Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Sunday, 21 June 2015

Preliminary auction stats & the week ahead

Prelim auction figures

CoreLogic-RP Data's preliminary auction clearance rate for the weekend of 77.7 per cent from 1,803 reported results was a little above the final clearance rate result for the preceding week of 75.9 per cent.

The below charts were reported by CoreLogic-RP Data.

Since June 2009 auction clearance rates dipped, recovered and have now soared again.

Sydney's clearance rate continues to hit at exceptionally high levels, clubbing at a preliminary rate of 83.9 per cent this week up from 70.1 per cent in the corresponding weekend for the prior year.

The Melbourne market has also remained robust, while Brisbane and now perhaps Adelaide are in a steady recovery phase.

Melbourne's preliminary clearance rate of 79.2 per cent this weekend was well up from 69.1 per cent last year.

As already noted, Sydney is regularly hitting at close to its record highs for auction clearances.

As usual there were very few auctions to report from Brisbane, but the preliminary clearance rate of 55.4 per cent is well up from the 32.2 per cent seen last year.

Adelaide's preliminary rate was also up by a moderate 3 per cent on the prior year figure, and the market does now appear to be in a steady recovery, albeit with some outer suburban pockets still struggling. 

The recovery has been a long time coming.

The Perth market held even fewer auctions rendering the stats a little meaningless, but that particular market is presently very soft, with properties often taking a long time to sell through this downturn stage in the cycle.

All charts were prepared by CoreLogic-RP Data.

The wrap

In short, the Sydney market is still booming, while Brisbane and Adelaide are steadily improving.

There's a bit of chat in the blogosphere about these two secondary markets slowing some time soon,.

Most commentators can't predict the future of course (and how!), me included, but with a cash rate of 2 per cent - and a cash rate that stands every chance of falling even lower by Q2 2016 - I haven't heard too many compelling reasons why, although a looming apartment oversupply in parts of inner city Brisbane is one to watch.

There has also been a lot of media talk about housing affordability of late.

For sure, the deposit hurdle is higher than it was, as indeed the Reserve Bank fully expected when it began the easing cycle - in Sydney, especially - but don't forget that even as recently as Q1 2008 the cash rate in Australia was comparatively speaking staggeringly high at 7.25 per cent.

Mortgage serviceability for the majority existing homeowners is presently very comfortable with an official cash rate of just 2 per cent, reflected in exceptionally low 90+ day loan arrears as reported this week by Fitch's Dinkum Index.

New buyers can fix mortgage rates at below 4.5 per cent today.

Partly for these reasons, I expect median prices to continue rising in Brisbane and Adelaide - but that said I do tend to be a bit wary of about reported medians when it comes to the good old "shoebox apartments"

Too many of these are being constructed in many urban locations, and real capital growth for many such property types will undoubtedly be poor.

Week ahead

While on the subject of residential property, one of the more interesting releases this week will the ABS Residential Property Price Indices for Q1 2015, due to be pinged out on Tuesday (click on the hyperlinks for prior analysis of data series).

I expect to see rising property prices for the first quarter, of course, but I will also take a look at the supply of new dwellings by state, the total and mean values of dwelling stock, and a number of other interesting metrics.

The market expects to see dwelling prices up by around 2.1 per cent for the first quarter, but the market consensus incorporates estimates ranging from 0.9 per cent to 2.5 per cent (uh, yeah, should be about in that range!).

This week we also have the always-fascinating Australian Demographic Statistics data due out on Thursday which will round off the figures for the 2014 calendar year. 

Way back around a year ago I projected that Australia's population growth could sink from 396,200 in CY2013 to end up somewhere closer to 300,000 than 400,000 in 2014.

We'll still have to wait and see what the final news brings.

I'll probably be right, but only just, and looks like I might have under-cooked the final result a little - we may end up somewhere closer to 340,000 in the event.

The great bulk of that growth will be accounted for by Victoria and particularly New South Wales - where interstate migration has fallen to record low levels - and these two states alone should account for net population growth of around 200,000.

Other interesting news will include Job Vacancies for the period to May 2015 and the Finance and Wealth figures for the first quarter of the year.

I expect to see Australia's aggregate household financial wealth at an all-time high as at Q1 2015.