Wakelin’s Eureka moment on Melbourne property

By Leith van Onselen

It seems everyone is turning on the Melbourne housing market. Earlier this week, the Real Estate Institute of Victoria (REIV) capitulated, noting that Melbourne would see no house price growth in the short-term and, at best, only moderate price growth over the medium-term. The REIV’s analysis was joined by the generally bullish BIS Shrapnel, which forecast real price falls of -6% in Melbourne over the next three years.

Now the Eureka Report’s property analyst, Monique Sasson Wakelin, has had a ‘Eureka moment’, finally acknowledging that the Melbourne housing market is in the doldrums:

The current Melbourne housing market dynamics are working in the favour of aspiring home owners, with no short-term prospect of capital growth for investors, says property investment adviser Monique Sasson Wakelin.

Wakelin has adopted a more bearish outlook on the Melbourne property market and predicts there will be no capital growth in house prices for at least year…

“Investors will be treading water for some time, but the upside is that you are coming into a market that is very transparent and very affordable…

However, Wakelin insisted a lack of capital growth did not mean the “sky is falling in” or that the “everything is going to fall apart”.

The thing that is particularly interesting about Ms Wakelin’s comments are that they contradict her more upbeat assessment provided only last month:

The Melbourne inner-suburban investment property market is in recovery mode, with a perceptible shift in the balance of power from buyers to vendors, according to property investment adviser Monique Sasson Wakelin…

“You won’t see it in the statistics published in our metropolitan daily newspapers because they concern themselves with city-wide data, which, as the table shows, only indicate a flat market.”

But she suggests investment-grade assets two to 12 kilometres out from Melbourne’s CBD are improving.

“The feedback from our team of property advisors who are in the market six days a week is that prices for this category have clawed back around half of the decline in prices experienced since the previous market peak in 2010 – a testament to their resilience and quality even in a challenged market,” she says…

“Another positive for the market was the reasonable level of quality stock at the moment.

“If you’re looking for a quality asset, now is a time you can be confident of finding it.”

“Similarly, those who are seeking to sell can expect growing interest from buyers,” she says.

With this backdrop of an already recovering market, she expects the 50-basis-points drop in the cash rate by the Reserve Bank last Tuesday, plus the prospects of further cuts in coming months, to provide further support.

Better late than never I guess…

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Comments

  1. What on earth does she mean by “the upside is you are coming into a market that is very transparent and very affordable”?

    I hope someone who used her investment advisory service takes her to court over inaccurate forecasts, which consistently ignored the obvious.

    • Crack up: “very transparent and very affordable”

      * 40-50% overvalued;
      * x6-8 times average income vs x3-4 times long term average for debt/income;
      * home buyers continue to be outgunned by subsidized investors, admittedly in a transparent fashion;
      * media maintains illusion that RE is guaranteed safe bet & one-way ticket to mega-profits.

      RE industry avarice devoid of common sense, govt tax & policy distortions and lazy & irresponsible lending have resulted in anything but affordable shelter.
      But it is transparent.

      • Not ethics, but regulatory guides.

        All AFSL holders have a broad guidelines, with the lines of RG146 and RG175 the most widely used.

        RG146 relates to advisor competence.

        RG175 relates to conduct, and tends to be backed up by pt7 of the Corporations Act

        The product of investment property is exempt from these guides.

      • Sorry, but if anyone dropped $500,000 on an investment property based on her investment advice, they should consider having a crack at her. Sure, the rules are different for real estate and finance advisers, but that does not mean someone who holds herself out to be a specialist property investment adviser has no duty to clients. Wakelin has been consistently and obviously wrong for a long time. Someone should have a crack at her. Perhaps with its newfound wealth, AIM would be worth going after as well, given she was presented as an expert in Eureka Report etc.

      • Forrest GumpMEMBER

        The Irony of investing is dumbfounding. If you have a $500K investment portfolio of ASX shares and ForEX, you use the skill and expertise of a qualified, ‘competent’ trained advisor that has at least passed junior high school.

        Now applying the same logic, you have the same amount of money, but are considering investing in real estate. So instead of utilising the skills of a qualifed and competent person, you generally elect to taking advice from a shiny shoed snappy dressing black suited real etstate agent whom spent 5 years stacking shelves at the local supermarket before entering into the real estate “profession”. (Note, i use the word profession very loosely.)

        Then after purchasing your half million dollar investment, you then hand it over to a self titled “Senior Property manager” whom from my experience is generally a young girl that probably never completed high school. And this “senior property manager” sells you the concept that she will “Manage” your property and provide all the advice that you need.

