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 of the world's most popular & widely-read financial publications.

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

Monday, 14 July 2014

Rents haven't fallen in four decades

Interesting research paper from the Reserve Bank today on the subject of "Is Housing Overvalued"?

In short, no.

There were some interesting points made on the relative cost of renting a house versus owning, which will doubtless be quoted as some kind of 'proof' that renting is smarter than buying.

Don't get me wrong, I like renting and investing. 

It can free up capital to deploy more efficiently. 

But to suggest that renting is better than buying for most people over the long haul is highly questionable.

After all, the homeowner owns their place of residence at the end of the mortgage term, and quite likely sooner.

On the other hand the renter faces rents which rise in perpetuity, even if you live for half a century beyond the retirement date.

More than that, plenty of people who rent instead of buy don't invest in anything else outside of their super.

Buying a home can impose a discipline of forced saving for those who are unable to do so otherwise.

In fact, rents have not fallen on an aggregate basis in Australia according to the ABS series across 40 years, and in capital city locations that will likely continue over the long haul as the population grows and inflation continues to depreciate the value of the currency.

I examined this subject in some detail on Property Update here.