Pete Wargent blogspot

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

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.

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

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

Thursday, 27 April 2017

Rental growth remains soft

Rental growth at two-decade low

Rental growth was flat at just 0.6 per cent over the year to March 2017, according to the ABS inflation figures. 

This is the equal lowest annual percentage growth since 1994, largely reflecting the new supply of apartments hitting the capital cities on the east coast. 


The national figure obscures contrasting fortunes around the capital cities.

Sydney recorded annual growth in its rental CPI of 2.5 per cent. 

In Melbourne rental price growth has been picking up over the past five quarters, although only to 1.7 per cent year-on-year according to the ABS series (there has been considerably stronger growth in asking prices). 

Hobart recorded the fastest annual growth of the capital cities at 4.2 per cent. 

In Canberra there has not been much to see in aggregate, but anecdotally there is a view that the annual land tax has turned investors away from houses leading to a shortage of detached rental stock (though as in most capitals there is clearly no shortage of new apartments, which has compensated tenants for now).

In Darwin rents declined by 7.4 per cent year-on-year, although this actually represents an improvement on the preceding quarter's drop.

And in Perth, rents were down by 7.3 per cent year-om-year, having now dropped by 12.1 per cent from their peak. 


In Brisbane nominal rents remain positive, but there's no doubt that inner city apartments rents are set for a tumble, as evidenced by the "for lease" banners strewn around the inner city.

This from yesterday...


Benign inflation

The above figures feed in to the benign inflation picture.

Moreover, while dwelling construction is expected to remain strong for some time in Sydney, new apartment projects are now being shelved or scrapped practically by the week in Melbourne and Brisbane.

As each new Brisbane apartment project completes this will leave a small hole in the economy, which cumulatively will act as a drag on growth.

For this reason the government will be looking to loosen the purse strings to pave the way for infrastructure projects to plug the hole, which can be achieved through borrowing without unnecessarily crippling the budget.

A final point, the Sydney market has seen rents outpace CPI by a factor of two over the past ten years to rise by 56 per cent. 


This reflects that Sydney's construction boom was still addressing an inherent undersupply until recently, but stay alert because the balance is about to swing sharply in favour of tenants over the next couple of years.