Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyers agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds & private investors.

4 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he is one of the better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete Wargent is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Wednesday, 28 September 2016

Stamp duty bonanza continues

The number of property transfers may be somewhat passed their peak in New South Wales.

But as noted here previously the median price of transfers is much higher than before, particularly in Sydney. 

And since duties are raised based upon transaction prices, the NSW Government stamp duty bonanza continues apace. 

The Office for State Revenue reported transfer duty revenues of a rip-snorting $8.7 billion in the year to August 2016.


The initial August result was a little below the prior year final comparative, but will in all likelihood be revised up as results wash through. 

In any case, the year-on-year change doesn't matter all that much since nobody ever expected or forecast stamps to be this high in the first place. 

It's a massive windfall, and the NSW budget coffers runneth over, in turn funding an infrastructure boom. 

Tuesday, 27 September 2016

Confidence in financial conditions surges to post-GFC high

High plateau...

Consumer confidence jumped +5.1 points or +4.4 per cent according to ANZ-Roy Morgan.

The reading of 120.6 is well ahead of the long run average since 1990 of 112.8, while the 4-week average has consolidated at a strong level. 


Household confidence in financial conditions compared to a year ago was up by +5.4 per cent to a post-financial crisis high.


Full report from ANZ-Roy Morgan here.

Parklife

A stormy-looking view over one of the most dynamic and exciting Boroughs for property investors.


Free copy of my book for the first person to email me where this pic was taken from yesterday...

Pop

Mining cliff approaches nadir

Tomorrow I'll update my analysis of Engineering Construction Activity for the June quarter.

In the March 2016 quarter engineering construction had declined by another 14.9 per cent in trend terms over the year to $23.7 billion. 

Four long years after construction activity peaked at $34 billion per quarter in June 2012 - driven by a range of resources mega projects - the figures will show that we're now getting somewhere quite close to the bottom.

In fact, depending upon where you live in the country, the bottom many already be in.

The figures will show that New South Wales bottomed out in September 2014, and after scraping along the bottom for a while activity has been rising steadily as infrastructure takes over from mining as the driver of growth. 

New South Wales had a significant number of black coal mining projects under consideration or construction through the peak of the mining boom around the Hunter Valley, Newcastle, Wollongong, Mudgee, Lithgow, and elsewhere - including Bengalla, (Wesfarmers, Rio Tinto), Ravensworth North, Ulan West (both Xstrata), Mount Arthur (BHP Billiton), Narrabri Stage 2 (Whitehaven Coal), and a whole raft of others. 

Victoria never had any such such great surge from resources projects, with activity remaining relatively speaking fairly steady throughout the entire period. 

And indeed engineering construction activity in Victoria too has been rising steadily since Q3 2014.

In Queensland the retracement still has a bit of a way to run. Engineering activity is already down by two-thirds since September 2013 as Gladstone's massive multi-billion-dollar LNG projects transition to production.

The main declines still to come relate to Ichthys in the Northern Territory and projects in the Pilbara such as Roy Hill and Gorgon transition to their respective production phases, with the available data lagging somewhat. 

Pop

The LNG boom was supposedly to create property hotspots in Karratha, Gladstone, Dalby, Chinchilla, and so on.

Instead, what it created in the Pilbara from a real estate perspective was a temporary insanity, an unsustainable explosion in rents, over-development, and finally an epic crash. 

Louis Christopher of SQM Research posted the below chart for Karratha yesterday, showing house prices down by another 60 per cent over the last three years. 



Source: SQM Research

Asking rents for houses in Karratha have fallen even further, down by 64 per cent over three years. 

In Queensland, Gladstone has followed a similar - if less severe - trajectory.

Monday, 26 September 2016

Chinese buyers...where to from here?

Wall of capital?

Chinese capital has a huge role to play in Australia's housing market over the next few years, for better or for worse. 

But there are some looming obstacles. 

New South Wales recently introduced a 4 per cent stamp duty surcharge for non-resident buyers, with a 0.75 per cent land tax. 

Harsh, yes, but not as onerous for apartment buyers as the 7 per cent stamp duty surcharge that became effective from 1 July in Victoria, while Queensland has also introduced a 3 per cent surcharge. 

Meanwhile, banks and brokers fearing investigation have become extremely reluctant to lend to non-resident buyers declaring only foreign income. 

With a record volume of apartments due for completion over the next two years, and many of these having been bought off the plan by overseas buyers, one way or another one feels that something has to give. 

Fork...

At this juncture it feels like it could go either way.

We know that Australia (and particularly Melbourne and Sydney) is a favourite destination for Chinese capital. 

Across the drink, Vancouver recently introduced a monster 15 per cent tax on non-residents which has turned Chinese investors away and is pushing that housing market south.

This could in turn lead more Chinese buyers to look at Australia as the destination for their fleeing capital.

Although prices have gotten more expensive in Australia for local buyers, thanks to foreign exchange movements this is not so for the Chinese. 

Unit prices may have increased by 41 per cent over the last four years in Sydney, for example, but when translated into CNY prices have not moved up at all in real terms.