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, 18 December 2017

Arrears down again

By default

S&P Global Ratings reported that Australia's prime SPIN 30-day delinquencies declined again from 1.08 per cent to 1.04 per cent in October 2017.

Declines were reported in all mainland states and territories. 

Western Australia continued to have the highest rate of 30-day arrears, declining from 2.21 per cent to 2.12 per cent. 

The lowest rate of delinquency was to be found in the ACT at only 0.58 per cent (Canberra has by far the highest incomes on the country). 

In New South Wales 30-day arrears fell from 0.79 per cent to only 0.75 per cent in the month.

Arrears were also below 1 per cent in Victoria and Tasmania. 

While risks remain, S&P Global commented:

"We do not expect arrears to increase much above current levels while benign economic conditions persist." 

Perth transfers: the only way is up

Taking stock

Australia's total dwelling stock value was pretty much flat in the September quarter 2017, rising only by about $15 billion to at $6.78 trillion, as Sydney's median dwelling price was stopped in its tracks by tighter lending standards.

The number of dwellings now sits just shy of 10 million, while the value of the dwelling stock has in aggregate increased by more than 50 per cent since September 2012.

It's worth having a look at where the increase in stock value has happened over that past five-year period.

To some extent stock values at the state level will follow the population growth, largely into Sydney and Melbourne.

But even after accounting for the increase in the number of dwellings, the two most populous states have seen a combination of rising prices and a growing population make them become effectively too big to fail.

Policy makers now cannot afford to ignore housing market corrections in Sydney and Melbourne, for to all intents and purposes these two cities have become Australia's housing market.

This alone may represent a strong argument for investors and developers playing in the bigger ponds.

Over the past decade Sydney and Melbourne have added a combined 1.75 million people, and - with manufacturing output and now resources construction in decline - are accounting for a disproportionately large share of growth in the economy. 

Research by Terry Rawnsley of SGS Economics & Planning showed how growth rates in the regional economies of New South Wales and Victoria are lagging way behind the capital cities, while the growth of the largest capital cities is becoming a self-reinforcing trend.

Apartment turnover slowing

The available figures detailing the number of dwelling transfers always lag, so it's wise not to put faith in the latest quarter of figures as the preliminary estimates tend to be revised up later. 

But rolling the chart back to the June 2017 quarter, it's quite clear that the peak of turnover activity in the attached dwelling market has well and truly passed in Sydney, Melbourne, and Brisbane.

Turnover in the detached house market has tended to be less volatile, though here too there was clear evidence of activity levels being lower than two years ago in Sydney. 

Probably the most interesting trend of note was that transaction levels for houses in Perth began to rise again in 2017, with the annual total having dropped by nearly 30 per cent between 2014 and 2016 (while apartment transfers are also rising moderately).

At the national level the housing turnover rate is tracking at about 5 per cent, well below the levels seen before the financial crisis. 

Sunday, 17 December 2017


China boom continues

Long term arrivals into Australia have really picked up over the past two years, hitting a fresh record high of +778,000 over the year to October 2017.

That said, it looks as though annual long term arrivals will struggle to rise much further from here.

Well over half of permanent settlers now hail from Asia, with strong growth from India and China in recent years. 

The ABS has changed the way that departures are measured, making it more difficult to draw meaningful conclusions.

What is not in doubt is the tremendous lift in short term visitors.

And there's also no doubting the main driver of the boom, being Chinese visitors in their hundreds of thousands.

In seasonally adjusted terms October 2017 was again the biggest on record for Chinese visitors, with a total of 1.37 million visiting over the past 12 months (and many more besides from Taiwan and Hong Kong).

The benefits of Chinese tourism are not being experienced equally around the country, however.

See here for details of where will benefit the most (and least).

Flat as a tack

Attachment disorder

Some unusual commentary and conclusions were drawn about the price of flats and apartments this week, derived from an Urbis survey of unsettled off-the-plan prices each quarter (which alas does not compare like-for-like sales). 

Apparently apartment prices boomed in Gold Coast and Melbourne, but nosedived in Brisbane.

In just three months!

Or not.

