Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, a must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of Australia's finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts, the most comprehensive analyst I follow in Australia' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

'Superlative work' - Grant Williams, founder RealVision.

Wednesday, 12 April 2017

Bear

Bear market

Commonwealth Bank reported that the spot price of coking coal has doubled from $150/tonne to over $300/tonne over the last fortnight. 

Clearly that's related to the disruption to supply caused by Queensland's Cyclone Debbie as repairs are carried out.

More fundamentally, the stimulus from China looks to be wearing off, and it appears likely that the sizeable rebound in Australia's commodity price is set to reverse. 

Earlier this month the Reserve Bank reported that Australia's Index of Commodity Prices had risen by more than 50 per cent year-on-year

However, iron ore spot prices have now dropped by 20 per cent since the third week of March, and as such are entering a bear market.


Resources struggle

SQM Research released its Weekly Asking Prices Index figures for Australia's housing markets yesterday.

They reported ongoing increases in Sydney, Melbourne, and Hobart, but no let-up in house price declines in Perth or Darwin.

In Perth the median asking price for houses is now 12.8 per cent lower over the last three years.


Source: SQM Research

In Darwin, where the housing market has followed a very similar trajectory, the equivalent figure is a 14.7 per cent decline.


Source: SQM Research

These are material declines for capital city housing markets, but are chump change compared to what's been playing in out in some of the regional resources towns and cities.

In Gladstone median asking rents have collapsed by about 45 to 55 per cent over the past three years alone for houses and apartments respectively.

Similar outcomes have been seen in any number of locations, from Whyalla and Roxby Downs in South Australia, to Karratha and Port Hedland in Western Australia, and Moranbah and Dsyart in Queensland. 

As such, mortgage delinquency rates appear very likely to continue rising in resources regions.