Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

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.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Monday, 2 November 2015

Land values rip

Residential land values soared in 2015

I've been reading Piketty's Capital this week (birthday present - thanks Matt!).

One of the many interesting observations therein notes how while in 1770 the value of agricultural land typically accounted for a very significant share of total land values, over time and through industrialisation housing has instead come to account for an ever greater share of the pie. 

In Britain, there have been few better investments than farmland over the past two decades, but this has largely been a function of the favourable inheritance tax treatment.

In Australia, the growth in land values has been all about residential use over the last three decades.

Australian land values

During the past week the ABS released its System of National Accounts for 2015 which as always revealed a plethora of interesting trends, not least that the decline of mining capital expenditure has a long way to run yet. 

One of the most striking data sets showed how the total value of Australian land has surged to more than $4.7 trillion as at June 2015.

Perhaps predictably, more than 97 per cent of the increase over the financial year was accounted for by residential land use.

The total value of residential land soared by more than half a trillion dollars ($509.2 billion) or 15.1 per cent over the financial year. 



Since 1989 the total value of land in Australia has surged by well over $4 trillion, with residential use accounting for nearly $3.5 trillion or more than 85 per cent of the increase.

Capital cities drive land values

Since dwelling prices over the long run are ultimately a derivative of the land value which sits underneath, I always recommend capital city properties as those with the greatest potential for price growth.

Particularly I look at those located within easy commuting distance of the Central Business District and with a high percentage land value content, which typically means steering well clear of high rise tower blocks.

Since 2012, the biggest paper gains for property speculators have been seen in Sydney, with the total value of residential land in New South Wales spiralling by more than 53 per cent in just three financial years. 

Victoria has also seen land values increase by 35 per cent over the same time period, with broadly similar gains in land values across the next three most populous states in the 20 -22 per cent range.


Of course, population growth accounts for some of the increase in residential land value, and so too does the prosperity of the local economy, the lower cost of capital, and the relative scarcity or availability of the land in question.