5 things that will NOT happen in 2009

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We all like to predict what will happen in 2009 but I think it is easier to predict what will not happen in 2009.

1. Housing Recovery
Depending on who you want to believe determines what you will believe. There will likely be no recovery and you should be happy about this. Don’t listen to your real estate institute, they will come out with “there are very healthy signs” about 10 times this year.

The truth is there will be no housing recovery for at least 10 years. Why?  Wages!  If you look at the cost of living and wages growth over the past decade (yes Mr Howard the true indicator of how your people are living) you will notice that costs have skyrocketed whilst wages have remained steady. For a housing recovery we need real wages growth and the opposite to occur with cost of living expenses.

With the current global economy and climate change you will not see this happen for many years. So why should you be happy?  Believe me, you do not want housing prices going up, this will just mean less and less of a market to sell to.  What you want is a bottom and therefore a steady market.

2. REA Price Freeze
This will be a great test to see how much the REA understands about the current market and how many of their real estate agents are feeling the pinch. You know that they are going to put your subscription fees up, maybe they will only increase them by 5% to show you just how much they care!  I am sure there will be a positive spin somewhere.

3. First Home Buyers
Tasmania has led the way with albeit a limited scheme, but one that is a little different. The state government provides a $50,000 loan to first home buyers. This must be paid back in 15 years, this incentive is on top of the first home buyers grants.

This was of course limited to 7 million on a first come first served basis, but it showed a little bit of innovation can go a long way.  For those of us who live in NSW, don’t hold your breath – there is no chance that this government or the liberals have any idea how to run a canteen, let alone a state, it really is that bad. Embarrassing!

4. Newspaper Recovery
When some of the biggest and historically the most profitable newspapers in the world need bailouts (Chicago Tribune,  New York Times) you know that there are troubles ahead for the industry as a whole. My guess is that this will be the worst year on record for newspapers/print advertising and many will go to the wall.

5. Television Revival
So Channel 9 has a new look, looks the same to me!  In Sydney they are talking up Peter Overton as some kind of ‘saviour’ and promoting him across the network as a renegade.  The interview that they promoted with Tom Cruise does not work, Peter looks petrified when Tom tells him off.

Old TV is near finished, lets see how long they try to keep it going. Oh and forget about Free TV being anything revolutionary in the short term, they count the same shows on digital and analogue as two different channels. Too funny!

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10 Comments

  • craig pontey
    Posted January 21, 2009 at 12:51 pm 0Likes

    The Year to “Expect the Unexpected”

  • Andy
    Posted January 21, 2009 at 1:03 pm 0Likes

    Craig sums it up completely – who knows what the year holds but the demise of traditional media is overrated….the demise of hefty corporate overheads and perks at anything media is more likely though. This would then bring the price down of all media as media production costs are reduced for the real estate industry! (this is wishful thinking)

  • SSSR
    Posted January 21, 2009 at 1:20 pm 0Likes

    Peter, I think your comments regarding house prices may be true of some places in Australia and not others. 10 years is a bold prediction.

    I believe that supply and demand and lower interest rates will still drive prices, albeit somewhat more modestly than in previous years.

    I think one could safely predict rental prices to continue to climb over the next couple of years though.

  • Bill Burdin
    Posted January 21, 2009 at 2:34 pm 0Likes

    Peter,

    I think you are absolutely spot on and there won’t be a recovery until real wages fall back into line where once again they allow the “Australian Dream” to become a reality to the younger generation.

    I’m at an age where I have seen several booms and busts but the current one is far different from the past.

    Here in Canberra the dream of home ownership for one reason or another has been taken away from the young generation.

    There is only one way it will become achievable again and that is when supply of land way exceeds demand and therefore the market drives down the price.

    But I cannot see it happening because governments have become reliant on taxes and duties on land transactions so they believe it’s in their interests to keep land scarce and keep prices up.

    I remember the days here in Canberra when a young couple could walk into the lands office and choose a block of land over the counter and pay maybe the equivalent of a years wages for a decent block.

    Now land is so scarce they need to pay $200k – $300k for a block if they are lucky enough to find one.

    That’s equivalent to 3 – 4 years wages and the dream has evaporated.

    I’m old enough to also remember Gough Whitlam opening up Western Sydney and housing boomed because it was affordable.

    Like it or not, one way or another Government needs to make it affordable again, and there is only one way and only one way, that is to oversupply land availability.

    Throwing money at first homebuyers or reducing stamp duties won’t solve the problem, only one factor will make housing affordable and it’s over supply and the only control the government has is land supply.

    So open up the land.

    Oh Oh, here come the greenies.

  • Simon Baker
    Posted January 21, 2009 at 10:01 pm 0Likes

    Peter

    Good article and makes a nice match for our top 10 predictions for the Australian property portal market on Property Portal Watch.

    I have to agre with you that REA will increase their prices. My guess is that they will for a couple of reasons – firstly, they need to maintain growth in revenues and as Australia is their main driver of revenues, a price increase is the easiest way and secondly, they will see this as a way to drive another nail into the coffins of the papers and the online competitors.

    I also think that Domain will follow REA up on any price increase as Fairfax needs every cent of revenue it can generate. It doesnt make sense for them to drop their prices.

    Finally – i agree with your comments about the papers and TV … there is too much investment for them to die overnight but they will eventually pass away … just look at the US and what is happening there.

    Simon Baker

  • Robert Simeon
    Posted January 24, 2009 at 12:32 pm 0Likes

    Simon,

    “firstly, they need to maintain growth in revenues and as Australia is their main driver of revenues, a price increase is the easiest way”.

    Growth in revenues simply can’t happen in the current economic environment given the number of agencies either closing, merging and cost cutting implementation. I believe to the contrary where the market can anticipate profit downgrades given that their remains a very strong possibility that third party advertising will be seriously impacted and reduced substantially.

    Until businesses see some light at the end of the tunnel we can expect very conservative agency marketing expenditure for quite some time to come.

  • Sal Espro
    Posted January 24, 2009 at 7:32 pm 0Likes

    Just musing folks.

    Were you guys around during the last big ‘clean-out’ of the industry in the early nineties?

    [Just as a point of reference, that’s when Property.com.au (Realestateview.com.au as it was then), began – pre-Netscape browser days, ftp’s and 9.6Kbps when the browser was eventually launched – ah, the good ole days 🙂 And Even Thornley was hatching-up Looksmart with Readers Digest funding but still hadn’t launched.]

    What were you up to then, Simon? Learning some graphs and sales skills with McKinsey while the rest of us were wondering who was going to be left.

    Papers, schmapers…that’s what I always say.
    REA, Domain, blah, blah, blah. I know another very well known (VERY) old-timer who has just sold a couple of big properties without using the Web at all. He is the master of niching. Makes you wonder, don’t it.

  • Sal Espro
    Posted January 27, 2009 at 12:08 pm 0Likes

    Just quickly revisiting and re-read my comment above. Thought I should apologise for having a dig at Simon Baker. You have given me no reason to be rude so please accept my apologies Simon.

    Sal 🙂

  • Paul Devine
    Posted January 29, 2009 at 12:18 pm 0Likes

    Hi Sal,

    Realestateview.com.au was formed around 2001 as an industry portal and had nothing to do with property.com.au which has been around since 1995 and was owned by PMP Communications.

    They sold out to some other company (RPData?) before realestate.com.au bought them a year or two ago. The REIV now controls realestateview.com.au.

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