Luxury Real Estate

By Abercromby's Real Estate

Recently two of the directors Jock Langley and Robert Vickers-Willis returned from Hong Kong meeting expatriates and building new relationships with migration companies.

Having worked in more discerning markets we feel it is important to look outside the square and attract different buyers to the residential market place.

This has born fruit with our agency being a Finalist in the recent Age REIV Awards for

Excellence:

• Residential Marketing Campaign Budget $2,000 - $10,000

• Residential Marketing Campaign Budget in excess of $10,000

We are also please to advise that we were awarded First Prize in The Classified Display

Advertisement category.

The Board of the Reserve Bank of Australia decided to reduce the cash rate target by 100 basis points to 4.25 per cent at its monetary policy meeting on 2nd December 2008.

The Australian economy has been more resilient than other advanced economies.

With confidence affected by the financial turbulence and a very negative media, it is likely to see demand for housing purchases remain subdued in the near future.

With inflation expected to fall, we will probably see further interest rate cuts in the near future. Given the current economic climate, strong employment will ensure property prices will not drop significantly as they have in the UK, USA and EU.

By Simon Turner of Marquette Turner

It was almost like you went to put the kettle on during the ad break and everything changed with the Australian Dollar: one minute we’re pushing (almost) the 1 AUD for 1 USD and within a few months the AUD is struggling to buy 60 cents US.

Not being an economist, and learning on the run as no doubt many of us are in these historical economic times, I put this question to a friend of mine that I’ve grown up with that now works in the City of London. He’s a bit of a whizz and obviously a busy man, so I really appreciated his answers in layman’s terms, and am glad he’s allowed me to share them with you. Here’s his explanation:

The USD is benefiting from several themes, I will list them:

1) There is a perception that the US is further down the road in this crisis (ie. real estate markets have fallen more dramatically) and they have unveiled a more comprehensive suite of policy measures to deal with their problems than other countries have thus far needed to, Australia included. This has enhanced the USD status as a “safe haven” currency. There is the perception that the rest of the world is now slowing down faster than the US, and so this is encouraging US investors to repatriate foreign investments into USD.

2) Central banks around the world are cutting rates aggressively, and so the interest rate differential between other currencies and USD is narrowing, this increases the relative attractiveness of the USD.

3) The unwinding of “carry” trades (this is where credit is borrowed from central banks with low interest rates and invested in other economies that are higher). Over the past year/18months some investors have borrowed in USD at low interest rates, to invest in AUD at higher rates, and so earning the 4% or 5% interest differential between the two currencies. This money flow was one of the reasons behind a 30% increase in the AUD vs the USD over this period. As volatility in financial markets increased, these investors have unwound these trades and subsequently sold AUD to buy USD.

4) The linkage of the AUD to commodities has not helped it in recent weeks, as all commodities have sold off on expectation of a rapidly slowing economy.

So there you go. Economies are ultimately a huge web of tangled and complicated interests, involve complex strategies and vary in their proclivity to risk. We clearly can’t be expected to understand every single facet with great understanding, particularly when many of the best brains in the world couldn’t.

I do hope, however, we’ve given you a few little tips that mean your “flapping in the wind” a little less. And of course, there’s certainly a need in the world for Wise Guys!

By Janice Ridge

Treasury Secretary Henry Paulson in a CNBC interview said that although the U.S. economy has been struggling, we are coming closer to the end of the current credit crisis. He believes progressive signs of credit and market stabilization are evident and the markets are considerably calmer than they were in March.

In defense of the housing industry, speculators and investors bear little responsibility for record high oil prices. In the CNBC interview he stated, “This is not about blame, this is about supply and demand. All the research we have done shows that speculators and investors have had very little impact on this.” Traders and longer-term investors tend to take positions on both sides of oil market transactions, long and short, thus being essentially price receivers rather than price setters.

Do you agree with Mr. Paulson’s assessment of the situation? If the current run-up in oil prices is not the fault of investors then who is to blame or is it even worthwhile to find someone to blame?


Editor’s Note:
As the Director of Membership at LuxuryRealEstate.com, and herself a licensed REALTOR®, Janice Ridge is devoted to coordinating the efforts of all of the LuxuryRealEstate.com Membership and Account Managers, so that each of our members is given superior service. This is definitely a hot topic at the moment because all of our lives are directly affected by credit and fuel problems, which both affect the real-estate market. There might not be an easy answer to the questions raised in this blog entry, but hopefully we can generate some useful discussion and get a variety of perspectives.