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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Monday, 14 October 2013

ABS: soft housing finance data only strengthens the case for Sydney

A soft housing finance data release today from the Australian Bureau of Statistics (ABS).

Source: ABS

As you can see above, the ABS recorded a 3.9% seasonally adjusted fall in the actual number of owner-occupied financing commitments.

Graph: No. of dwelling commitments, Owner occupied housing

Source: ABS

Analysts had expected a fall of 2.5%. That said, it never pays to get too excited about one month of data from ABS releases. Average loans sizes held fairly steady, while the total value of dwelling commitments accordingly slipped.

Value of dwelling commitments

Graph: Value of dwelling commitments, Total dwellings

Source: ABS

Notably, first homebuyer activity remains disappointingly low.

In all truth, weak releases like this are exactly what owners and investors in the hot sectors of the real estate market (at this time essentially meaning investor-favoured medium-density properties in prime Sydney locations where auction results are hitting at scorching levels - as I anticipated here long ago) want to see. 

If housing finance numbers and property price data elsewhere remain soft, this should in theory reduce the calls for interest rate hikes allowing the market more time to run upwards. The ongoing weakness of markets such as Adelaide and Hobart are actually a boon for property owners and investors elsewhere.

It was interesting to note during a stroll along Sydney's Broadway yesterday how a number of new apartment developments are coming along. 

Investors in Sydney would likely be wise to look away from the markets which have a forthcoming risk of oversupply - which include the Central Business District and some of its immediate surrounds and parts of the inner south, where thousands of new units will come online in the coming few years.

This boost in apartment construction is part of a fairly typical residential property cycle. Those who get caught out over the coming decade are likely to include those paying premium prices in 2013-14 for new or off-plan properties just at the time when a glut of new supply is set to become available - supply-constrained suburbs with massive and growing demand will as ever represent a smarter investment.

Note that a huge proportion of property sales are presently to investors, a trend which those interested in buying property would be wise to take heed of.