ON THE WALLABY- 19th February 2007

”What does a man need - really need? A few pounds of food each day, heat and shelter, six feet to lie down in - and some form of working activity that will yield a sense of accomplishment. That's all - in the material sense, and we know it. But we are brainwashed by our economic system until we end up in a tomb beneath a pyramid of time payments, mortgages, preposterous gadgetry, playthings that divert our attention for the sheer idiocy of the charade.

The years thunder by, the dreams of youth grow dim where they lie caked in dust on the shelves of patience. Before we know it, the tomb is sealed.

Where, then, lies the answer?

In choice.

Which shall it be - bankruptcy of purse or bankruptcy of life?"

THE SYDNEY REAL ESTATE MARKET – WHICH WAY AND WHEN?

Being actively involved in the Sydney market as an auctioneer for the last 20 years (and having conducted over 25,000 auctions in that period), it never ceases to surprise me just how some people handle the market ups and downs.

Sydney at the moment, especially in the western half of the city, is getting a hammering with the market having come back from the 2000-2003 boom by anywhere up to 10% and that equates to a large loss by someone.

The eastern part of the city, (i.e. eastern suburbs, north shore and inner west), are showing growth, albeit slow, and much of this can be attributed to the closeness of these areas to the CBD and the higher level of public transport.

Mortgagee auctions in the western area are on a steep climb and I cannot see any change in this pattern due to the high level of debt given in those areas.

Where the supposedly simple issue of “oh, they borrowed too much” comes a bit unstuck to my mind is the vastly varying degree of loan facilities available to borrowers.

As an example, a couple with no children earning $100,000 between them can have totally different profiles with different banks.

For example, and the banks names are not included for obvious reasons,:-

• Bank A would loan $511,000

• Bank B would loan $564,000 and

• Bank C would loan $624,000

Is it any wonder then that many young people go “you beaut” and go with Bank C, thus being able to (hopefully) afford their dream home?

Where this comes awry is when the female falls pregnant or there is a loss of a job or illness. No matter what, when you are paying $600+ a week as mortgage payment, you don’t have to be a Rhodes Scholar to see what will eventuate.

Having said that, at a mortgagee auction I was conducting recently, my partner Sam overheard the mother of the girl who was being sold up telling her daughter “not to worry, we’ll just find another one”!

No worry! What about the adverse credit rating? What about the most likely bankruptcy which, whilst today hardly regarded as a blemish by many young people, does in fact have a massive on-flow into their lives and their ability to borrow?

So back to the Sydney market and its future pattern. How does it rate?

Take a look at the ABC TV weather map each night at the end of the 7pm news and the strength of the geographical position of Sydney explains it all.

With Sydney having the Tasman Sea on the east, Blue Mountains on the west and National Parks to the north and south east, Sydney, unlike its inter city capital rivals can go only go three ways – south west, north west and up!

Take Melbourne, Brisbane or Adelaide and you can keep building west (or, in Adelaide’s case north) nearly as far as you like and you will find few, if any, natural barriers to expanding urban areas.

So given these natural barriers which simultaneously aid and hinder the Sydney market, what does the future hold?

For many, I really can’t see one for many people. Sam and I were talking the other day about how the market had leaped in the last six or seven years when some homes rose from the $300 thousands to sixes and even seven hundred thousand.

So will we see these homes rise again from the sevens to over a million? If this is the case to be, how will young people or people “picking themselves up” ever gain a foothold in the market?

Certainly the expectation of many, if not most, is to have the MacMansion with all the bells and whistles plus the new car or cars in the garage plus the plasma etc etc. The reality, as it was when I was younger, was that you started at the bottom and worked your way up, not make it in one fell swoop!

What was it that Sterling Hayden wrote in his autobiography “The Wanderer”?

”What does a man need - really need? A few pounds of food each day, heat and shelter, six feet to lie down in - and some form of working activity that will yield a sense of accomplishment. That's all - in the material sense, and we know it. But we are brainwashed by our economic system until we end up in a tomb beneath a pyramid of time payments, mortgages, preposterous gadgetry, playthings that divert our attention for the sheer idiocy of the charade.

The years thunder by, The dreams of youth grow dim where they lie caked in dust on the shelves of patience. Before we know it, the tomb is sealed.

Where, then, lies the answer?

In choice.

Which shall it be - bankruptcy of purse or bankruptcy of life?"

I’m with Sterling!

Carpe diem

Tony

Tony Fountain

Professional Speaker, auctioneer and author

Sydney NSW Australia

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