Sydney: A Tale of Two Cities?

Sydney is home to Australia's sharpest divide between rich and poor.

The harbourside suburb of Milsons Point was rated Australia's most advantaged and Claymore in the south-west the most disadvantaged in a new study by sociologist Scott Baum, based on 2006 Census data. Associate Professor Baum said the study, for Brisbane's Griffith University Urban Research Program, was not just based on real estate prices or household incomes.

It included a number of factors, including participation in the labour market, public housing, whether or not they spoke English well, the number of single parents and the number of elderly people in the suburb who required help on a daily basis.

"It's interesting that Sydney, the most global city and the one that is supposedly pulled along by the global economy, is also the most polarised," Prof Baum said.

"So, in a large sense, you've got this feeling that some suburbs have more in common with places in New York and London than they do with suburbs in their own city. "In Sydney's case, it really is a tale of two cities."

Researchers drew on the Census data to compare and overlay several indicators of disadvantage to come up with a rating, with "band one" being the poorest or most deprived and "band six" the wealthiest or least deprived.

Melbourne was rated the most liveable city, with its worst deprivation in the suburban industrial heartland of Broadmeadows and Sunshine.

East Melbourne and newly-gentrified inner urban areas of Docklands were least disadvantaged.
"While not suffering the extreme polarisation of Sydney, economic spin-offs (in Melbourne) ... don't flow evenly across the metropolitan area," Prof Baum said.

Neither Brisbane nor Perth had a band one area of highest deprivation, but Brisbane's outer suburbs of Inala and Logan Central were rated as band two, along with Perth's Karawara and Crawley.

Best Countries To Retire To

Recent research compared the top ten locations for pensioners to retire abroad. The results saw Cyprus and Panama coming tops based on tax, ease of residency, healthcare and average property costs.

It is fact that Australia is seeing large numbers of it's people leaving the country to live overseas. Years of being in the Australian housing market has left many retirees with large amounts of equity in their homes and a desire for better things.

The report shows the vast differences in taxation, inheritance laws and the availability of healthcare. How many of us know that France for example has income tax rate of up to 40% plus.

Cyprus tops the list of destinations because it has an income-tax rate of just 5% on pensions for retired residents, as well as low property prices and no inheritance tax. It also scores highly on related issues such as ease of gaining residency, low property buying and selling costs and benefits for pensioners. Not only does Cyprus offer a warm, sunny climate, it also benefits from favourable taxation and healthcare policies.

Panama, now infamously the chosen destination of “back from the dead” British canoeist John Darwin and his wife Anne, comes a close second. This is largely thanks to its pensionado scheme, which offers attractive discounts for pensioners.

Simon Turner simon@marquetteturner.com.au

How Dumb Are Most Real Estate Agents?!

This question has been asked many times. Real estate constantly polls as one of the most untrustworthy professions in the country. Have you ever heard the phrase “trust me I’m a real estate agent?” While this all sounds a little cliché the reality is that the general public has very little trust for real estate agents.

They tend to drive flashy cars, wear suits (some cheap, some not) and are always just a little bit late for every appointment to the frustration of buyers, tenants, vendors and landlords. So does this perception that real estate agents are untrustworthy, incompetent and overpaid really have merit?

The last comprehensive survey of the public put Doctors, Solicitors, Dentists, Pharmacists, School Teachers and even Accountants all well ahead of Real Estate Agents – the big question is why is this consistently the case? I believe the answer lies in the entry requirements to the profession which only require a 3 day course to become a certified agent. Could you imagine a 3 day crass course in Medicine and you could then operate on unsuspecting patients?

There would be enormous public outrage and the course would be banned in a flash. So why has Real Estate been allowed to offer such crash courses to the profession which bring completely unsuitable people into the industry with absolutely no idea what they are doing? The answer lies with the pressure groups that our Government actually listen to like the Real Estate Institute – they make a small fortune from memberships and training. They have self interest at heart when directing policy and have been allowed to influence decisions for far too long.

There are no base requirements to be a real estate agent. Your English can be disgraceful, as can your people skills. You don’t need to have completed high school and there are no checks in place to see if you even attended school. At Marquette Turner we believe that there is only one way to change the perception of the industry and that is through formal education. My fellow Directors are all studying a Masters degree or a Doctorate and we believe that will change the real estate landscape over the next 20 years. So next time you are deciding which agent is best to sell your home it might be worth asking them what formal qualifications they have. Ask them what formal negotiation and marketing training they have completed – after all you are entrusting your greatest asset to them and you have a right to know that you have chosen the best person for the job.

