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.

Friday, 19 December 2014

Residex: Brisbane to Outperform

Sydney Still Surging

The latest stats from Residex confirm what we expected to see, with Sydney dwelling prices rising strongly.

Sydney house prices are up by 17.2 percent over the past year and 3.9 percent over the last quarter on the Residex indices.

Apartment prices in Sydney have increased by 13.8 percent over the past year and 2.5 percent over the last quarter.

Sydney Rents Rise

It is quite clear from these numbers that there is no "oversupply" issue in Sydney with rents soaring.

Sydney house rents roared 10.3 percent higher, while unit rents in aggregate were up by another 5.94 percent.

Capital growth has generally been considerably weaker elsewhere and generally poor in most regional areas according to the Residex figures given record low interest rates.

Brisbane to Outperform in 2015

Residex sees Brisbane as an outperformer through 2015 and beyondL

"The models are indicating that Brisbane is likely to be the standout performer in growth terms when compared to other cities. Equally, the models are indicating that the rates of growth are likely to be quite moderate when compared to past growth cycles.

It is not particularly difficult to find justification as to why Brisbane will do better than most cities in the next period of growth. The following is provided in support the hypothesis:
  • It is one of the most affordable cities for housing when compared to the other major cities (as is shown in Table 3);
  • The median cost of a property is now lower than all cities, other than Adelaide and Hobart. On a historical basis this is not typical. In the past, cities like Darwin and Perth have been less expensive than Brisbane;
  • Rental yields in Brisbane are now more attractive than in other major capital cities on the east coast, and there will be situations where rental yields of better than 6 per cent can be found;
  • The Government has been taking decisive action to correct budget deficits. With the significant expansion in the Liquefied Natural Gas (LNG) projects in the state, it is likely that, notwithstanding the recent significant falls in carbon based energy resource prices, the economic growth in the state will move to being potentially the highest in the nation1;
  • The reduction in the value of the Australian dollar will be of significant benefit to the tourist industry and positively impact on the Queensland economy.
Our Viewpoint

Our chart packs are in agreement with these conclusions. After a rough few years for Queensland, housing finance is steadily building both for owner-occupiers and from investors suggesting price growth ahead in certain suburbs.

However, there are two significant caveats:

Firstly, unemployment rates are rising in many areas of regional Queensland. We will cover this in a little more detail in the next blog post, but we would be much more inclined towards a Brisbane investment than a cheaper regional option.

Secondly, asset selection is key since generic price growth will be weaker than that seen in cycles past. Off-the-plan apartments in larger developments may not be a great choice, for example. Investors need to do better than that and understand the market at a closer micro level. 


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