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.

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"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'.

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Wednesday, 24 July 2013

Inflation remains soft

The inflation data today did not reveal any horrors, so the Reserve Bank has the 'room' to cut interest rates should it so wish.

The headline rate of CPI was only 0.4% for the quarter, leading to a year-on-year figure of 2.4%, or 2.3% seasonally adjusted.

This is broadly in the middle of the targeted range of 2-3%.

Graph: All Groups CPI, Quarterly change

Source: ABS

When the one-off effect of the carbon tax is stripped out, the headline result might be considered to be at the bottom of the target range at close to 2%, which might imply that an interest rate cut is in the pipeline.

However, an interest rate cut is not a done deal.

The weighted median and trimmed mean readings, which are the Reserve Bank's preferred measures as those which look to strip out the impact of outlying readings and thus provide a more balanced result, showed a slightly different picture.

Source: ABS

Year-on year, these measures came in at 2.2% and 2.6%.

While these figures also suggest that there is room for a cut, some exercise might be cautioned as so-called 'tradeables inflation' may be expected to increase as a result of the Australian dollar having fallen from above 106 cents towards the bottom of the 90 cent range.

The other news which may have a bearing on the August interest rate decision today was a weaker-than-expected flash PMI reading from China.

On balance, futures markets remain undecided, and price in a cut as around a 6 in 10 chance, while the dollar took a while to make its own mind up, before settling on something of an each way bet sitting at around 92.5 cents.


The two-speed nature of the housing market continues to be emphasised with dwelling prices in Adelaide falling by 2.9% over the last quarter, while those in Sydney increased by 3.5% according to RP Data.

Yield-chasing investors have been tipping Adelaide for half a decade, but they got it wrong. 

In fact, throwing a pin at an Australian property dart board would on average have scored a much better result.