Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, 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.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Thursday, 31 January 2013

Another day, another Ryder tirade

It's no doubt hard work for real estate writers trying to think of something different to say several times per week. On Thursday, Terry Ryder vented his spleen - again - about "lies and propaganda" from "vested interests" writing about property (vested interests being an unusual subject for an article signed off: Terry Ryder, founder of hotspotting.com.au). 

The other day he was fuming about talk of a property bubble, and the day before that the lies about housing shortages and then it was something else or other, can't remember what.

Today it's me in the firing line after quoting an article about Sydney's middle sector of the market being "the only sector" of the property market to be at all-time highs - see today's further article in Sydney Morning Herald and another one in Property Observer here.

Terry R notes that among other regional areas Karratha, Dubbo, Mudgee and Whyalla have recently shown growth.

Look, fair enough - if you want to get bogged down in semantics - I'll admit I do not consider the town of Mudgee (population 10,000) to be a "sector" of the property market, I suppose you could feasibly term it a sub-sector though. Truth be told, I couldn't even tell you exactly what prices have done in Mudgee though some pretty good growth in 2012 springs to mind (just looked it up - 9% growth).

I'm probably one of the very few people to have actually travelled to all of the listed places in the last couple of years and all I say is, if you're comfortable in these days of elevated household leverage investing in small towns and remote regional markets, then, truly, go for it.

I wouldn't be. Having seen some the regional market bloodbaths in some overseas markets, I'm happy enough sticking with the boring capital cities approach.

APM reports today that apartments in Sydney increased in median price by 5.6% last year, though obviously some sub-sectors of the market performed significantly better than others. Other capital cities such as Melbourne, Adelaide, Brisbane and Canberra were weak in 2012.

Prices of some quality properties in key suburbs of the inner-west of Sydney have grown by around a solid 25-35% over the past 4 years or so. Again, I'm not talking about prices doubling overnight, just strong, steady growth.

As anyone with even half a brain who invests in capital cities knows, it is preferable to aim to invest in the cities which have not experienced a recent boom which is precisely why I picked out Sydney at that time ahead of other cities which had already shown strong growth.

So yes, since its spurt through to Q1, 2004 price growth in Sydney has been lower than elsewhere, that's a given - but prices therefore haven't fallen from peaks in the same way as in other capital cities (hence "resilient") and I expect RP Data to report that strong growth has continued in Australia's largest capital through to January.

If you want to take the approach of carefully selecting time-frames for capital growth (or for that matter, individual suburbs like Canterbury) then pick any regional market you like from around Australia and note that prices are as cheap as chips as compared to quality city suburbs - that's due to poor long-term growth.  Almost as pointless an argument...

Personally, I invest in large and capital cities for the long term - the reasons for which I explained here with not much value in me reproducing - if you want to 'hotspot' (if that isn't unacceptable verbing of my adjectives) in Mount Isa, Wagga Wagga, the Pilbara or near wind farms off the coast of Tasmania, then, sincerely, best of luck to you.

The old regions versus capital cities debate has been well and truly done to death - you just have to take your viewpoint and go with it. I think the old phrase is: "let's agree to disagree".

Remember that property is best treated as a long-term investment, and long-term price growth ultimately has to be sourced from real and sustained wages growth. And also remember the concept of risk versus return. Let's just see wait and see what happens to regional markets in Australia the next time the economy shrinks.

Boarding for Singapore, over and out for now.