2009. Last weekends Financial Review’s feature article was back to “What’s Driving Property Prices” and talking about how bullish prices are.

What is going on?

RP Data’s Tim Lawless (National Research Director) felt the need to state that “We are not in a housing bubble”. Mr Lawless reveals that a housing ‘bubble’ suggests housing values increased too rapidly and are set to experience a rapid decline, a fate not likely to come to be experienced in Australia. “Across Australia’s capital cities, home values have increased by just 6.2 percent per annum over the last five years – a rate of growth that is in line with wages growth which has been 6.0 per cent per annum over the same time frame” An interesting point!

The Financial Review Easter weekend edition, explored the buoyant market being experienced throughout Australia (with auction clearance rates remaining above 70%) and delved into some of the forces driving the market.

Further on this topic – Rod Cornish of Macquarie Capital Advisers, points out that although first-home buyer numbers have been in decline since they peaked at 30 per cent of the market in May last year, the market has been driven for the past six months or more by repeat buyers or upgraders.

Real Estate Institute of Australia President David Airey, backs this up stating that upgraders now account for almost 60 percent of the market and many have sold their previous home to first-home buyers

Building on the demand side of the equation, Richardson & Wrench Seaforth/Balgowlah (R&W) have however, been experiencing an increase in foreigners securing property as the Foreign Investment Review Board relaxed purchasing requirements last March – with a number of buyers flying in for a week to 10 days to secure a home on their trip.

Reviewing the market, selling conditions remain buoyant and our feeling is that the market has moved past the uncertainty of the GFC & has now found steady ground.

In this market, particularly for prestige homes – vendors need to be accurate with their anticipated price to achieve a sale in a favorable timeframe. Purchasers will also need to act or you are likely to miss out with someone else moving in ahead of you.

Cutting through all the information – What’s our advice?

If you like a property, you can afford it and are planning for the longer term – jump in now and secure it. We enjoy a fantastic lifestyle on the gateway to the Northern Beaches – its time for you to spend your time enjoying it in your “castle”!

We look forward to your posts on the blog with any additional thoughts & comments from our readers.

Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 9/04/2010

Happy Easter 2010…

First & foremost – Happy Easter from the team at Richardson & Wrench Seaforth (R&W)

Looking through the long weekend with the economic data at hand it would appear a safe bet that interest rates will continue the upward trend next Tuesday with the markets pricing a better then 60% chance of an increase.

The rate increase curve may be levelling out as we move back to the neutral cash rate. Last week Assistant Governor of the Reserve Bank of Australia (RBA), Philip Lowe has stated that the underlying inflation has “moderated significantly” and is expected to decline from 3.25 per cent to about 2.5 per cent during 2010.

Dr Lowe has reinforced that the central bank’s view that the Australian economy had “relatively limited spare capacity” and that it was likely interest rates would move towards “more normal” levels.

Depending on who you listen to we may be looking at another 3 interest rate increases over 2010 (up a total of 75 basis points) if you take the Commonwealth Bank (CBA) suggestion then the rate increases could be a more aggressive with 5 increases up a total of 125 basis points.

RBA Governor Glen Stevens, stated this week that house prices are “getting quite high” and suggested that interest rates may need to be increased further to contain inflation.

On the coal face we have seen buyers factoring in interest rates, returning to historical levels since the economy started to turn around last year. So the strong demand we feel will continue as interest rates increase as there should be no surprises as to what is happening.

We feel that if the variable interest rates move above 7.5% then we will see interest rates having an impact and providing downward pressure on the local housing market. In the past we have seen other parts of Sydney show signs of housing slowing before there is any noticeable impact on the Northern Beaches. Looking across Sydney we are not seeing signs of the market cooling off with auction clearance rates sitting around 70%, the market is looking quite solid.

pricegrowthchart 1994 till today First & foremost – Happy Easter from the team at Richardson & Wrench Seaforth (R&W)

As shown in the above diagram while auction clearance rates sit substantially over 50% then the market should continue to move strongly.

Over the past month we have seen an increase in the number of homes selling within the first week on the market, selling off our database previews before moving to a more aggressive marketing campaign. Talking to a number of buyers this week the frustration has been building as our database keeps growing at a much faster rate than properties are selling. With a number of new listings hitting the market after Easter we hope to be able to satisfy some of the current demand.

We look forward to your posts on the blog with any additional thoughts & comments from our readers.

Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

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See you at the open for inspections: Click Here for our open times

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate Click Here*

*Sales are as reported by Australian Property monitors on 1/04/2010

The trend is up…

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With Thirty-Three (33) auctions on the Northern Beaches last weekend, R&W’s Glen Wirth was privileged to be the auctioneer at Four of the Auctions [with 4 sales]. We are seeing that confidence in the market has built upon the momentum that started in November last year is still heading in the same positive direction, certainly a strong turn around from what we were experiencing 9 months ago!

