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Without fear nor contest, the following listings of Marquette Turner Luxury Homes have received a price reduction in the past week, with the explicit consent of the owner.
I read an article today on the Domain blog in Australia (owned by Fairfax Media) and I cannot believe the total rubbish it conveyed to people. I am so disappointed that I feel forced to discuss it. We can all recognize that someone has done well for themselves – we can praise and applaud that – well done John McGrath – to a point. We can also recognize when they have said something that is too hard to comprehend. So much as to make it simply unbelievable and it has to be discussed.
In a world that is missing realism at times and where the base expectations of the population are set according to media, lies – half-truths at best it is important to point out what is totally ridiculous. Not only do people feel inadequate but they lose sight of reality, feel unsuccessful and like in this case downright ill-informed.
John McGrath, founder of McGrath Estate Agents, stated in a recent blog that property in Australia fell into one of three bands. The Lower End (below $750,000), the mid range ($750,000-$3 million) and the upper end ($3 million to $30 million).
The pure facts are these. Anyone kidding themselves to think that $3m is mid-priced is either lying or living in a fantasy land. The facts are simple – 3.65% of all residential property in Australia in 2007 sold at or above $1million. In other words 96.35% of residential property sold was sold at or less than $1 million. $3 million is NOT mid priced – not in Sydney, not in Regional Australia – not anywhere in Australia. The information is so poor that it needs to be quickly corrected.
I’m not questioning that John McGrath has done well for himself over the years – but that simply does not excuse information that is blatantly incorrect. Since John McGrath has become a franchise agency, seeking to compete with the likes of LJ Hooker and Ray White, it is laughable that he should set such benchmarks given that the majority of the properties for sale through his franchise offices in New South Wales are of “the lower end”. I’m sure this isn’t the message his agents are conveying to their clients.
Why point this out? Simply people are given so much information that cannot be backed up by evidence and those that are unaware of the reality can at times feel inadequate. What do you need to do to be successful? What have you done wrong? How can you possibly achieve that? The reality is very different to the perception.
I am disappointed that John McGrath would publicly say something that is simply wrong – he is smarter than that and it concerns me that many people will read his material and question themselves thinking he is telling the truth – Shame on you John McGrath.
Part 2 of a 2 Part Investigation
The low sales volumes that we have seen in 2008 have resulted from fear, necessity and pride. Each has played a role in reducing the number of sales.
In so much as fear has contributed people are always cautious during times of upheaval or unrest.
Economically it has been a minefield of a year with Sydney property prices generally being stable or heading south. The stock market has shed billions of dollars and nervous investors and even more nervous fund managers have either panicked or halted all activity to see where it would lead – we certainly have a good idea of that now.
As interest rates increased early in 2008 many people feared that the return of Labor to the Federal Government would bring devastatingly high interest rates and therefore chose not to buy – again they played a wait and see game.
Vendors, convinced that the economic bliss was sure to continue refused to accept lower prices from buyers and the number of unsold properties has increased as the year has gone on. The financial turmoil has seen companies tightening their belts and in some cases withdrawing benefits, bonuses and international transfers.
This has greatly affected the number of “Private Brokerage” level sales and has played havoc with the top end Luxury rental market. Without companies paying absurd amounts of money to house executives the demand for top end rentals has all but dried up – with Luxury Landlords accepting massive cuts in rental amounts, moving back into properties or simply leaving them empty (Not very smart in most cases).
The final and least understood factor that has resulted in decreased “Private Brokerage” level sales is the age old problem of pride. The uncertainty that the year has provided has caused many would be vendors to reconsider plans to sell in case they were seen by family, friends, colleagues and competitors as potentially having financial problems.
It has been reported in Sydney newspapers that journalists were waiting to see which Luxury Homes were put on the market as this may have been an indicator that a company or associated interest was struggling and in need of cash. It is amazing what people will do out of pride and emotion has played a huge part in the decreased sales volumes we have seen.
Fundamentally Sydney is well positioned. It has stunning natural beauty and there is a low rental vacancy rate and net immigration is quite high putting further demand on housing in the city. This should see the market steady and confidence return in 2009, however we cannot ignore the differences between average or low end property and Luxury “Private Brokerage” Sales.
Click on the link for PART 1
Over the last month or so I have had numerous discussions with people from all around the world about the level of Stamp Duty we pay in Australia on property transactions. In my opinion it acts as a huge disincentive for people to transact and puts additional and unnecessary barriers in place for buyers and vendors alike.
For those that aren’t aware buyers in NSW pay around 4% tax to the State Government – in addition to the purchase price of their property when they buy.
Who can forget the effect of the vendor duty that the New South Wales Government (for our international readers, Sydney is the Capital City of the State of New South Wales – NSW) decided to charge on the sale of investment properties. That 2.25% duty on the sale of investment properties (paid by vendors to the Government – calculated as a percentage of the total sale price) stalled the sale of investment property in the State and made purchasing investment property look very unattractive.
Thankfully common sense prevailed and the duty was removed. New South Wales lost hundreds of millions of dollars to States like Queensland as investors chose to purchase elsewhere. South East Queensland did very well out of what can only be described a shocking decision. So what would happen if New South Wales slashed the stamp duty paid by purchasers? Would we see huge amounts of investment coming into the State from Queensland, Victoria and other States?
It’s an interesting question and one I’d like to see debated as increased taxes, tolls or duties is not the way to stimulate the economy. New South Wales is a wonderful part of our country and Sydney is one of the most beautiful cities in world – if only we had a State Government to match.
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