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.

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Wednesday, 16 January 2013

Sydney's broad middle market the only property sector at all time highs

I think it would be fair to say that nobody enjoys blogs where the blogger includes the words "I told you so" but y'know what...

It's true that I've been harping on about this for far too long now, but the most resilient market in Australia was always going to be Sydney's broad middle market.

As reported in this article here, Sydney's broad middle market is the only sector of Australia's property markets to be at all-time high prices, which is what I have been suggesting on this blog for well over the past year.

Of course, the cheap low-demand sectors of the Sydney market have not performed so well and the top end of the market has also eased as one would expect given the stock market correction and low confidence we have experienced.

But the broad middle sector of that market continues to power along.

It's more than half a decade now since the real scaremongering began in Australian property but in spite of all the predictions of wider market crashes most markets are well ahead of where they were at that time.

Prices in Sydney and Melbourne have raced ahead since Professor Steven Keen's infamous "prices will crash by 40%" call meaning that prices are simply a mile away from where he said they would be. 

It seems to be increasingly common for housing market bears to make sweeping statements about markets tumbling which generally imply that all property markets will inevitably crash and all people who invest in property are greedy and unethical landlords.

The first part is wrong. Experienced investors tend to do well even when some markets are tanking, in particular by investing in those properties which are in the highest demand, and often those close to median prices.

The second part is formed around the argument that property should be for shelter (unquestionably true) and therefore greedy landlords should not invest in property. I'm not really sure how that works and who would then own the properties for the rental market, so I'll leave others to debate that.

It's continually overlooked that it is not only "greedy" investors who push up property market prices - it is also "greedy" home-buyers, the category which presumably those praying for a crash ultimately hope to be in.

This is the invisible hand of capitalism at work - supply versus demand. Some property markets where demand is low and appetite for debt weak will continue to fall in price in 2013. But in the popular suburbs of cities such as Sydney? I wouldn't be holding my breath for any major super-correction.

As for being bearish Sydney's broad middle market back then with the population of the city growing at a stonking 60,000 people per annum and appropriate developments rarely seeming to come online, to nab the phrase of one witty forum contributor: "That was like shorting oxygen."

Flat start for stocks looking most likely today...