While the Reserve Bank increased rates again on Tuesday this week and with expectations of another rise over the next couple months, interest rates are still below the Reserves’ economic “neutral“ position! Viewing the weekend’s results - buyer confidence seems to be moving with interest rates rather than having its usual inverse relationship. Put simply, although interest rates are going back up to their historical average, the market in our area is likely to keep powering on – with no sign of buyer interest coming off the boil.

Many cashed up buyers on our database would like to see more homes coming to the market, for those considering selling, now is definitely the time to come & have a confidential chat about the market with the team at R&W.

For those who have been out at the opens & attending recent auctions, it doesn’t take long to notice that there are many buyers out there searching for a new home (22 registered bidders for 16 New Street East, Balgowlah) and with a relatively low level of new listings - the demand trend is likely to keep on its current path for the foreseeable future.

The prestige market as we commented on 2 weeks ago is continuing to build momentum, for those looking to upgrade there are still great opportunities to take advantage of the greater market activity at the lower price brackets & comparatively less competition at the top end.

With today’s topic of the Trend is up…, it is prudent to look at why we are experiencing this trend. This week the 6th Annual Demographia International Housing Affordability Survey: 2010 has been released. A worthwile read for those with a bit of time on their hands!

Looking at the trends from a Global, National and local view the reasons are similar, however at the local level there are some subtle differences.

Over all – supply & demand are very much the key to strong prices being paid for property. Looking at the below diagram we see that in Sydney particularly, the number of new properties being built had been falling substantially over the past few years. With the current Australian immagration policy - demand for housing is continuing to grow substantially faster than the supply.

Housing Starts By State '02 - '09

In our local area there is only a very limited number of blocks that have come to the market in the past decade & there is a very limited supply that can come to the market in the years to come, so for our area the new builds are replacing existing homes rather than adding to the housing supply.

With the lifestyle that the Beach side / Harbour side location of our area offers, we are going to continue to find that out of area buyers are drawn to our gorgeous pocket of Sydney and as such we will continue to see increasing demand without the opportunity of any significant additional supply.

Manly Beach

It’s not a bad lifestyle with Manly Beach on your door step!

Continuing our review of our local suburbs sales statistics

Today we delve into North Balgowlah and see what’s been happening over the past few years.

North Balgowlah sales so far in 2010* (House / Townhouse / Semi)

Total number listed 6

Total number of sales recorded 1

Private Treaty 1 Properties $980,000 (Total Value)

North Balgowlah Sales in 2009* (House / Townhouse / Semi)

Total number listed 60

Total number of sales recorded 42

Total Value Sold $ 38,257,335

Public Auction 12 Properties $ 8,905,000 (Total Value)

Public Auction Average $890,500

Private Treaty 30 Properties $29,352,335 (Total Value)

Private Treaty Average $1,012,149

Median Price $879,000

Average Price $980,957

Highest Sale $1,785,500 (R&W)

North Balgowlah Sales in 2008* (House / Townhouse / Semi)

Total number listed 67

Total number of sales recorded 53

Total Value Sold $52,568,750

Public Auction 16 Properties $16,942,250 (Total Value)

Public Auction Average $1,058,890

Private Treaty 37 Properties $35,626,500 (Total Value)

Private Treaty Average $962,878

Median Price $955,000

Average Price $991,863

Highest Sale $1,805,000

North Balgowlah Sales in 2007* (House / Townhouse / Semi)

Total number listed 61

Total number of sales recorded 58

Total Value Sold $57,294,893

Public Auction 17 Properties $18,406,000 (Total Value)

Public Auction Average $1,082,705

Private Treaty 40 Properties $38,888,893 (Total Value)

Private Treaty Average $948,509

Median Price $900,000

Average Price $987,842

Highest Sale $1,750,000 (R&W)

We look forward to your posts on the blog with any additional thoughts & comments from our readers.

Please feel free to email us if you have any further questions about the market or real estate in general – it would be great to hear from you.

Till we meet again, wishing you all the best in your property search!

The Team at R&W Seaforth/Balgowlah.

See you at the open for inspections www.teamrw.com.au/buy/opentimes-sales/

To keep an eye on this week’s reported Seaforth real estate, Clontarf real estate, Balgowlah real estate, Balgowlah Heights real estate and North Balgowlah real estate www.teamrw.com.au/buy/local-market-watch/*

*Sales are as reported by Australian Property monitors on 05/03/2010

Teamrw Seaforth / Balgowlah

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R&W Seaforth / Balgowlah

R&W blog is back in action…

Another tax for NSW

A lot of news, still waiting on any impact…

Interest Rates – April commentary

Schools not the only controversial topic for grades…

Information Overload! What does it all mean?…

Happy Easter 2010…

The trend is up…

Continuing our review of our local suburbs sales statistics