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'.

Tuesday, 21 March 2017

Melbourne vacancies close to a 10-year low

Melbourne rental markets tightens 

A short but possibly very important article!

SQM Research reported today that Melbourne's vacancy rate had declined to just 1.7 per cent.

That's nearing a 10-year low.

Given the very high rate of construction seen in Victoria, this is remarkable, and potentially leaves many commentators - including me, actually - with egg all over their faces. 

The state of Victoria has added more than 229,000 dwellings to its stock or more than 10 per cent over the past 5 years.

Yet with Melbourne population growth rising to a record high, even this mightily impressive rate of dwelling construction still not been enough to stop vacancy rates falling from around 2.5 per cent to well below 2 per cent.

Asking rents are rising solidly for houses and apartments in Melbourne and Sydney, and have hit new highs in both cities. 

Despite this, rental CPI is tracking at around two decade lows, with rents having declined in Perth, Darwin, and now for Brisbane apartments. 

Heck, even the reported vacancy rate in Melbourne's Docklands tumbled to just 2.4 per cent according to SQM Research, after a sizeable seasonal spike through the Christmas break. 

The monthly vacancy rate figures can move around a bit, and vacancies can be higher over the Christmas period, but just to get a feel for where things are heading I also run a 4mMA chart. 

Some cities did record seasonal spikes over Christmas, but the tightness in Hobart and Canberra is clearly apparent. 

Perth's rental market seems to have improved just a notch lately. 

The wrap

The March result showed vacancy rates below 2 per cent in Sydney and Melbourne, while Canberra and especially Hobart have very tight rental markets. 

This is potentially hugely significant, for it suggests that apartment oversupply will not be the trigger for the next downturn in Sydney and Melbourne, which is a conclusion I've previously drawn in my own market research reports (Brisbane's inner city apartment market is a different story). 

One thing we can say, however, is that the true extent of any oversupply doesn't become apparent until sentiment and prices are in decline. 

Nevertheless, all eyes turn to APRA, and to the cash rate yield curve.