We have posted two parts of the five part expose of the “Real Estate Cartel in Australia”. This is a must read and the third part will be published in next week’s E Mag. You can catch up on the previous exposes by clicking on the links below.

EXPOSED: The Real Estate Cartels, Part 1 & Part 2

Michael Marquette michael@marquetteturner.com.au

Sydney's Losing...It's People!

Sydney is bleeding 22,000 citizens a year to all parts of Australia, and for the first time the people deficit covers all key groups, from students and young singles to families and retirees.

The nation's biggest city is the only capital to lose more people aged 15-34 than it gained from interstate migration between 2001 and last year, and is the only capital apart from Adelaide to go backwards for both professional and blue-collar workers.

But for every Sydneysider who is forced out by the cost of living, another two are replacing them from the overseas migration program.

New official data analysed by The Australian reveals a dramatic realignment in the nation's make-up as young and old alike criss-cross the continent from Perth to Melbourne and from Sydney to the "rest of" Queensland - everywhere outside the capital city.

Hobart is the surprise packet, rising to third place behind Brisbane and Perth as the most popular city destination for interstate migrants, while the rest of Tasmania has leapt to second behind the rest of Queensland on the regional growth ladder.

The rest of Victoria and the rest of NSW are also in the black - breaking the past pattern in which they gave up more people to Queensland than they received in seachange and treechange retirees from Melbourne and Sydney.

The bigger picture shows that the rest of Queensland has replaced the state's capital as the nation's top people magnet, gaining 14,000 people a year compared with Brisbane's 10,000 a year.

The customised tables were extracted from the 2006 census, and track interstate migration over the past five years by age and qualification.

Responding to The Australian's analysis, demographic experts said the cause of the drift away from Sydney could be explained in part by its high property prices but also by its slowing economy.

The director of Monash University's Centre for Population and Urban Research, Bob Birrell, said Sydney's population decline mirrored the decline of its economy relative to the rest of Australia.
"We're seeing a big change in Sydney's relative attraction since 2001 or, really, since the Olympics. Sydney's demographic fortunes have changed sharply," he said.

"It's a chicken-and-egg thing, but the actual fact is that job growth in Sydney has slowed relative to Brisbane and Melbourne since 2001."

Demographer Bernard Salt said Sydney had become a divided city, between those who lived the "globalised" lifestyle, close to the CBD, and those who lived in the outer suburbs and rarely saw the Sydney Harbour Bridge.

"We've got floods of people coming in through the front door, into Sydney through Mascot (airport from other countries), but the backdoor's wide open, and Gen Y and down-shifters are streaming out. You don't find that to the same extent in other capital cities," Mr Salt said.

The latest census shows 111,400 more people left Sydney than arrived from elsewhere in Australia between 2001 and last year. This is almost double the rate of defection between 1996 and 2001, when 59,700 people left Sydney in net terms. Every capital, state and territory is officially an importer of Sydneysiders, the data confirms. Four out five Sydney defectors moved to the rest of NSW (46,500), the rest of Queensland (27,800) or Brisbane (18,700).

But Sydney's loss is most acute in the youth belt, which is the group providing the best gauge of a city's health. Almost one in 10 departing Sydneysiders was aged 15-34 - 10,000 out of the total 111,400. Sydney had previously been a net importer of youth, with 14,000 recruits from the rest of the nation between 1996 and 2001. The reversal over the past five years suggests cost of living pressures are pushing out Sydney's young and discouraging others from settling in their place.

The top beneficiaries of Sydney's youth drain were the rest of Queensland (5900), Brisbane (4600) and Melbourne (1800).

Sydney has struggled to meet the infrastructure needs of its population, but growing cities such as Brisbane could face the same pressures.

The other telling deficit for Sydney involves its local workforce. Sydney lost 7200 professionals and 5100 labourers between 2001 and last year.

Sydney also suffered professional worker deficits with Melbourne and Canberra (600 each).
Traditionally, Sydney and Melbourne received more professionals from Brisbane than went the other way. But the tables flipped in the past five years, although Melbourne lost 400 professionals to Brisbane, compared with 1700 who moved north from Sydney.


Simon Turner simon@marquetteturner.com.au

Is 2008 Set To Be A Year To Forget?

Unemployment is now at 6.1% nationally - the second consecutive quarter that this has increased. Should we be blaming the new Rudd Labor Government? Should the knives be at the ready? Will interest rates reach the heights of the early 90’s and what does all this mean for property in 2008?

