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'.

Monday, 22 January 2018

How to beat negativity bias

See here at my blog (or click the image below for details).

Check into my website this week for a free e-book.

Saturday, 20 January 2018

Business borrow again as economy picks up

Lending up

There was a tidy +9.5 per cent rise in Lending Finance in November 2017 to $74.3 billion. 

This was the biggest monthly gain in several years, and a 12-month high for total lending. 

Businesses are borrowing again, which is good to see, with a +14.7 per cent monthly increase in commercial finance commitments. 

Personal lending has been trending moderately higher for the past 7 months.

Meanwhile, there's clearly been a shift from investors to owner-occupiers in the housing market.

And finally, loans to buy blocks of land soared to a record high of more than $8 billion in the month of November.

Victoria's population surge is clearly in evidence here.

The wrap

This is the latest in what is now proving to become a steady stream of stronger data releases.

Just look at what we've seen in only the past few weeks alone:

-record employment growth in 2017 of +404,000 (& a surge in the participation rate)

-record high jobs vacancies of 210,800 - easily the highest ever figure 

-record high value of building approved - a massive pipeline of commercial, infrastructure, and residential building in the pipeline

-strong housing finance - with a +60 per cent surge in first homebuyers since July, and a swing away from investors 

-a surprise surge in retail trade to the highest monthly result to date in terms of retail turnover (I'm not bullish on the retail sector generally, however)

-consumer confidence soaring to the highest level since 2013 - with strength on more than one survey now in evidence 

-record household wealth of nearly $10 trillion making Australia the world's second wealthiest households

-the end of the resources capex downturn after half a decade of drag

-a projected fall in the Budget deficit, not before time

-record high immigration into Sydney & Melbourne - granted not everyone is keen on this, but it does show just how sold jobs growth has been in the two major capital cities

-a record year for new motor vehicle sales (though the closure of auto production in Australia)

-a record high for land sales

-falling mortgage arrears

-tourism and education exports booming

And that's just for starters, with other surveys clearly pointing to the economy having turned a corner, which is a relief after a sparse few years. 

Strangely, some commentators are trying to systematically talk down every single one of the recent improvements in economic data.

This normally happens when people are trying to shoehorn the narrative to fit or justify an earlier forecast (much better to admit it when news surprises and move on), or to flog you something.

Either way, it's been a happy new year for the government and Reserve Bank. Next stop, wages growth, but probably not until late in the year!

Free podcast

Wow, weren't podcasts a growth industry in 2017?

Here's one worth listening to - in fact it's already become one of the most popular podcasts out there - Michael Yardney shares decades of wisdom on money, investing, and wealth.

Nice to hear a bit from Louise Bedford as well, I've watched her speak for the past three years in a row and always learn something new. 

Better still it comes with free resources and links (click on the image below).

Great stuff! Sign up for the free Property Update newsletter while you're there as well. 

Friday, 19 January 2018

NSW jobs growth on steroids

Records blown up

Wow, another big beat for employment, increasing +37,700 to a fresh high of 12,440,800. 

That makes 2017 the biggest year on record for employment growth at +403,700, with the survey recording 15 consecutive monthly gains for the first time in four decades. 

Better still, ¾ of the growth was in full-time jobs. 

Annual employment growth was the biggest ever for a calendar year, then, while in percentage terms the growth rate just rounded down to +3.3 per cent, absolutely miles above the 20-year average of +1.9 per cent. 

Female participation rose to the highest level on record, while the participation rate snapped higher to 65.7 per cent, the highest since March 2011. 

The trend unemployment rate was 5.44 per cent, the lowest since January 2013.

A terrific set of numbers, it must be said, with the Coalition now having overseen employment growth of +956,500 since coming into office. 

NSW on steroids

Queensland may see its monster employment growth rate of +4.6 per cent ease back in the coming months as a strong print or two washes through the annual data. 

Meanwhile, New South Wales employment growth has followed jobs vacancies as anticipated to create a stunning +139,700 jobs in a year, including an outrageous +150,600 since February alone!

It's pleasing to see Western Australia creating jobs again too. 

The trend unemployment rate in New South Wales continues to drop towards record lows, now at just 4.67 per cent. 

Note how things are quietly improving in South Australia too, with the unemployment rate now below 6 per cent. 

Last but not least, the trend in hours worked notched +3.6 per cent growth over the calendar year. 

