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'.

Wednesday, 3 January 2018

Units outperformed houses in 2017

Flat chat

Probably not quite a result to fit the prevailing narrative! 

But the combined capital city unit price rose by +5.1 per cent in 2017, comfortably outperforming house prices at +4 per cent (with the usual lengthy disclaimers about methodology, margins for error, and mile-wide variations across sub-markets).

Typically capital city units saw stronger yields too, so on a total return basis outperformed in notching +9.3 per cent for the calendar year compared to +7.3 per cent for houses, the reasons for which may vary.

House prices in Sydney and Melbourne have outperformed units through this cycle, but house prices in Sydney certainly softened the second half of the year.

Around the traps

Early in the year Sydney's inner suburbs were characterised by some borderline insane auction bidding, but this had petered out by the final quarter as APRA's cooling measures took hold. 

Thus, while housing market data providers no longer focus on seasonally adjusted figures, as it turned out the fourth quarter was a weak one anyway. 

Over the full year Sydney's median unit price increased by +5.4 per cent to $774,100, while the median house price tapered off in the final quarter of the year to be just +2.1 per cent higher in 2017.

With rents increasing in 2017, CoreLogic reported that Sydney's yield had edged up to a 12-month high by the end of the year (if indeed 'high' is the right word for something that is, in fact, low). 

Hobart was the clear outperformer in 2017, with the median house price rising by +12.9 per cent to $424,250, with further gains in 2018 all but assured in this extremely tight market. 

In Melbourne there was strong growth in both the median house (+9.1 per cent) and unit price (+8.4 per cent) over the year. 


In the resources capitals Perth (-2.6 per cent) and Darwin (-5.3 per cent) house prices declined in 2017, but a range of indicators suggest that brighter times will eventually lie ahead. 

Percentage gains in Brisbane and Adelaide house prices have tended to dovetail quite closely over the past decade-and-a-half, and these markets once again saw house prices rise by +3.1 per cent and +3.3 per cent respectively.

Brisbane's beleaguered unit market recorded a moderate -1.2 per cent decline in its median price to $383,750, though gross rental yields of +5.3 per cent may attract more interstate investors while population growth is now steadily picking up. 

Ripple effect

Across regional Australia many markets were rather flat in 2017.

But some of the stronger markets included those located within striking distance of Sydney and Melbourne, as the ripple effect took hold.

The main outperformers of note were Newcastle & Lake Macquarie (+11.7 per cent), Southern Highlands & Shoalhaven (+10.3 per cent), and Geelong in Victoria (+9.7 per cent).