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'.

Thursday, 9 April 2015

AFR: Severe downturn ahead for SA building

Adelaide stagnating

I spent some time recently here discussing Adelaide's mendicant economy, pulling together a handful of graphics from my chart packs to back up my points.

My analysis of the ABS Building Activity data has consistently shown that the construction boom has been threatening to pass South Australia ("SA") by.

Now it looks as though we have further confirmation of that - reported Tim Binsted in today's AFR:

"On the east coast, the negative economic impact of the dwindling mining boom is being offset by a red hot housing market, particularly in NSW, that has seen the nation's biggest brick maker Brickworks scrambling to bring on new plants to meet demand.

But Hickinbotham Homes MD Michael Hickinbotham said SA is missing out on the action.

"The SA housing market is currently experiencing a very severe downturn, with a significant number of building companies having closed their doors over the last 18 months".

"There are rumours that some large interstate companies may be scaling down or leaving the state."
An anaemic housing market adds to the woes facing SA Premier Jay Weatherill.

SA is already struggling with the highest unemployment of any state, the exit of car manufacturing and uncertainty over the future of the state's ship building industry.

Building to fall to lowest level in 15 years?

The ABS Building Approvals data has suggested an even worse dynamic, with the pipeline looking all but set to dry up.

Continued the AFR:

"HIA chief economist Harley Dale said the weakening state economy is taking housing down with it.

"The unfortunate reality in the here and now is that the SA economy is weak and the new home building sector is weakening quite considerably".

"We could be in for a 10 to 15 per cent fall in new home building activity that could take us back to some of the lowest levels we've seen in the last 15 years … we are building record numbers of homes in Australia at the moment … but it is quite a divergent profile for South Australia."

"The government there has a tough gig, but while the economy is going to find it rough, with manufacturing of cars and submarines coming out, the impact on cement is not that great," he said.

By way of further damning evidence the AFR piece cites Adelaide Brighton (ASX: ABC) seeing activity coming off in SA with pre-mixed concrete expected to be down 6 per cent year-on-year, and Boral (ASX: BLD) highlighting "challenging conditions" and "muted demand",

Add in the maufacturing employment malaise and it's really not a great look for Adelaide.

Not that this is anything new - it's a point I've been making on this blog for years.