In the last few Marquette Turner e-magazines I have looked closely at what 2008 will bring for property owners and with only 10 days gone in 2008, we can already see the validity of the predictions I made for 2008 at the end of last year.

As interest rates increase and inflation stays above 3%, fuelled by the pressures of high oil prices it’s inevitable that unemployment will increase. Employers are tending to play a waiting game or are battening down the hatches and getting ready for what comes next. But what will come next?

At the end of 2007 I predicted interest rates to hit somewhere between 9-9.5% and with the Banks increasing rates even before the Reserve Bank announces its decision on official rates this is looking very likely.

Is the Rudd Government to blame? The answer to this is no. The Australian economy is now into its seventeenth year of growth which is remarkable and home owners have been able to cope on the most part (only just in many cases) with recent rate hikes. Interest rates increased 6 times under the former Coalition Government and it was inevitable that further increases would occur in 2008 regardless of which party formed Government. The price of oil filters through every area of the economy with the result being higher prices for consumers. Higher prices result in inflationary pressure which means higher interest rates.

What does this mean for property in 2008? Marquette Turner's first open home for 2008 was run in Neutral Bay last weekend and to our amazement we were inundated with over 30 groups of buyers all eagerly searching for property.

Buyers are still very much in the market, however the attraction to fixed interest rates has increased and I am urging all those that ask to lock in rates as quickly as possible - this is by far the best way to bullet-proof yourself and ensure that you are not feeling undue financial pressure as 2008 rolls on.

Rental demand is extremely strong and rental returns have increased but these gains will quickly be swallowed up by increased interest rates with the result being that many landlords will find the situation too tough, forcing them to sell. 2008 is going to be a year where property prices are steady and those that are willing and able to take advantage of distressed sales will benefit greatly.

The property outlook is mixed – rents will continue to be high, housing affordability is now at its worst point in over 20 years and this is likely to become even worse as interest rates and unemployment continue to increase.

The likelihood of a US recession is high and the sub prime (Lo Doc) mortgage market has caused significant damage in the US and this will likely result in tougher lending criteria for Low Doc products in Australia. The Australian economy has stood firm against the Asian Economic Crisis and we can get through a US recession.

With over 40% of our National exports coming out of mineral rich Western Australia and with demand for our natural resources greater than the rate at which we can supply them we may just sneak through when other countries stumble.

My advice for 2008 is lock in your interest rates and be sensible when spending. Ensure there is plenty of money in the tin for a rainy day and do everything possible to cut excess.

Michael Marquette michael@marquetteturner.com.au

The Outlook for Rental Propery in 2008

Increasing demand and lower vacancy rates will cause many rents to increase during 2008.

With the population growing and rising interest rates putting some investors off the residental market, vacancy rates, (currently running at an average 1.7 per cent) are unlikely to improve.

Increases in median rents can be expected in all states, the Real Estate Institute of Australia says in its 2008 real estate market outlook. The likely rise follow across-the-country increases last year with rents for three-bedroom houses increasing by an average of 12.6 per cent to September 2007.

Darwin is now the most expensive rental location in Australia (the median rent for houses is $440 per week and for other dwellings $340 per week) although Sydney and Canberra renters also pay $340 median weekly rent for two-bedroom other dwellings.

The cheapest rental location is Adelaide at $255 per week for a three-bedroom house and $205 per week for a two-bedroom dwelling.

Some investors are being turned off from the housing market as interest rates have risen and are seeking to take advantage of other investment opportunities which have more favourable taxation treatment.

On the upside, however, with a fluctuating stock market, residential real estate in Australia is looking decidely stable!

Simon Turner simon@marquetteturner.com.au

The Most Expensive Street in the Country

Wolseley Road, Point Piper, is the most expensive street in the most expensive suburb in Australia. It's also a who's who of Sydney real estate.

Wolseley Road is the dress circle where the rich and famous sit high on a thin-necked peninsula jutting deep into Sydney Harbour with mega-million-dollar views back to the bridge, the Opera House and the silhouetted CBD skyline.

Established in 1890 and named after British field marshal Garnet Joseph Wolseley, this wide, hooked street is a row of lavish estates, deluxe apartments and theme-park palaces.

Of the 10 highest-priced house sales in 2007, it is the only street with multiple listings, including $25 million handed over in December by stockmarket trader David Trew for a 1921 harbourfront mansion.

24 houses have traded in the past five years on Wolseley Road at an average $12.33 million - including the $21.5 million recruitment queen Julia Ross paid in 2004 for Villa del Mare, still a non-waterfront Sydney record.

