Pete Wargent blogspot

PERSONAL/BUSINESS COACH | PROPERTY BUYER | ANALYST

'Must-read, must-follow, one of the best analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Markets & Economics Editor, Sydney Morning Herald.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Tuesday 5 November 2024

Interest rates on hold until 2025

Rates on hold

The Reserve Bank released its monetary policy decision, with the cash rate target on hold as expected at 4.35 per cent. 

Markets were little moved by the news and the release.

The bank's latest statement on monetary policy showed GDP forecasts revised down slightly. 

Shane Oliver from AMP prepared a neat 'before and after' chart to underscore these changes. 


Source: Shane Oliver, AMP

The forecasts for trimmed mean were also revised back down a little, after the 'mini-scare' for inflation in May 2024.


Source: Shane Oliver, AMP

There is a possibility that headline inflation 'pops' higher to back above target above next year if government subsidies are wound back, but I'd say it's pretty unlikely that the subsidies are going anywhere. 

Overall, it looks most likely that if the  trimmed mean inflation figure comes in at +0.7 per cent for the December quarter when it's reported in January, then interest rates will be on the way down from February 2025.

A bit can happen between now and then, of course.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Monday 4 November 2024

Loans skewing to wealthier borrowers

Loan sizes up

Housing finance figures softened a little in September, down by -0.3 per cent, after a very strong run-up in recent months.

Investment loans were still a very solid 30 per cent higher from a year earlier.

It was interesting to note that the average owner-occupier home loan has increased to surpass previous peaks. 

This looks unusual, because loans are typically being stress-tested at absurdly high levels of around 9½ per cent, which borrowers will most likely never pay (and only would pay if nominal incomes surged very considerably higher). 

However, because lower income earners are effectively now locked out of the market by lending assessment buffers, this is having the effect of skewing the averages higher and towards wealthier borrowers.


Lending for construction and new homes is off the lows thanks to the investment lending rebound, but remains disappointing for homebuyers, meaning that overall the national dwelling supply shortage continues to worsen (despite the solidly rising approvals in Perth and Melbourne). 

Less risky lending

Westpac reported its latest results this morning, which showed that the fixed rate cliff (i.e. the scheduled expiry of fixed rate home loans) peaked way back in September 2023 last year.

Only 11.8 per cent of loans by value across Westpac's loan books were interest-only, down from around half of the entire mortgage book at the peaks.

This means that Australia's debt to household income ratio is falling as most mortgages are seeing the principal being paid down (net of Australia's large offset balances it hasn't increased for nearly two decades). 

Overall, 'risky' lending has been almost completely stripped out of the lending market, but you'd be hard pressed to argue that this is reducing systemic risks if the outcome is tent cities and a destabilising housing shortage. 

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James Foster ran through the detailed housing finance figures here.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.


Sunday 3 November 2024

2-Sense: Policy proposals pour in as wealth increases

2-Sense podcast

This week, Chris and I discussed all the latest policies impacted the housing market, and the ongoing increase in property and household wealth in Australia. 

Tune in here (or click on the image below):


You can also watch the YouTube version here:


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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Saturday 2 November 2024

Fed to cut in November & December

Payrolls weaken

US nonfarm payrolls were much weaker, and essentially unchanged in October (+12,000).

The blues and academics were quick to point out that hurricanes might've clipped 40,000 or so from employment - which could prove to be true - however, that doesn't account for downwards revisions to the preceding months totalling -112,000. 

Overall, it looks like the pace of employment gains may be tapering off now.


The reported unemployment rate did increase, but only marginally from 4.051 per cent to 4.145 per cent, and as such held relatively steady at just 4.1 per cent rounded.

The so-called 'Sahm Rule' is no longer triggered on these numbers, but next month will likely be more instructive. 

Average hourly earnings were +4 per cent higher over the year, broadly as expected.

Bond yields initially dived 10 basis points or so, but then fairly quickly rebounded through the day's trade.

Overall, this was an apparently soft result, which should keep the Fed cutting interest rates in November and December.

Thursday 31 October 2024

Investors coming back ahead of expected rate cuts

Credit impulse up

Credit growth was a solid 0.5 per cent in September 2024, and increased to 5.8 per cent over the year, according to the latest Financial Aggregates from the Reserve Bank of Australia. 


Housing credit growth picked up to 5.1 per cent over the year, the fastest increase since April 2023.


In particular, investor credit growth of 0.5 per cent over the month was the quickest increase since June 2022, a clear sign that investors are getting back into the market ahead of anticipated interest rate cuts.


