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'.

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Monday, 9 September 2013

APM: "Sydney auction boom to new heights"

The promised housing correction has totally gone up in smoke in Sydney with prices moving well above previous peaks.

There have been a raft of articles discussing the auction frenzy at the weekend in Sydney, with some examples of crazy bidding occurring and the usual generic comments blaming Asian buyers for spiralling prices.

Historically, auction clearance rates (although auctions only represent a fraction of the total market) have been seen as a leading indicator of property price action in the two major capital cities Sydney and Melbourne. 

Elsewhere in Australia, there are so few auctions held that the trend is of far less significance.

This may go some way to explaining why only 4 months ago there were all kinds of hare-brained theories being bandied around to explain why Sydney prices were 'falling' in spite of auction clearance rates and activity which were clearly booming.

Some suggested that more properties were being sold into a falling market, which seemed incredibly unlikely given the sales figures that were being reported.

There were other theories as recently as the first week of June this year that a few weeks worth of soft price action was a result of an instant consumer backlash against the Federal Budget (it is highly unlikely that property prices could respond immediately to a budget given the settlement periods involved).

Of course, since that time prices have reportedly boomed in Sydney and Melbourne.

In truth though, this just goes to show that the shorter the timeframe for considering property price movements, the greater the margin of error for misreading the trend.

All that we can really say is that (a) historically auction clearance rates have been a leading indicator of property price movements, (b) auction clearance rates are close to record heights in Sydney at an outlandish 88%, and (c) therefore, it is likely that property price gains will continue at the least through the remainder of 2013.

I note that the sector of the market I called as being the outperformer (the inner west - and in particular the suburb of Erskineville) is still recording incredible clearance rates with 90% at the weekend. 

The SMH reported that one buyer paid $890,000 for a crumbling hovel in 'Erko', a sure sign of a market entering a period of temporary insanity and sky-high prices.

Prices in Erskineville in the inner west are going berserk as I specifically predicted on this blog.

For this reason, I would suggest that buyers today begin to consider other sectors of the harbour city - in particular a few of those beautifully located suburbs on the dark side (i.e. to the north of the coat-hanger).

In the coming weeks I will elaborate further on my favoured suburbs located in both the lower and upper north shore, as well as making my assessment for the better prospects or otherwise in the inner south.

From Australian Property Monitors:

"Just when you thought buyer activity in Sydney’s booming home auction market couldn’t get any hotter the weekend clearance rate has broken yet another record. Despite the distractions of the federal election, Sydney recorded an astonishing 87.6 percent clearance rate at the weekend clearly the highest this year and smashing last weekend’s then record of 84 percent.

Listing numbers were unsurprisingly low this weekend compared to high numbers in recent weeks as sellers avoided an Election Day clash. The rising trend of buyer activity however continued unabated at the weekend with Sydney clearance rates over the past month now averaging 83.2 percent.
A number of Sydney’s suburban regions recorded the ultimate auction result at the weekend with 100 percent clearance rates. The central coast, the city and east, the north west and the west all scored the highest possible clearance rate. Sydney’s inner west also reported a strong weekend clearance rate of 90 percent.
Sydney’s white-hot weekend home auction market has started the spring selling season off with a big bang. Buyers hungry for property apparently paying whatever it takes to secure homes at auction.
With the spring selling season now under way higher numbers of listings are set to come onto the auction market over coming months. The next big test for the market will be the season’s first Super Saturday due on the pre football grand finals weekend of September 21st."