This sort of thing tends to happen when you get an excellent research report (Urbis), which is then quoted by a passable media article (often with a somewhat misleading headline), and then misinterpreted in the blogosphere, sometimes deliberately. 

In reality what tends to happen is the first user of a new apartment or townhouse pays a significant 'newness premium', which may be eroded on resale, especially in a soft market. 

For all the talk of property booms and unsustainable prices, median price growth in established apartments has, on average, been pretty muted outside Sydney, despite record low mortgage rates through this cycle. 

Looking at the last ten years of official figures from the ABS, you find that only Sydney has recorded strong growth in the price of attached dwellings (and even this came off the back of nearly half a decade of flat or falling prices). 

Hobart has also gone on a bit of a run over the past couple of years, the ultra-tight market sending the median asking price for a unit above $300,000 for the first time.

Melbourne's attached dwelling price index recorded a compound annual growth rate of 4 per cent over the decade to September 2017, which is solid, if not exactly wild. 

All other capital cities have only seen moderate price growth over the past decade - hardly a rapidly inflating bubble looking set to burst - though if you wound the clock back to 2003 the growth rates would be considerably stronger in Perth and Darwin, taking into account the early years of the resources boom.

In Sydney, price growth clearly has been strong, and consequently sites are under development stretching practically from Bondi to Bathurst (the surest indicator that new unit prices have risen above replacement cost). 

In Brisbane median apartment prices (and asking prices) have declined only marginally over the past year, however the rental market has been very soft.

The decade's annual average price growth in five of the eight capital cities has been below the implied inflation target of 2.5 per cent.

Compare that with a genuinely pumping bubble like the price of Bitcoin, where year-on-year price growth just exceeded 2,350 per cent.

As Crocodile Dundee once said: "That's not a knife...".

Saturday, 16 December 2017

New order


More evidence of an orderly slowdown in the housing market, with new home sales following approvals higher again in recent months. 

The November 2017 figures from the Housing Industry Association (HIA) showed that new homes sales were a moderate 6 per cent below where they were a year ago, following a record run through this cycle.

Building approvals remained relatively flat from a year earlier, as analysed here previously

Source: HIA

Victoria has been the strongest of the main markets for new home sales, and Western Australia the weakest (partly in response to more restrictive policies for first homebuyers).

The HIA expects new home sales to cool further in 2018.

Fundamentals balanced

As for the other market fundamentals, they have generally been strengthening.

While dwelling commencements ease, immigration increased by 27 per cent in the 2017 financial year to a very strong +245,500, largely focused on Sydney and Melbourne.

Much of the increase in recent times relates to temporary visas.

Partly for that reason, internal migration trends are at least as important.

Meanwhile trend employment growth hit the highest level ever recorded this month at +371,000, helping New South Wales return to full employment already, as the other states improve.

That suggests only moderate levels of mortgage stress.

Wages growth has been very soft, but the bottom is likely in now.

I don't believe interest rates are going anywhere, but futures markets are pricing a hike by the first quarter of 2019.

Not much of a headline-grabber, but the fundamentals generally point towards balanced conditions in 2018. 

Everything must go

We have clearance, Clarence

In the unlikely event you hadn't noticed, I take a very methodical, sometimes painstaking approach to financial analysis.

Why? To some extent, I can't help it because I trained as an accountant, so my brain just likes to work logically...crunching my way through the numbers to find the story behind them.

It's also because I believe that if you have a range of key metrics and indicators that you update every week, then you'll be practically forced to pick up on or identify the best trading themes as and when they come along.

You might get one or two compelling ideas in a year. 

Sometimes trading themes aren't clear-cut or straightforward to spot, and other times you pick them up but too late to be useful or profitable to anyone.

But occasionally there are a great big ideas staring you right in the face.

A key theme in 2017 has been the emergence of headwinds facing some businesses in the retail sector.

The figures this year have generally shown that retail volumes have been uninspiring, though not disastrous.

But increasingly there has been evidence that retail prices are under significant pressure, particularly in certain sectors.

Fashion sector businesses, for example, have been especially hard hit, with a growing list of failures, while retail activity for some discretionary spend has held up better, such as for eating out.  

And lately there's been growing evidence that retail prices have actually been falling at a concerning rate. 