The new supply from the spring selling season has cooled housing price growth - indeed, it's been negative in Melbourne, Canberra, and Hobart - yet the housing credit impulse has picked up some speed. 


A combination of a dwelling shortage and lower mortgage rates in 2025 should be net bullish for the housing market, overall, with some divergence in performance depending on local market conditions. 

Building approvals surge in Perth, but...

Approvals off the lows, thanks to Perth

House approvals in Australia have increased by 17 per cent from a year earlier, driven by Melbourne, Brisbane...and especially Perth. 


Unit approvals are a different story, altogether, down -12 per cent from a year earlier.

Melbourne and Brisbane aren't looking too clever from a unit supply perspective, while developers in Sydney have seemingly all but given up for the time being.

Sydney mustered only 662 unit approvals in September - with the exception of one seasonally weak January month in 2023, you'd have to go back a dozen years to find a weaker result.


Overall, house approvals are trending higher from their lows, at about 9,500 per month nationally, but capital city unit approvals are very soggy. 


The rebound from the cycle nadir has been overwhelmingly driven by a 50 per cent increase in dwelling approvals in Perth.


Over the year to September there were 167,000 dwelling approvals in total.

For the government to hit their pledged target of 1.2 million homes in 5 years, annual approvals probably need to be closer to 250,000. 


The wrap

Melbourne is faring quite solidly in terms of its housing supply, but Sydney seems to be heading for a colossal shortage of dwelling units. 

Meanwhile in Perth developers are flat out trying to keep up with booming housing demand, pushing construction costs in Western Australia sharply higher.

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Wednesday 30 October 2024

Inflation slows to 0.2 per cent

Inflation eases

Headline inflation came in a bit lower than expected at just 0.2 per cent for the September 2024 quarter, taking the annual figure down to 2.8 per cent, according to the latest ABS figures.

That's the lowest annual figure figure since March 2021, with further declines to come.

There was a bit of inflation on alcohol and tobacco - and some services inflation for rents, insurance, and childcare costs - but not a whole lot else. 


Source: ABS

As expected, electricity subsidies helped to reduce the headline figure significantly.

The trimmed mean result for the quarter was 0.78 per cent, taking the annual reading down from 4 per cent to 3½ per cent, essentially in line with the Reserve Bank's forecasts.


Source: ABS

Naturally, analysts will ask what happens when the power bill subsidies are taken away, but 2025 is an election year, and most likely they probably aren't going anywhere fast.

With oil prices trading at under $67.50, we'll likely get some further disinflation in fuel prices in the December quarter too. 


Source: ABS

The monthly inflation indicator was also soft and dropped all the way down to 2.1 per cent over the year.


Source: ABS

Overall, Australia's inflation trends haven't been much different to elsewhere...just a little lagged.


The wrap

Markets weren't much moved by this, with the 3-year bond yield still trading at a bit under 4 per cent.

This was probably a fair set of numbers from the perspective the central bank, with interest rates likely to remain on hold until next year (perhaps pencil in a first rate cut for February 2025). 

The government will be a bit twitchy as we head through into an election year with cost of living pressures front of mind for the electorate, and elevated mortgage rates killing off the prospect of the pledged new housing supply. 

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Tuesday 29 October 2024

Domain housing price report, Q3 2024

Domain update

Domain released its latest house price report for the September 2024 quarter.

Capital city unit prices increased +1 per cent over the quarter, while there were modest declines in the regions of Australia. 

Increases over the year were mainly driven by outsized annual gains in Perth and Brisbane. 

Brisbane is now the second most expensive capital city in which to buy a unit, after median prices increased for a 14th consecutive quarter.

Sydney unit prices increased for a 7th quarter on the bounce, and have now reached a fresh high having fully recovered from the pandemic downturn. 

Many units in Melbourne and suburban Sydney can be bought today well below the replacement cost (of $500,000 per unit plus land value), and so it seems likely to me that the big city unit prices will surge over the next few years as the cost of financing comes down in the face of a chronic shortage of property.


Source: Domain

House prices were softest in Melbourne, down -1.5 per cent over the quarter, with some further softness likely over the remainder of the year in the face of more listings and higher auction volumes. 

From a year earlier there were strong capital gains in Perth, Adelaide, and Brisbane, taking booming Adelaide up to become the 5th most expensive capital city in which to buy a house for the first time in over two decades, which is historically unusual. 


Source: Domain

Domain sees a resurgent market in Sydney in 2025 as interest rates fall.

Dr. Nicola Powell reported to the AFR that higher mortgage rates had been constraining price growth. 


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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.