It is also a place where construction never stops, with many residents wanting to display “their legacy”, say Michael Marquette, Director of Marquette Turner. Ultimately, “the more it costs and the more people that know how much it costs, the better”.

Take a stroll and and have a look to see who you can recognise (that is if you're tall enough to catch a glimpse beyond the high security walls and fences!).

Simon Turner simon@marquetteturner.com.au

Where The Smart Money Will Go in 2008

With so much happening around both Australia and the world – wars, sub-prime financial crisis, changing governments, assassinations and very unforgiving stock market investors, where is the hot money tipped to go?

On the domestic front we have just come through to our 17th year of consecutive growth. We defied the Asian economic crisis and continued building and growing as demand for our natural resources reached record highs. The resilience of the Australian economy will again be tested to some extent if predictions of a recession in the United States come to bear. Decreased US demand will affect Asian manufacturers including China however their domestic demand for Australian resources and products has every chance of shielding our economy and seeing yet another year of continued growth.

So the big question is where will the HOT (or smart) money go in 2008?

Typically we would be asking – shares or property? We have seen some of the property trusts like Centro take major hits on the stock market which is now extremely watchful and cautious.

We’d expect a flow of money into property with any stock market wobble and I am hoping that will occur in 2008. Prior to the Federal election I predicted that interest rates would continue to increase regardless of which party won and with inflation at current levels The Reserve Bank is likely to increase rates further.

The last property cycle came to an end in 2003 and historically property has doubled in price every 7-10 years depending on location, so we can reasonably expect that Sydney prices would have doubled by around 2013 as compared to prices in 2003. With that in mind property yet again looks like being a winner for those fortunate enough to capitalize on the current situation. Mortgage foreclosures in 2008 will create opportunities for investors with rental demand outstripping supply, increased yields and an excellent outlook for long term growth. Our population has now reached over 21,000,000 and people will inevitably continue to invest in Sydney.

The hot suburbs for me are those in the typical hot spots like Surry Hills, Darlinghurst, Potts Point and now Redfern. Rental demand in these suburbs is enormous and there are still some great buys for those willing to look and wait. And of course, sydney luxury homes continue to do well.

The surprise suburbs for 2008 will be those that have an inherent cultural need like Lakemba and its surrounds. The Muslim Mosque creates a natural need for accommodation around the area and the Eastern Distributor and M5 have now made it very easy to reach the city from that area.

Suburbs like Penrith, Glenmore Park and Kellyville are much further from the city and will hurt as interest rates increase.

My tip for 2008 is to invest in property where you know that demand will be constant – especially where a cultural need exists. Many of these suburbs are undervalued and provide enormous opportunity for those willing and able to look outside the square.

Michael Marquette

michael@marquetteturner.com.au

View our listings

Marquette Turner Launches "Home-Page"

Marquette Turner is extremely excited to launch "Home-Page", a service allowing EVERY SINGLE property listing to have it's very own website.

Managing Director Michael Marquette said yesterday that "in keeping with our philosophy of providing an individual and personalised experience at all times, and with our constant pursuance of improving the technology with which our business operates, Home-Page is to property listings what our ground-breaking Concierge service is to people."

With immediate effect ALL vendor's and landlord's properties will be presented using a Home-Page, as well as the traditional internet marketing services. This will allow their properties to stand-alone in all their glory, and for prospective purchasers and tenants to fully appreciate the property online.

Another reason for you to enjoy our company!

Click here to see the very first Home-Page property.

Simon Turner

What Women Want: Guess Who Makes the Investment Decisions!

A survey by Suncorp Metway has uncovered that women make most of the big decisions when it comes to investing in property.

A staggering 85 per cent of all purchasing decisions are influenced by a female despite the findings that most women are ignored during the purchasing process.

Real estate agents and mortgage lenders seem to think that women who come along are just there to support their partner meaning that they are treated fairly poorly.

Quite simply, anyone ignores a woman at their peril, as they can make or break a transaction. And reversely, any woman that finds she is being ignored or that the agent is looking to her husband for approval can also potentially use this to their advantage. She can be silently but deadly, her moves poorly followed.

The investigation also showed that women tend to research more when it comes to buying, meaning they’re more likely to find a good balance between their head and their heart.

They are most interested in features of the property, such as living areas, number and size of bedrooms, kitchen appliances, and off-street parking with the ultimate deciding factors being the size of the block or house, overall aesthetics and proximity to amenities.

Simon Turner