With Amazon and others now disrupting the retail space further, there are significant downside risks for many retailers.

Myer fails to find wonderful

On Thursday this week it was Myer's turn to disappoint the market, with an atrocious second quarter trading update sending the share price into meltdown (not for the first time).

Source: ASX

Of note in this release was the reference to "widespread industry discounting":

"Since the AGM sales have continued to be below expectations and reflect ongoing challenging retail conditions characterised by reduced foot traffic, widespread industry discounting and subdued consumer sentiment."

There will be more trading updates of this ilk in the retail sector, one suspects.

Float sinks

Myer's share price hit new lows this week, closing out the week down at just 64.5 cents.

All of this is a far cry from the update tone of the prospectus in the run-up to the listing. 

Myer floated in 2009 with an issue price of $4.10, opening at a slightly lower share price of $3.88 on the first day of trading. 

That was generally thought to be quite a punchy or expensive valuation at the time, but even still few would have predicted the maelstrom that has followed. 

The share price chart has been a disaster practically ever since, more than halving again in 2017 from a 52-week high of $1.39.

Approaching 85 per cent of shareholder value has been eroded destroyed over more than 8 years since the float.

A shocking performance in anyone's language.

Weekend reads - must see articles of the week

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Friday, 15 December 2017

Record high immigration to Sydney & Melbourne

Immigration ramps up

The natural increase in Australia's population slowed a bit over the 2017 financial year as the number of deaths increased. 

However net immigration from overseas boomed by +27 per cent from +193,000 to 245,500, so you can comprehensively chalk that one up as a good call for this blog page (a year ago much of the idle talk of was population growth dropping because of a slowing economy). 

Australia is the planet's sixth largest country so this isn't such a big deal in itself, but the concentration of the immigration will raise a few eyebrows, as we shall see below. 

Over the financial year Australia's population grew by +388,100 or +1.6 per cent to 24.6 million by the end of June 2017. 

The Aussie population will pass the 25 million landmark in 2018.

The MEL-SYD magnet

Net overseas migration into the two most populous states rose to the highest level on record. 

New South Wales (+98,600) and Victoria (+86,800) accounted for the great bulk of immigration, with new arrivals overwhelmingly clustering into the capital cities of Greater Sydney and Melbourne respectively. 

Immigration into Queensland is also picking up the pace, from a cyclical nadir of +18,300 over the year to September 2015 up to +31,100 in the 2017 financial year, with the trend pointing north as the economy improves. 

Just as significantly for Queensland, the state is now pulling Sydneysiders up and away from New South Wales. 

Net interstate migration to the Sunshine State hit a decade-high +5,050 in the June quarter, taking the rolling annual total up to +17,400, surpassing Victoria to notch the biggest draw of any state. 

This is positive news for Brisbane, while south-east Queensland has other worthy growth hubs, including Gold Coast and the Sunshine Coast. 

South Australia lost -5,900 residents interstate, and Western Australia lost -11,700, although in each case the bottom appears to be in. 

The big migratory trend in 2018 will clearly be from New South Wales up to Queensland. 

The wrap

Totting up the figures New South Wales (+121,800), Victoria (+144,400), and Queensland (+79,600) accounted for 89 per cent of population growth in the 2017 financial year. 

Victoria's population growth rate of +2.3 per cent exceeds the rate at which appropriate new accommodation can realistically be built, let alone the availability of new land supply. 

On the other hand population growth rate was considerably weaker than the national average in Western Australia (+21,400 or +0.8 per cent), South Australia (+10,500 or +0.6 per cent), Tasmania (+3,300 or +0.8 per cent), and the Northern Territory (+400 or +0.1 per cent). 

Last, but certainly not least, the Australian Capital Territory added +6,800 or +1.7 per cent to its population, which will help to fill up all those new apartments. 

Thursday, 14 December 2017

Christmas cheer for RBA!

Merry Christmas, Phil Lowe!

Well, that was a sensational Labour Force result, with employment up by a massive +61,600 in November, including +41,900 full time jobs, making for 14 gains on the bounce and the best monthly result in a couple of years. 

