Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 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 finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete 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'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go Hmmm...one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Wednesday, 5 March 2014

RBA Chart Pack shows property market in good shape

Saving

Household saving ratios have been high since the financial crisis, but data out today from the Australian Bureau of Statistics showed that at last people may be gradually opening their wallets again.

Retail sales data tomorrow will provide us with more evidence.

There is a bit of a lag in the Reserve Bank's Chart Pack figures, but let's see what we can deduce.

Household Saving Ratio graph

Sill elevated, as compared to the levels seen over the last two decades, but low interest rates should see Aussies starting to loose the purse strings a bit.

Building approvals

By the time next month's charts are in the total residential building approvals data will show approvals at their highest level in a decade.

A good thing or a bad thing?

A great thing for the economy.

And for housing prices? Well, we'll get an oversupply in pockets, of course.

But nationally? 

The Digital Finance Analytics blog attempts  here to  explain the shortfall in our construction and concludes we need to more than double dwelling construction to meet demand. 

I'm not sure about the exact nature of the conclusion, since different cities and regions have different demands and requirements.

But with the population growing at 400,000 per annum and household sizes far lower than they used to be...then, yes we desperately need to get building supply, and quickly.

Private Residential Building Approvals graph

Household finances

The third chart below on household finance shows the first signs that household debt levels as a percentage of disposable income - which have been flat or falling slightly for the last 9 years - may again be turning up, just a slight notch.

Household Finances graph

Housing loan approvals

Housing loan approvals are by aggregate dollar value are...heading to the moon, blasting through the $20 billion barrier and heading well beyond. 

It's property market boomtime.

Housing Loan Approvals graph

Dwelling prices

Prices are heading sharply upwards in all major capital cities except for Adelaide. 

The red line indicates that some regional markets must have picked up also, although this is best judged on a region by region basis.

Sydney property market commentary over the years has morphed from crash, to bust, to a bull trap'and then to a slow melt...but finally there seems to be an acceptance of what we forecast here long ago: we're into a sharp property upturn, with very little stock on the market.

In our estimation the cost of production was too high for this to be otherwise, and only now are we at last seeing any meaningful supply response.

Tomorrow we'll take a look at whether SQM's prediction of 15-20% Sydney price growth in 2014 will play out.

In any case, sweeping city-wide commentary adds very little value to anyone who can read a chart.

So we'll also be looking in a bit more detail at which sectors of the Sydney market are now risky (plenty of those) and which we consider to be significantly less so.

Housing Prices graph

Household wealth, household debt

With share markets driving up to a 6 year high today, Aussies' net worth is now in a pleasing uptrend, while household debt levels have been flat for around a decade, which is good news for Aussie households.

Household Wealth and Liabilities graph