Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

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.

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Monday, 26 November 2012

Residex reports property price growth in 2012

After all the hype about "spectacular and humiliating" corrections and the like, Residex reports that in 2012, house prices just moved up by 3% and unit prices moved up by 3.7%. Here's John Edwards:

"Overall, Australian detached dwellings provided an improved result of around 3% while the improvement in unit market was in the order of 3.7%.

Consumer sentiment is improving. The Westpac Melbourne Institute Index of Consumer Sentiment posted a rise of 5.2% from October in November, finally bringing it above the 100 point mark to 104.3. At last it seems RBA interest rate reductions may be having an impact.

However, I suspect that the reduced negative press about the problems in Europe may also be playing an important role. I also have a suspicion that the number could have been even better if the coverage of the potential that the mining boom is coming to an end had not been so prominent in the media."

Perth and Darwin were the clear standout performers, although Sydney has shown very strong 8-10% annualised growth over the last 3 months, at least, it has according to the Residex figures below. Overall, the wider Australian property markets just seem to be consolidating rather than capitulating spectacularly as was so joyfully proclaimed by the resident blogs of doom.

Interest rates are deemed to be 57% likely to be cut next Tuesday according to the implications of the futures markets. A further drop in rates may well see further growth through 2013.

Residex predicts growth through 2013 and 2014, before the market retreating again in 2015. That's a fairly likely outcome to my mind, as it would mirror the expected movements in interest rates per the implied yield curve (with the effects thereof taking up to 18 months to flow through fully to the housing market).

Mind you, if the Residex numbers show anything, the one thing they do demonstrate is how totally and utterly pointless 12 months market forecasts are. It's simply uncanny how often and how spectacularly wrong they can be, the huge margins of error proving how futile the whole forecasting exercise really is.

Always better to focus on the long term!