The trend growth in employment tore up to +3.1 per cent, or +371,000 jobs, which is the highest annual employment growth ever recorded on that measure - and better still this has overwhelmingly been driven by full time jobs (about four-fifths of the increase).

Total hours worked were a fairly punchy +4 per cent higher over the year, or +3.4 per cent higher over the year in trend terms. 

Full employment for NSW

There was a tremendous surge in total employment in New South Wales (+28,500) and Victoria (+32,900) in the month of November, with employment ballooning in those two states by +120,000 and +110,000 respectively over the year. 

Queensland also added more than +95,000 jobs over the year, albeit only about half of those positions full-time. 

The trend employment growth in Queensland has soared to +4.8 per cent, reflected in net interstate migration that is beginning to gather a head of steam in the Sunshine State (well over +5,000 people over the last 3 months of available data, a decade high). 

Western Australia saw a solid +35,000 increase in employment over the year, though the state's unemployment rate increased on a higher participation rate.

Indeed an interesting aspect of this release was that the national participation rate suddenly leapt to 65.5 per cent, meaning that there was no change in the headline unemployment rate.

In New South Wales in original terms the unemployment rate dropped to just 4.4 per cent, with the trend unemployment rate now just 4.6 per cent. 

Hello, full employment! NSW is now within a sports stadium or two of a record low unemployment rate - amazing stuff.

The wrap

This was a big result, strong pretty much all round, blasting expectations and sending the Aussie dollar soaring. 

More Aussies are looking for work, and the economy is creating the jobs accordingly, in part driven by infrastructure projects. 

The quarterly measures of underemployment and underutilisation both fell nicely from quite elevated levels, and importantly, leading indicators point to more of the same over the next 6 months. 

The Reserve Bank will be thrilled with these numbers, and all eyes will now turn to look for signs of wages growth in the new year. 

Melbourne's gonna need primary schools

One born every minute

If you've ever wondered why house prices can rise faster in desirable school zones, the latest ABS figures on births provided a few clues as to why.

Statistics for registered births in Victoria saw a +12.7 per cent leap to 82,892 in 2016.

In truth, some of this apparent increase was due to data processing lags, but even after accounting for this Greater Melbourne is seeing new arrivals trending higher, with registered births at a total of 65,148 in 2016.

Certain LGAs in both inner and outer Melbourne are reporting extra-high growth in their student-age population.

After accounting for immigrant families bringing children into Australia, rising student enrolments are placing significant pressure on the primary school system in particular.

The Department of Education and Training figures for Victoria showed that the average class size is 22 for primary schools (and 21 for high schools), and there are already thousands more children in the lower year groups (~77,000 FTE students) than there are in year 6 (~72,000 FTE students), implying pressure at the entry level.

State government figures show student enrolments have continued to increase relentlessly over the past decade, following a baby boom that kicked off a little over a decade ago, with the pressure beginning to flow through to the secondary school system from 2018 forth. 

Grattan previously estimated that Victoria would need to absorb an extra 190,000 school students over the decade to 2026, yet no new state schools were opened in 2016 (though new schools were opened in 2017, and more will follow next year). The Department of Education's projections implied similar growth.

Source: State Government

However, the Census revealed that population growth in Victoria had actually accelerated even further, so the projections may yet prove to be on the light side. 

The data processing lags in New South Wales instead inflated the 2015 numbers accounting for the apparent decline from 100,079 to 96,083 last year. Greater Sydney nevertheless also saw more than 65,000 births in 2016.

Lower fertility

On average, Aussies are having babies later than, with the median age of mothers rising to 31.2 years, and the median age of fathers rising to 33.3 years, both the highest on record.

The total fertility rate in 2016 was down to 1.79 babies per woman, sliding from 1.88 per cent in 2006 and having remained below replacement level since 1976.

Even the 1.95 per cent fertility rate down in Tasmania was well below the 2.1 babies per woman required to replace herself and her partner.

In the capital cities fertility rates were frequently seen to be higher in outer suburban locations. 

Australia has a strong immigration programme, however, and the total number of births hit the highest annual figure on record at 311,404, with 77.4 per cent of those born to residents of New South Wales, Victoria, and Queensland. 