        But in reality, what the “property manager” is telling you, is she will conduct a quarterly property inspection and determine if the property has been cleaned and ignore the rising damp running up the walls, the peeling paint, the black scortch marks around the fuse box and the leaking water from the toilet shank. Her report will be…Cleaning Done (check). Grass mowed (check), no pets (check), rent paid (check). Property effictively managed, please forward your payment.

    • Oh – that would probably be a pang from the spruik-gland. Very much the equivalent of “I’ve got nothing, so I’d better make up something and tag it good, to balance the torrent of bad news”

      I think the Cat from Red Dwarf had it right: “About your father. If it’s any help, he’s in the ground now. Sure, it’s bad news for him. But on the other hand, it’s party time for all those little worms.”

    • True. But, we’re a long way off the last bull turning.

      There are also greater forces at work right now that have a lot of people in turtle mode. Heads in their shell, waiting for the hail to stop.

      Who’d want to buy right now, regardless of price when Victoria is losing jobs hand over fist? Is the 1year repayment holiday still in effect if unemployment hits? If so, then there will be a 6-12 month lag on forced sales and it’s possible the delinquency rate will look normal if the banks have agreed to it.

      Then there’s Europe who seem intent on destroying their civilisation to save their shitty currency.

      Then there’s the US who seem intent on destroying their currency to save their banks.

      Then there’s China who seem intent on pretending nothing is wrong to save their political grip.

      What hope does Australia have in avoiding the consequences of these actions when we are, by population, depth of markets, and stock of money the global equivalent of a penny stock?

      The last bull may capitulate and have a chance to be right for a reasonable time before it stabilises.

      We ARE different in many ways. Both good and bad.

      • I can think of a reason why Melbourne property is a buy.

        Europe has an exit crisis in the next twelve months, leading to a bank freeze, leading to global recession, leading a new stimulus package here targeting house prices.

        Short term, sure. Risky, definitely. Plausible, yes.

      • That might make it a buy IF we see a stimulus package targeting housing. Wouldn’t be a buy NOW based on potential for this scenario IMO.

        And even if we saw a a package like this rolled out, surely there would be better cities to be buying than the one with the lowest yield? (although probably depending on state specific responses)

      • What if they threw a party and nobody came?

        I’m sure they’ll be tempted by FHOG again, it’s been such an effective way of kicking the can down the road, but I do wonder how much firepower it would have this time round.

        There’s more political opposition to it, there isn’t the scope to reduce interest rates as much to go with it, general concern around global economy, etc.

        If they ran it and it had minimal impact there would surely be panic at policy levels in government, finance, etc.

    • Yes, for the stock market. (E.g. Charlie Aitken in the Eureka report kept saying buy buy buy in 2007 and 2008 until he capitulated and threw in the towel. Then the market turned and he said buy and then claimed his spectacular results from there onwards… ha ha ha)

      The bull here on housing may have turned, but the market in housing is a lot slower than the stock market. Slower to go up and slower to go down and turn. It just takes longer.

  2. +2 Junkyard and Lori. She is rather special. If one was to write 5 reasons for not parting with a razoo to read Spectator or Eureka etc, she’d be up there.

  3. looks like a joint effort to condition the public to accept/ beg for more housing stimulus

  4. Monique was one of the reasons I had a Eureka moment – when I was a (silly) subscriber to the Eureka report.

    Monique kept writing that “good” property always doubles in price every 7 – 10 years. People wrote letters to the report (which were published) arguing with Monique on this point. Monique responded to them and claimed that this is exactly the case with property and tried to refute every argument put forward. People wrote and wrote. Monique claimed and claimed that every 7 – 10 years property doubled. Buy buy buy.

    I realised back then (approx 2009) that the Eureka report was not worth spending my hard earned money on. I have learnt so much more from Macrobusiness…

    I never kept all the PDFs of the Eureka report – I should have, just to re-read it and remind myself of the “advice” I was paying for…

    • BakuninMEMBER

      Their advice is correct….when in a bull market..however they won’t tell you when the market has turned and to preserve capital and look for income and by then it’s probably too late…also got to remember that if you never listened to the bulls, you would never do anything.

    • Mining BoganMEMBER

      Sales slew Advice a long time back.

      What we have seen is a victory dance on the grave of a beaten foe.

  5. as has been stated many times here by others, the problem with the “no big fall” scenario is this – who will buy when yields in melbourne are SO LOW (3.5% gross on stand alone house) and there is NO prospect of gains to compensate??? No sensible investor, no sensible FHBer. Who will sell? Sensible investors (many who are retiring boomers). As inventory levels creep ever higher there is a very real chance of caution becoming panic – especially with Melbourne being on the bad side of the 2 speed economy. It may only stagnate, but there is a very real chance of large falls. All we can say with certainty is that over the next 10 years, property will lose money for anyone who has to borrow to buy. When the masses become fully aware of this the chances of capitulation increase. Dont buy now!!

