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).

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.

Saturday, 28 February 2015

Emerald the next hotspot to crash

Sydney to power ahead of poor mining locations

Interesting how quickly things change.

Only a little over two years ago my predictions of a Sydney property boom were very much out of favour because I'd neglected to note the fortunes of Gladstone, Port Hedland, Moranbah, Karratha, the Hunter Valley etc etc.

Unfortunately for those favouring mining towns those property markets have been crashing all over the place.

Port Hedland, Karratha and Moranbah have all capitulated in spectacular style.

I haven't been up to Gladstone for a couple of years and I'm not really qualified to comment, but the prognosis is for a crash.

Although coal jobs are being cut all over the shop, Newcastle and the Hunter Valley are unlikely to be the worst hit areas, because they do have an element of employment diversity.

I expect Emerald will be the next of the small town property hotspot recommendations from 2013 to implode as mining workers relocate back to Brisbane.


"Blake Graham is uneasy about the changing nature of his home town of Emerald in central Queensland, now the coalmining boom has bust.
“It’s like a ghost town,” admits the 31-year-old, who works for his family’s mine machinery hire company, Grahams Plant Hire.
“Heaps of my mates were working out here in the mines but they’ve had to move back to the Gold Coast and Brisbane; they’ve lost their jobs, sold their jetskis, new cars and all the other sh_t that you buy when you are 27 and earning $140,000 or more, and gone home to a labouring wage.”
It’s a vastly different Emerald that is showing its country face to new arrivals and travellers these days, from the flashy height of the coalmining boom two years ago.
Gone are the loud pubs overflowing with cashed-up workers in fluorescent mining garb; the shiny new black utes with chrome rollbars trawling the main drag; prostitutes lolling against motel walls; and hotels charging more than $300 a night.
As world coal prices have plummeted, planned new coalmines in central Queensland have been shelved and future explor­ation halted. So too has Emerald’s growth as a thriving mining hub come to a screeching halt.
Empty shops line the town’s main street. The local council is owed nearly $10 million from homeowners unable to pay their rates.
Motel owners used to full occupancy and high rates are going broke by the week, with rooms only 30 per cent full at a lowly $89 a night.
Rents for a three-bedroom house have similarly slumped, from $800 a week to a pre-boom $250 per week. Many landlords are dangling offers of the first month’s rent free in the hope of enticing a rare new family to the town.
Graham’s family equipment business, which in its heyday supplied contract heavy mine machinery, drivers and service mechanics to some of the biggest coalmines, has shrunk from a workforce of more than 250 in 2013 back to a small Emerald-based team of nine.
Its work yard is filled with big yellow dump trucks and mine bulldozers with nowhere to go.
“When the coal price went down, contractors like us were the first ones to go; we’ve had to change our business to stay afloat and it hasn’t been easy,” says Graham.
“It’s the same for everyone in Emerald, back to reality in a way: the pubs and restaurants are struggling, you can get a park outside the post office any time, and all my age group has gone again. It’s pretty dead and slow on a Saturday night in town now.”
It is in the new housing estates — carved from Emerald’s bush fringe with their manicured lawns, grand display homes and pretentious names such as Maranda Heights, Mayfair Ridge and The Vines — that the dashed aspirations of hundreds of mine-dependent families are most evident.
There are currently 477 vacant houses for rent in Emerald and more than 300 on the market. In a town of 12,000 — down from a boom population of 15,000 in 2012 — the bleeding shows.
New cul-de-sacs and silent courts are lined with For Sale signs. Some new homes have never been lived in, as local coalmines such as Rio Tinto’s Kestrel and BHP Billiton-Mitsubishi’s Blackwater have slashed worker numbers in the past 18 months, despite maintaining coal production levels.
Other empty houses are owned by absent city speculators, caught too in the boom-bust cycle.
Local valuation firm Taylor Byrne has tracked how house values in Emerald have fallen in concert with dropping world coal prices, now as low as $77 a tonne.
Modern new homes that were selling like hot cakes for $450,000 in 2012, when coal prices were just off their $142/tonne peak, can now not find a buyer at $250,000.
Banks in possession of dozens of houses, seized from out-of-work miners unable to maintain big mortgages, are offering deeper discounts.
Taylor Byrne valuer Annette Smith says it is not only the resident miners and their families who have left town. Gone too are the troops of fly-in, fly-out miners who used to arrive daily at the airport to live on remote mine sites; FIFO numbers have halved from their peak in 2012-13.
Dozens of service and supply companies that arrived in Emerald while the coal sector thrived have also vanished."
Terrible.

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Sydney's market goes from strength to strength with a massive and "irresistible" 85.5 percent preliminary clearance rate on Saturday.

This is the second highest preliminary clearance rate on record.