Australia has seen a very large increase in its immigrant population, especially from China and India in recent years. In aggregate, the Indian migrants are having considerably more babies.

Finally, the most common birth date in Australia is September 2017, so remember to behave responsibly over the festive period!

Demand for land

Lending slows

Total lending finance slipped back down to $67.8 billion in October, as APRA's cooling measures bite, the lowest total in 8 months.

Housing lending to owner-occupiers remained very solid at $20.8 billion, while major renovations activity continues to trend higher to be +14 per cent higher year-on-year. The slowdown has largely related to property investment loans. 

Having plumbed 14-year lows, personal finance has now been rising again for six months, though there are few signs of household financial stress (the average credit card balance hit a decade low this month, as reported in Reserve Bank figures and highlighted by Commsec, while the number of credit cards actually fell for the first time on record across nearly a quarter of a century of data). 

The usual meme at this point is to lament that too much lending to property investors has limited the business sector (i.e. corporate debt good, housing debt bad), but this overlooks that there are many ways to expand a business without using commercial debt.

Existing equity is one way, for example, with business profits hitting an all-time high in the third quarter. And, of course, many small businesses are started with housing equity loans. 

Indeed, business investment rose strongly over the year to September, as shown by the national accounts.

In saying that, cobbling together the figures for fixed commercial loans and revolving credit we can identify some notable trends. 

For example, lending finance to the retail sector has nosedived over the past 18 months. Perhaps this is not too much of a surprise - after all taking out debt for investment in a sector which is seeing falling sales prices and losing players by the month may not be such a wise move. 

On the other hand lending to the mining and construction sectors has surged over the past year, while investment in the services sectors looks to be rising solidly. This supports the capex data which showed services investment rising by 28 per cent since the 2013 nadir. 

Investors slowed

Drilling into the property investment loans figures we can see that APRA's moves have, for a second time, slowed this part of the mortgage market, albeit from record highs in New South Wales. 

In the Northern Territory, the bottom may be in at last!

And finally, the demand for blocks of land continues to soar, with a record $8 billion of lending over the year to October 2017.

Land prices have soared in the capital cities over the last five years, and this trend shows few signs of abating. 

The wrap

Overall, business lending is ticking along at healthy enough levels - certainly at high enough levels to keep investment in the services industries expanding

In the property lending space, the swing away from property investment loans and towards homebuyers, renovation, and land purchases continues. 

Wednesday, 13 December 2017

Louis MMXVIII runs with the bulls

Head for the Hills...District

SQM Research reported the usual slight November rise in vacancy rates, up to 2.2 per cent, for a national total of 70,795 vacancies. 

Despite the residential construction industry going like the clappers in 2017, the national figure is considerably lower than the 2.5 per cent or 78,629 vacancies seen in November last year, which helps to put some of the oversupply banter into a more balanced perspective. 

In fact, vacancy rates were lower year-on-year across all of the capital cities except for one - being Sydney, which increased to 2.1 per cent from 1.8 per cent a year earlier.

Around the traps

In the second largest city, Melbourne, the vacancy rate remains slightly lower than a year earlier, down from 2 per cent to 1.8 per cent.

Despite the record levels of building activity in Melbourne, thunderous population growth has threatened to overwhelm the new supply. 

The chart below shows the vacancy rates by capital city smoothed on a 6mMA basis, though not seasonally adjusted. 

Canberra and Hobart continue to have tight and very tight rental markets respectively - asking rents for houses in Hobart have shot nearly 21 per cent higher over the past three years.

Meanwhile Adelaide is very quietly drifting in that direction, with a vacancy rate of just 1.4 per cent in November.

Perth has by far the slackest rental market with a vacancy rate of 4.5 per cent, albeit well down from an alarming 5.2 per cent last year.

The rental market has been very weak in Perth since 2013, although median asking rents for houses in the Western Australian capital at last edged up by +0.8 per cent to be slightly higher on a rolling quarterly basis. 

The recent jump in Sydney vacancies has partly been driven by a spate of completions in the Hills District (which had a 3.7 per cent vacancy rate in November) as well as the usual seasonal weakness in the Parramatta LGA (2.2 per cent) according to SQM's figures, so it will be interesting to see how efficiently or otherwise these vacancies are absorbed in the new year. 

