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'.

Friday, 7 April 2017

Melbourne land

Melbourne land

I looked at some residential property price figures for Victoria.

It's not a market I'm particularly familiar with, but the 2015 figures from the DTPLI clearly showed land and house prices rising faster in metropolitan Melbourne (8.3 per cent) than in regional Victoria (2.5 per cent).

That's not that too surprising, as metro Melbourne where almost all of the record population growth is happening, and where most of Australia's jobs are being created too

Drilling in to the metropolitan Melbourne figures, below I plotted median land prices against median house and unit prices. 

The first thing of note is that since 2012 house prices have been outperforming unit prices, reflective of the high level of supply in the new apartment sector. 

The second point - which initially I found confusing - is that the land to dwelling price ratio has remained constant for three decades. 

That's not what I was expecting to see at all; rather I was expecting the land component to account for most of the price gains.

The reason the chart presents as it does is that it covers only the median and mean value of vacant land, which is often located further from the city.

The figures show that Melbourne’s median sale price for vacant residential land increased by 4.3 per cent from $210,900 in 2014 to $220,000 in 2015. 

Median land values in landlocked suburbs have often risen much faster over time, in turn resulting in very high house prices in blue chip suburbs.  

Noted the DTPLI:

The 10 suburbs in metropolitan Melbourne with the highest median house sale prices in 2015 were Toorak at $3,850,000, Deepdene at $2,720,000, Canterbury at $2,481,500, Jolimont at $2,350,000, Middle Park at $2,317,000, Brighton at $2,272,500, Malvern at $2,210,000, Balwyn at $2,200,000, Armadale at $2,160,000 and East Melbourne at $2,100,000."

Cheaper land

As a general rule Melbourne has fewer geographical constraints than Sydney, and this has been reflected in a higher rate of building and completions, particularly for houses. 

This is even visible in the percentage increase in the number of dwellings since 2011, which has comfortably outpaced that of New South Wales. 

Melbourne still has land which is "reasonably" affordable, however that may defined, although you might have to travel more than 20 kilometres from the Central Business District (CBD) to find it.

This is a comparative advantage that Melbourne has over Sydney, where this is demonstrably not the case. 

Even 50 kilometres from the city land prices in Sydney have soared to excruciating levels over the past half decade. 

It's another possible reason for the recent migration to Melbourne, as even some Sydneysiders opt to relocate for a more affordable housing options.