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.

Wednesday, 30 March 2016

Dichotomy

Inner ring tightens

The Sydney property market has become something of a dichotomy.

It was reported last week by the Real Estate Instititute of New South Wales (REINSW) that residential vacancy rates in inner ring Sydney had fallen by 0.6 per cent to just 1.3 per cent in February.

Vacancy rates in Sydney's middle ring also tightened to 1.6 per cent. 

On the other hand, vacancy rates in outer Sydney look to be a bit looser at 2.1 per cent.

To some extent this reflects what we have seen in auction clearance rates in 2016, with the inner ring suburbs often recording exceptionally strong results, but sentiment waning in the outer and in the Hills District.

Of course, it is a truism to say that monthly readings can jump around quite a bit, particularly in the regional areas where sample sizes are smaller.

However, if we smooth the data on a 3mMA basis, we can see that outer Sydney vacancy rates are potentially setting themselves to rise quite sharply, just as they did at towards the end of their growth cycle late in 2003. 


It's probably a bit too early to call a trend on this with any certainty, but it's definitely one worth watching.

I noted here yesterday how labour market conditions appear to have improved somewhat in Newcastle and much of the Hunter region, which also seems to be reflected in steadily tightening rental markets.

On the other hand, residential vacancy rates have all but doubled in Albury since August of last year to 3.7 per cent.  

Asking rents up

There have been some early suggestions that parts of the inner Sydney property market are tightening. 

The regulator APRA has certainly been successful in hosing down investor demand since a frenzied investor market around April and May last year.

And so with population growth in Sydney remaining very strong, there is a possibility that the rental market could be tightening again. 

SQM Research's latest asking rents index shows an annual increase of +5.5 per cent for Sydney units and +5.6 per cent for two bedroom units in the harbour city. 


Source: SQM Research

Of course, at this stage in the residential construction cycle, the supply of new units can on average command higher rents than much of the older or obsolete stock, which might skew indices north a little.

Asking rents for units in Brisbane are also up by +2.6 per cent, and in Melbourne by +4.1 per cent. 

In any case, the answer will become clear in the next few months.