The wrap

Overall, this was another great result, especially for New South Wales. 

Wages growth will start to pick up eventually, but experience overseas suggests that could take a while yet. 

5 steps to tackling loss aversion

Fear of loss is rational to a point, but it can also outweigh the will to win.

See my article here for how you can overcome it (or click the image below).

Wednesday, 17 January 2018

The dwelling supply (in 3 short parts)

Part 1- Starts & completions

One of the most misunderstood of all data releases is that of building activity, so let's see if I can shed at least a shard of light upon it, in three short parts. 

Firstly, then, the number of housing starts held firm at just under 55,000 in the September quarter.

There are still attached dwellings being kicked off aplenty, but there's been a quietly subtle shift towards more townhomes and fewer high-rise apartments lately, which is a positive move.

By the end of September the feared glut of completions still hadn't really arrived in full, and in fact the number of completions had been gently sliding for several quarters.

The obvious reason for this is the huge number of units in the pipeline, for on average apartment or multi-unit projects take longer to build than houses. 

Part 2 - Record pipeline

At the end of September 2017, there were still just under 220,000 dwellings under construction, including around 152,000 attached dwellings, which is still extremely high. 

A glut of completions likely began to hit the Sydney market in the final quarter of the year, so a spike in vacancies might be expected. Elsewhere, developers are steadily chewing their way through the pipeline. 

Sydney is seeing fewer houses built this cycle, but even so across the state there were more than 87,000 dwellings under construction at the end of September, comfortably the highest on record for any state. 

Including all commercial construction the building pipeline in Australia has never been higher, approaching a thunderous $90 billion

Part 3 - Brisbane units rebalancing

Finally the Brisbane apartment market continues to rebalance itself, with new starts slowing to a crawl. 

The trend figures present in a somewhat generous fashion here, with the original data series confirming that new starts would be a rarity by the end of the calendar year. 

Queensland also had a record high 5,678 dwellings in purgatory - being approved but not yet commenced - with quite a number of inner city apartment projects evidently stalled or mothballed. 

The wrap

Overall, expect to see Brisbane's apartment market swinging back towards equilibrium in 2018 as migration picks up from interstate and overseas. 

In Sydney, apartment completions will be running extremely high in 2018, so opportunities will present themselves for renters to snare a few bargains.

Finally, construction employment looks set to hold at or around record highs this year, both in absolute terms, and as a percentage of the workforce, with the building pipeline tracking at phenomenally high levels.

Housing finance strengthens as FHBs return

Housing finance higher

Well, it was a strong result for housing finance overall, with total commitments rising by +2.3 per cent to above $33.5 billion in seasonally adjusted terms. 

Investor loans were up +1.5 per cent in the month to $12.2 billion, but remain in a medium-term downtrend.

In original terms the total finance for all dwellings was above $37 billion only for the second time ever.  

At the state level, Victoria had the strongest trend in homebuyer commitments.

New dwelling surge

Rather than look through every number in tedious detail, let's take just a quick look at two trends in particular.

Firstly, homebuyers financed more new dwellings in November than in any month since 1978 as the new stock is absorbed domestically.

And secondly, as expected, the number of first homebuyers continued to surge up to 11,091, to sit at comfortably the highest level since the financial crisis stimulus. 

There has been a 60 per cent increase in activity in this cohort since concessionary measures were introduced in July 2017.

Indeed, if you add in first-time investors, it's possible (if not likely) that first time buyer activity is now tracking at above historic averages. 

In New South Wales, first homebuyer numbers are at the highest level since 2011, while in the other two main states first homebuyer loans are at the highest level since 2009. 

While all this has been happening, the average loan size for first homebuyers has stalled over the past year.

However, the average loan size for non-first homebuyers surged to $402,500 in November 2017, comfortably the highest monthly figure on record. 

The monthly result may prove to be a bit of an anomaly, but the trend is clearly up, perhaps representing the first signs of the latest round of macroprudential effects wearing off. 

The wrap

Overall, this was a very solid result which comfortably beat expectations, generally pointing to a solid start for housing in 2018.

That said, there will be some risks in the new dwelling sector, as a flood of supply hits the market, particularly in parts of Sydney. 

Bitcoin bursts

About a month ago we were all getting bombarded by market geniuses offering to teach us about investing in Bitcoin. 

Now down more than 41 per cent in a month. 

From hodl to sodl.