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From www.rwm.com.au:

"In 2007 Mosman, recorded 409 house sales, last year (2008) it recorded 261 house sales and in 2009, Mosman is currently recording just under 7 house sales per month. So under the current formula in 2009, we could be looking at somewhere in the vicinity of 90 to 125 house sales – despite all time record low interest rates. In the space of two years Mosman house sales could be down by seventy five per cent."

I notice that quite a few auctions fall through. Some properties couldn't even attract a single bid. Take your pick. You can have volume or price but not both. Something has to give at some point.

Rambo in 2009

We are currently witnessing the reincarnation of Rambo in 2009. I am not talking about the muscle man Rambo but how several central banks are resorting to "quantitative easing". Put it simply, they are printing their respective currency, stopping short of throwing money off a helicopter...Hold this thought for the moment.

Turning back to the property market, I assume everyone has worked out where the market is by now...If you are a First Home Buyer, you must have noticed you are at war vs. your fell0w citizens. If you are everyone else, the market is very boring. There are just not many new or interesting listings. I relish having my Saturdays back. I just can't be bothered anymore. Most of the listings have been around for awhile and the vendors are not keen to meet the market either.

A few observations though.....Some houses still got sold. Those vendors probably cut their prices by $100-200K. Fortunately, if one works hard and happy to compromise a bit, there are bargains to be had. I noticed two good transactions in Cremorne in the past 2 weeks. A house (4/5 bedrooms + decent land + OK condition but not great BUT no car park) with an almost stunning harbour view was sold for $1.66M. Another house (4 bedrooms + pretty run down but decent land in a good street + next to an apartment block yet to be built) was sold for $1.22M. The original asking price was $1.6-1.7M late last year.

I usually don't follow the "dream" segment. The other day I wandered to this auction in the City where 3 houses were going to be auctioned. 2 houses in Palm Beach and a house in Mosman (expecting $2.8-3M). When I got there, I found out that the auction was cancelled. Guess the agents couldn't find enough interested parties.

What do the Rambo central banks have to do with the Sydney property market ? First, one suspects it is a big deal. The brains in these central banks would not resort to this "nuclear" option unless they have no choice. One can surmise that things are looking pretty grim in UK and US. Second, I was sitting on the sideline quite happily waiting to see if my thesis holds water. Things were brewing in my favour for awhile. Third, now I am not so sure......

Think about it....What is the major consequence if a government tries to debase its currency ? Inflation is a likely outcome. In an inflationary environment, one wants to have debts and real assets.

To wrap this up, my gut instinct is to hang on to my thesis. With the latest interventions, the world may stabilise but likely won't go back to the races in 2009. The prospect for further job losses is real in Australia. And the fact that the LNS market is hardly (10-15%) off its high makes me reluctant to throw in the towel now.

Rome is burning....

I have been in the finance industry long enough to remember that any bear market is never fun. I have survived the Asian crisis, LTCM, Russian default, the IT crater in 2001/2 etc etc. Basically, all the implosions since 1995/1996. However, I honestly can't recall things ever get this bad. Thus far, I remember Australia has always managed to side step other messes in the world. It would be a miracle if history repeats itself this time. Truth be told,  this is the first financial crisis that I get to observe up close and personal.

I suspect we are going to take the cake this time.  4 of my immediate family members lost their jobs in the past 2 months - my better half + my brother and his wife + my sister. One of my friends recently lost his job. My better half went to a high school gathering last night - 2 of her closest friends lost their jobs last month. I shiver to think what happens if I lose my job with 2 young kids and a wife......

By the way, listening to Coldplay today certainly doesn't help my mood. I don't think my family situation is that unique, although in terms of GFC-related job loss, we are hard to beat. What does this personal anecdote have to do with property in LNS ? 

Lest we have any illusions, don't hope. This is a complete reset of the financial system as we know it......Be patience.......This is a marathon and whoever can hold on longest wins.