Sunday, 24 February 2013

Like a Sydney cappuccino

One of the delights to be enjoyed in Sydney thanks to the heritage of the city's Italian community, is a decent espresso and Sydneysiders all over come to depend on their regular "cuppas".  Of these the cappuccino is a particularly popular variety, which stands out for the amount of its froth - the hot aerated milk at the top of the cup (usually with a signature sprinkling of chocolate powder).

The other Sydney love affair is with property and glowing reports of a return of buyer interest in the Sydney property market and statewide (in New South Wales) was reported in a number of publications.  "Back to boom time" screamed the Sydney Morning Herald:


...LOW interest rates, rising confidence, an improving sharemarket and Chinese buyers all helped Sydney achieve a ''boom time'' auction day as the property market faced its first big test of the year on Saturday.........''Sydney's 76.3 per cent rate is the highest recorded for years and reflects boom-time activity similar to what the market experienced in 2010,'' the senior economist for Australian Property Monitors, Andrew Wilson, said.....(here).
This is froth.  Pure and simple.  A market divorced from fundamentals.  And the optimism on display was elsewhere, in other markets - reporters wrote of an expected bull year in the sharemarket (here), while bank regulators voiced concern about perceived increase in business lending (here). A glowing advertorial for some financial advisers told the story of Tim with all his amassed savings and how he was getting ready for the "good life" (with more saving and spending to come)(here).
So what is really going on? Businesses are looking to cut costs drastically - Insurer QBE noted to be ruling out job cuts (here) and one mining town is dying (here).  Anyone paying attention to global developments is right to think that Australia will not be immune for much longer.  Time to move from frothy cappuccino to regular black coffee...

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