    • Thanks Squirell. You have it exactly. The market price will be driven down by those who must sell – transfer, unemployment, family breakdown – and the holdouts can simply sit there… holding out. Even if there is no panic (the Debelle view) there are a lot of weak holders among the 1.2 million negative gearers whose attachment will be broken by continuous losses and grandfather time.

      Prices will fall. The change may be orderly, but prolonging the transition helps no one.

      All together:

      Don’t Buy Now!

  6. Blasphemy! How can I forget Ms Wakelin!

    Score of The Capitulated Vs The “We are different” Optimists:

    Capitulated: REIV Enzo, Eureka Monique, RBA Stevens,

    Optimists: RBA Guy (Debelle), APM Dr Andrew Wilson, Peter Fraser.

    Did I miss anyone in either camps?

    • Humour me Mav – exactly what is my view on Melbourne property prices?

      You apparently know it better than I do.

      • PF, your views on Melb are well known (Bearish, but bottom of the market spotted already!).

        But I dare not offend you by putting you in the capitulated camp. Do you want me to? 😀

      • CJ is the founder-president of the bullhawk camp (a class of its own).

        Given that he is perpetually predicting that inflation will rise and RBA will be forced to raise interest rates, I can’t possibly shoe horn him into the optimist camp.

      • I presume that you are specifically referring to interest rate calls. However, looking at the overall situation, it’s hard to not be aware of the risks, and therefore keep one eye on those risks, whilst at the same time appreciating that we are living in one of the few countries that has escaped most of the problems.
        Armegeddon hasn’t happened, it probably won’t happen, but we can’t deny the possibility of it happening.
        I don’t consider that to be a completely unrealistic point of view.

  7. Monique is adamant that only 5% of properties she reviews are properties she describes as investment grade. That means 95% of the properties are not worth investing in.

    It is her primary selling point in terms of appointing her as a property adviser.

    It’s the property that she rejects which makes Monique the best”

    It’s all a bit too simplistic this approach to ever increasing property prices. Demographical influences are never mentioned by these people.

    Forget FHOG’s that won’t prop the property prices in established areas, provision of irresponsible debt by our world class bankers needs to continue unabated to finance continual growth from these levels.

    I can recall the Japanese experience in the 1980’s when there was talk of generational mortgages spread over 60 years needed to finance a family home purchase. Look what happened from that point, Japanese property has declined 80% since those days.

    The major driver of property prices is confidence in a future which brings continued employment and rising incomes to service long term mortgage debt.

    There is now no such confidence and coupled with boomers needing to access the wealth within their number one asset, you don’t need to be a Rhodes Scholar to envisage a property correction of some size.

  8. For Ms Wakelin to even remotely admit that there may be no capital gains in Melbourne property market is a clear sign that the end is nigh…

    • “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

      Winston Churchill in November 1942

  9. anonysubscribe

    and these are the experts who guided my real estate decisions before I met MB!
    BIS shrapnel left a lot of shrapnel in me as I believed their projections nto realising in the 80s and 90s when I bought and sold without the net info now but just my friendly real state sharks as well as BS from BIS to make on the fly decisions about real estate residence buys in the wrong suburbs granville and greystanes which were not reflected in the media or BIS BS.

    • DrBob127MEMBER

      You raise a good point anonysubscribe.

      The interwebs have helped to alleviate the massive information assymetry that enabled the R/E spruiking to be dressed up as ‘investment advice’.

      i.e. they held all (the vast majority of) the information and your average R/E buyer did not have any (not very much).

      Go MB!

  10. GunnamattaMEMBER

    I must confess I too was a Eureka man – who bailed early this year. I found Monique wearying but plausible. I liked Alan K, and Steve B, but Bob just left me cold, time after time, with outright political lecturing of the most pernicious kind.

    They do have the odd bear there – just not on property.

  11. She said “The feedback from our team of property advisors who are in the market six days a week”…..
    They are NOT out there on Saturdays!!!!

  12. Not in Oz property but surprised when in Vic past few years hearing her regularly on ABC Radio Saturday mornings, i.e. a state broadcaster (doing a “Kohler”?), suggesting that if you did not get in now you may miss out etc. Further, with background in language and communication, I always thought her tone of voice and urgency was very suggestive….. but I suppose she is a “consultant”, not an “agent”…..