Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 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's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete 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.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Sunday, 19 February 2017

Sydney completions rise; so does population

Supply ramps up...

One of the questions I get asked more than any other relates to Sydney's property market and the looming supply of new apartments. 

I recently looked at which LGAs are set to become flooded with apartments and which aren't in a bit more detail here

It's certainly been an interesting construction cycle in Sydney.

In 2009 annual dwelling completions had fallen as low as 13,041, which incredibly was the lowest level of completions since 1953. 


Lately there has been a mighty surge in Sydney dwelling approvals which peaked at 56,415 in October 2016, driven by record high rise apartment approvals, while completions are now hitting their straps too, rising to 33,310 over the year to November 2016.

The Sydney region here includes the Central Coast and the Illawarra.

Source: NSW Government

In Melbourne developers have reportedly slowed the rate of completions due to fears of oversupply, but to date there is little sign of developers in Sydney playing a similar hand. 

...& so does population growth

It doesn't always make me popular, but I generally don't do those binary blog posts that tend to pepper the internet - not least in the real estate space - but in the real world nothing is all good, just as nothing is all bad. 

While the ramp up in dwelling completions has been a worthy supply response, it's only when you map the results against population growth that you begin to see why to date the impact on the market has been muted. 

The interim 2016 figures for population change in the Sydney region have surged as high as 94,099 according to the NSW Government (the interim figures are sourced from the Australian Bureau of Statistics, Sydney Water Connections, and research by the Department of Planning & Environment). 

The population of the Sydney region also increased by about 80,000 persons in financial years 2014 and 2015 respectively, thereby increasing by more than 322,000 in only four years, comfortably outpacing demand from the 100,328 dwelling completions over the corresponding four-year period. 

Source: NSW Government

Note that these 2016 population projections are interim figures and may be revised.

But if they are close to being accurate they suggest that the ratio of Sydney population growth to completions in Sydney is still quite high at around 2.8. 

Given that most completions these days are for smaller dwelling types - and that many are seemingly kept empty anyway - perhaps the supply response to date has yet to bridge much of the inherent shortfall from the nadir of the cycle, which lasted broadly from 2007 to 2012. 

I took a look at approvals and net completions by dwelling type at the LGA level in a little more detail here

Remember that there during 2016 there was a record number of apartments under construction, so those completions figures are going to run some way higher yet. 

City, Cityscape, High Rise, Metropolis