Asking rents for Sydney units are now just +2 per cent higher over the past year, compared to +6.5 per cent for units in Melbourne.

Forecast king Louis is bullish

Louis Christopher, forecaster nonpareil and the king of SQM Research, remains relatively upbeat on housing market prospects for 2018, estimating that banks will be able to lend a little more freely in the new year. 

"The seasonal dips and rises [in auction clearance rates] occur because of the seasonal rise in listings that occur each spring.

They don’t call it the “spring selling season” for nothing. Yet each year this seasonality is mistaken by the media and/or some of our most senior economists for some type of major market slowdown or correction that is about to herald “the crash”.

[In] Sydney...the clearance rate recorded now is below 2013 and 2014 but in line with 2015 and above 2012. For a slowdown to be more serious I would have expected clearance rates to be at the 2012 levels."

Christopher is forecasting Sydney and Melbourne dwelling prices rising solidly in 2018, so bidding action at auctions in the new year will warrant watching closely.

"Our forecast for Sydney is for a 4-8% price rise for Sydney and a 7-12% rise for Melbourne." reiterated SQM Research in its media release.


2-for-1 Donuts

Retail Food Group (RFG) crashed again yesterday, down another 5 per cent to $3.08.

The shellacking continues...

Tuesday, 12 December 2017

Melt down

Prices are down

Capital city dwelling prices declined marginally in the September quarter, down by -0.2 per cent on the supply of new apartments, although dwelling prices were +8.3 per cent higher than a year earlier, taking the total stock value up to nearly $6.8 trillion (click charts to expand). 

The quarterly decline was driven by Sydney (-1.4 per cent), with the harbour city's annual growth now slowing to +9.4 per cent. 

The fastest growing markets over the year were Hobart (+13.8 per cent) and Melbourne (+13.2 per cent). 

Hobart's index has now outperformed that of Sydney since the inception of this index in 2003, while Melbourne has now comprehensively beaten off all comers. 

By far the softest market was Darwin, with prices down by another -6.3 per cent over the year.

Adelaide (+4.8 per cent) and Brisbane (+3.5 per cent) recorded steady annual growth.

Drilling into the Sydney figures, APRA's intervention is once again clear, this time with a marginal correction in both house (-1.3 per cent) and attached dwelling prices (-1.4 per cent) in the quarter. 

Nationally the median dwelling price declined by $1,200 in the third quarter to $681,100, due to a decline in New South Wales (although it is much higher over the past year, up from $637,400). 

Finally there are now just shy of 10 million dwellings in Australia.

The preliminary figures for New South Wales are clearly low for the quarter, which can happen, but the one thing to take away from these figures is the clear lack of overbuild in Victoria. 

Building activity has been supremely strong in Victoria over the past half-decade, but it has simply been overwhelmed by the even faster increase in headcount. 

Dunked donuts


Oh dear, yet another retail stock hits the skids. 

It's becoming nigh on impossible to keep count.

Proving that strong investigative journalism can still pack a punch, yesterday's share price collapse resulted from a detailed Fairfax investigation.

This time it was Retail Food Group (ASX: RFG), franchiser and owner of brands including Donut King, Gloria Jean's, Michel's Patisserie, Pizza Capers, Brumby's, and a a whole lot more. 

Until recently the stock-pickers' market darling, RFG has instead become a shorter's delight.

The share price crashed further yesterday following the Fairfax investigation which alleged that franchisees are charged...wait, actually, you can read the allegations for yourself, there's no need for me to copy them here. 

The share price was smashed by another 26 per cent yesterday.

The market for RFG is now down from the 52-week high of $7.18 to just $3.25.

Fairfax reported that "hundreds of stores are going to the wall", with many on sale, or about to be so (17 per cent of Gloria Jean's stores were said to be for sale, and 25 per cent of Pizza Capers stores). 

Indeed, Fairfax made a long list of claims, which you can read about here and here, among other places.  

The retail sector is under pressure, with prices already falling and Amazon now beginning to trade

There's been a lengthening list of retail collapses in Australia's fashion sector.