Tuesday, October 25, 2011


I heard a discussion recently on a community radio station about how people could and were buying products increasingly over the web and the conversation concluded with the announcer declaring that retailers would “...just have to get their act together”.
I recently made myself fairly unpopular with some friends who were discussing how much cheaper they could buy motor vehicle parts from the USA and were grumping about how they were being ripped off, when I pointed out some of the realities of being an employer in Australia.
In our modern, fast paced world it seems few people have time to look behind the quick sound bite or headlines to explore what is actually going on.
First some reality about competition if you are in the business of retailing...the only means you have of competing is on price.
So let’s look at how uneven the playing field for our retailers compared to the USA.
The minimum wage in the USA Federal $7.25/hour Highest state Washington $8.67 for a 40 hour week.
Australia’s is $15.51 for a 38 hour week.
With close to parity in the dollar that means we get paid twice what workers in the USA get.
Annual leave USA under Federal law reqirements........none Usual 10 days annual leave.
Australia 20 days plus 10 public holidays plus annual leave loading 17.5% (non-existant in the USA).
Sick leave.....USA no entitlement.
Australia 10 days including compassionate leave extending from grandparent to grandchild.
Not many people can explain long service leave here in Australia even though all workers have the entitlement so I will explain.
When Australia was being settled there was no local people qualified to run things such as public works or water supply so they had to be recruited from The dear old mother country, the UK.
As an inducement these employed were guaranteed 6 months Long Service Leave every 6 months.
Why 6 months?
So they could take a trip by boat taking 6 weeks to get “home”, have 3 months at “home” and take 6 weeks to sail back.
This leave entitlement still exists even though almost no-one calls England “home” and you can be there in 18 hours by jet.
We have not yet considered maternity leave nor some of the myriad other occupational health and safety laws, unfair dismissals or other laws imposed on Australian employers that many other countries are not subject to.
Please don’t misunderstand, I am not suggesting we reverse the benefits we have.
I am simply saying that before you criticise local retailers you had best take another look at how difficult it is for these traders to compete and recognise that the playing field is far from level.
We also need to understand that the way a modern economy works each of us needs to have our customers employed to sustain our own standard of living.
If you are buying from overseas under $1,000 GST free that is 100.00 not going to your tax office.
Ross Cutten
Owner / Director
Noble Real Estate

Wednesday, October 12, 2011


I have been selling real estate in the Rockingham District since 1984.
When I started a typical well presented home in the Rockingham Park home was selling for around $55,000.
My father, who was in real estate for 42 of his 50 working years told me he could have bought land in Applecross just after WW2 for 50 pounds ($100).
I have just read the latest presentation from the Perth Chamber of Commerce and Industry on the future for Western Australia showing economic growth in India of 37% since June 07 of 37%, China 31%, Western Australia 23%, Australia 11% as opposed to the USA with 1% and Japan with -5% and yet people are more fearful than at any time I can recall.
I believe the level of fear is mainly attributable to the incessantly negative forecasts in the media, principally from economists who have predicted 28 of the last 3 recessions. They are the modern equivalent of Chicken Licken, running around telling us the sky is falling. My beef with them is that there is no accountability when they are wrong.
Stand by for the shocking truth....No-one can predict the future (even with a degree in economics).
Perth’s most famous valuer predicted in 2004 that the market had peaked and advised against buying. In fact the market ran on for a further 2 years.
In London and New York prior to the turn of the 19th century all the doomsayers were forecasting both cities would drown in a sea of horse manure. How could the forecasters be expected to foresee the internal combustion engine?
Warren Buffett is quoted as saying “When people are fearful be greedy” but buyers are still sitting on the fence, I presume thinking that they will buy when the media report the market has moved up. Do they fail to realise that sellers will see the same reports and therefore will be more confident of achieving a higher price?
In the very latest news from REIWA sales are up 25% from 4 weeks ago and 34% from one year past. First home buyer demand is up 10% and is higher than any time since March 2010.
Is this the beginning of a new trend?
I have no way of knowing, but certain facts hold true.
W.A continues to receive 1,000 people per week from interstate and overseas migration.
Home building has been subdued below normal for some years.
Our rental property vacancy factor continues to be extremely tight indicating continuing solid demand (people have to live somewhere), and rental returns on recently purchased properties are showing 5% gross return or above.
Humans still buy food, then clothing, then shelter in that order and for shelter they have only 2 options....buy or rent. Either way they must be housed and cannot delay the decision.
Real Estate continues to be much safer than shares. A company can go broke and the shares become valueless. That cannot happen with housing.
So, are you going to move like Warren Buffett or wait for the herd?
Ross Cutten
Noble Real Estate