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'.

Wednesday, 2 November 2016

Value of building approvals explodes (non-resi comes to the party)

Part 1 - Approvals slide

A rapid-fire rattle through Building Approvals figures for September in the usual three parts. 

Total residential approvals fell for a second month by -8.7 per cent in the month to 18,945, to be -6.4 per cent lower than a year ago.

To be clear, though, nearly 19,000 approvals in a month is still a LOT!

In annual terms total approvals wormed back to below 238,000, fairly evenly split between houses and other dwellings. 

Part 2 - City by city (Sydney not full)

House approvals are now steadily trending lower, driven by ongoing falls in Perth as population growth in the WA capital has slowed.

Even the undisputed king of house-building Melbourne is looking peaky here. 

The monthly decline in approvals was largely driven by significant declines in unit and townhouse approvals in Sydney, and to a slightly lesser extent Melbourne. 

Despite this, after a couple of epic months Sydney still managed to notch a record high 41,650 approvals over the year to September. 

Median unit and apartment prices in Sydney hit a record high $705,000 last month according to Residex, so the demand has arguably been there, but there is clearly a sweeping supply response in the post. 

Elsewhere, it looks as though developers are gradually backing away from unit developments.

Part 3 - High rise dream!

Finally, the volatility in building approvals was all the way driven by the 'lumpy' high-rise sector, where approvals were 30 per cent lower than a month previously following a barnstorming run.

As you can see, approvals for other dwelling types are generally softening. 

Sydney continues its plans to build up, but elsewhere the market has become saturated, and must fall.

The wrap

Overall, this was a result that matched expectations for a change, and one which suggests that the residential construction boom will peak some time in 2017. 

One swallow doesn't make a summer, of course, but a broad-based and monster spike in non-residential approvals for office blocks, retail, and hotels implies that the next wave of construction may be in the commercial sector.

The value of total building approvals in September was therefore by a huge margin the greatest on record at $11.9 billion, which if sustained would be amazingly positive news.