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'.

Monday, 19 June 2017

Is Sydney heading for a rental crisis?

Investors knocked out

An idea seemingly out of left field given record dwelling completions in Sydney, but stick with it.

Despite record apartment construction in 2016, the rental market is ultimately governed by the supply of rental properties on the market and the demand from tenants, not the absolute number of properties built.

Sydney is a city with an unusually high demand for rentals, for a few reasons.

Firstly, because it's an expensive city to buy a home to live in, and in an era where job stability is far less common most inhabitants will be a part of the rental market at one time or another (if nothing else the high rates of stamp duty ensure this). 

Sydney can also be a transient type of place - the harbour city attracts the most migrants from overseas, but also loses the most incumbent residents interstate or to the regions of New South Wales. 

This is a dynamic which leads to a high rate of churn and lots of tenancies. 

As home to the strongest economy in the nation in recent years, the annual rate of net overseas migration into New South Wales has been accelerating again, from 50,000 in 2010 back up to to more than 76,500 at the last count in September 2016. 


And then there is the unprecedented boom in the number of international students.


At the same time, a significant crackdown in lending to investors is underway, with a credit squeeze and rates being hiked on investor loans, while investors increasingly starved of credit are beginning to turn their interest to cheaper markets upstate or interstate. 

Changes announced in the state budget were designed to bring more first homebuyers into the market in their stead. 

Domain Group reported this week that apartment rents have increased by 17.4 per cent in Sydney over the last five years, with the growth in apartment rents topping 20 per cent in half a dozen sub-regions. 


Sydney may not be at full employment just yet, but with an unemployment rate of just 4.4 per cent it's been getting pretty close, and we know from historical experience that this tends to bring a high demand for rental properties. 



Sydney also has a track record of seeing rental prices spike when demand for investment properties falls sharply, such as from 1985 to 1988 (negative gearing ban), and in 2008 (financial crisis). 

A post to bookmark and watch over the next year.