Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & 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's 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 & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & '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'.

Monday, 3 November 2014

Sydney auction market goes stronger again

Clearance rates running high

A huge weekend of Sydney auctions.

Australian Property Monitors (APM) recorded an 82.4 percent clearance rate result, which will in all likelihood be revised down to 77-78 percent in due course.

This level of clearance rates may be commensurate with double digit levels of dwelling price growth.



RP Data, which typically records lower clearance rates than APM, notes how the market is stronger than 2013, a year when prices boomed.


Investment returns?

People often debate whether property is a "good" investment in Sydney.

The answer, obviously, is "that depends".

Just as if I bought shares in a failing company and saw poor results, so it is in real estate.

If you buy poor property located miles from the city where few people want to live and there is rezonable land as far as the eye can see, then yes, it is quite possible that property will be a poor investment for you.

In short, it is largely likely to be quality asset selection and getting the terms of the deal right which determines the answer and the outcome.

Winners

If you've been reading my blog over the years, you'll know that it's no secret that my favourite Sydney suburb has been Erskineville, as a long time property owner in the inner west suburb.

The returns from Erskineville property have continued to surprise even me, with yet more blistering auction results in recent week and apartment prices booming by another 31 percent over the past year. 


Since real estate tends to be a leveraged investment for most investors, for those using an LVR of 80 to 90 percent, this level of capital growth equates to an annual return of 150 to 300 percent before costs.

Of such rates of return are early retirements built.

Clearly now is not the time to be buying in Erskineville, since the prices of quality assets have soared by more than 60 percent since 2008. 

You have to think ahead and look at the next big thing.

Lower north shore, Canterbury-Bankstown to shine

Quite a slump into 2011 caused us to look at the lower north shore over the last year, leading us to buy numerous properties in the region for our clients, and now it is the lower north which is leading the auction results. 

Reported APM:

"Sydney’s lower north was the leading suburban region this weekend with a strong 89.0 percent clearance rate with 65 sales from 73 reported results. 

The northern beaches also reported a strong result with 86.5 percent closely followed by the inner west at 85.8 percent with the highest number of sales at 103. 

Next best was the upper north shore with 84.1 percent, the south 80.7 percent, Canterbury Bankstown 80 percent and the city and east with a clearance rate at the weekend of 79.8 percent." 

In particular, we are starting to see some huge results in suburbs such as Wollstonecraft, Waverton, Cremorne, Cammeray and Milsons Point. 

Ripple effect

The inner west has now largely blown off, but don't forget to consider the ripple effect.

Earlier in the year I also suggested on this blog and on Property Observer that for buyers with more constrained budgets, the suburb of Campsie would likely continue to fire up.

Sure enough this weekend 100% of everything the auctioneers touches in Campsie turns to sold, with some massive results...

Being located only 12km from the city and on a key train link, there will be some strong capital growth in suburbs like Campsie in the years ahead.

Suburbs like Campsie have been in dire need of gentrification, causing many to naturally shy away.

But it's a basic fact of investment and of life that if you buy what everyone else wants when everyone else wants it, then you will pay over the odds.

Interestingly, only a decade ago many Sydneysiders turned their noses up at Erskineville, flatly refusing to consider these "ghetto" suburbs, even those located only a few kilometres to the west of the city, yet now the suburb is one of cafe culture par excellence.

Reflecting the demographic shifts of Sydney, Campsie attracts immigrants from China, Korea, Lebanon and Vietnam, as well as ethnic Europeans.

Watch this space for further capital growth in the years ahead.