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).

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 is 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 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'.

"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 of the world's most popular & widely-read financial publications.

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

Thursday, 29 June 2017

Mining cliff seen off

Stabilising forces

It's sometimes under-appreciated how Australia's free floating dollar, monetary policy autonomy, flexible labour force, and comparatively low government debt have allowed the economy to adjust through a seriously tumultuous period.

At the peak of the resources construction boom in the third quarter of calendar year 2012 engineering construction activity peaked at $34.8 billion, yet by the end of 2016 had dropped by some 43.3 per cent to under $20 billion. 

This is what some people termed the "mining cliff", essentially the period through which resources projects transitioned from the construction phase through to production. 

And through all of that we never really did get all that close to a recession, though admittedly rising private debt levels did help to grease the wheels a bit.


More than four years on, and engineering construction actually began to rise again in early 2017.

Some of this was to do with infrastructure projects - rail, road, and highways - and some was related to ongoing resources investment in existing projects. 

Activity rose quite strongly by +2.8 per cent to $20.3 billion in the first quarter.

Engineering work in the public sector was +10.2 per cent higher over the year, while the quarterly rebound was also helped by a +3 per cent rise in private sector activity in Q1. 

State versus state

Queensland took most of its medicine back in 2014 as a number of major LNG projects approached the production phase, but the worst has now passed and annual construction activity levels in the Sunshine State have now been rising for four quarters consecutively.

Annual construction activity has also been rising steadily in New South Wales and Victoria since 2015. 

At least as importantly, Western Australia is now at last getting pretty close to the nadir, meaning that WA is no longer suffering the chronic declines that have characterised that past three years. 

No boom on the horizon, then, but arithmetically speaking this is positive news for the economy, simply because engineering construction is no longer acting as a drag.

The next pressing challenge will be whether construction employment can remain at today's elevated levels through a combination of residential building and infrastructure projects.