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.

Tuesday, 3 March 2015

As you were...

The Guv is holding...

Every man and his dog has had their say on today's Monetary Policy Decision, of course, where the Reserve Bank decided to leave the cash rate on hold at 2.25 percent.

The wording of the release revealed a few things.

Firstly and most obviously, there was the strongest indication of easing bias that we have seen in fully two years: "...further easing of policy may be appropriate over the period ahead".

As such, futures markets are largely unchanged by today's conservatism, still expecting two more rate cuts by the end of the year, with the next one to be delivered either by April (57 percent chance) or by May (almost a certainty!).

The Reserve Bank noted that dwelling prices are rising strongly in Sydney but are more varied elsewhere, suggesting that there is room for more cuts.

The RBA also notes that it is working with regulators (APRA) to ensure that lenders are not letting their lending standards slip in order to garner business.

Property market impacts

Louis Christopher noted in the past fortnight that a "hold" decision today would simply keep the Sydney housing market stronger for longer - in his own words "the longer the RBA spreads out the cuts, the longer the bull market in Sydney".

This sounds plausible.

Property markets are lumbering and illiquid beasts, and some potential buyers are perhaps only just processing their thoughts to the rate cut on February 3.

If anyone should have a handle for these things it is Louis Christopher, as the Managing Director of SQM Research, and he has a good track record of undertaking the notoriously tricky job of forecasting residential property markets.

Stock on market

By coincidence SQM released its Stock on Market figures for February 2015 today, which showed the following:

-the Hobart market is clearly tightening, and dwelling prices are at last set to rise in the Tassie capital finally after a dreadful decade within which parts of the local economy which were slugged by the strong Aussie dollar;

-there is still less stock on the market in Sydney than there was a year ago, despite a surge in listings over the past month - there are plenty of keen sellers around, yet stock is still being absorbed apace in an investor "feeding frenzy";

-Melbourne still has by far and away the highest level of stock on market; and

-stock on market in resources-influenced Perth and particularly Darwin is trending up, reflective of the two-speed mining economy flipping into reverse gear.

SQM's vacancy rates figures suggest a very similar story, with the tightest markets being Hobart, Adelaide and Sydney.

However, vacancy rates are elevated in Melbourne and are rising sharply in Perth and spectacularly in Darwin (although from a hazy memory of my days in the "Top End", the Darwin market can throw up seasonal surprises).

Q4 National Accounts tomorrow

Tomorrow I will be back to look at the much anticipated GDP figures, where we are expecting to see moderate growth for Q4 2014.

As a reminder, the Q3 result was very weak at only 0.3 percent as I looked at in more detail here with some pretty charts, as is my wont.

We know from the already released GDP partials that net exports will contribute a tidy 0.7 ppts, in part due to weak import figures,

However, there will be "disappointing" contributions from inventories (subtracting 0.75ppts in Q4) and public demand (+0.3 percent).

Meanwhile the terms of trade have once again been slugged in declining by 1.7 percent in Q4 to be some 10.8 percent lower across 2014.

While forecasting GDP is a crapshoot, one would think that risks abound to the downside for Q4!