Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and 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 is 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 and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and '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 of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Wednesday, 16 July 2014

New home starts +8.7% q/q (+22.2% y/y)

New home starts increased impressively by another +8.7% in the March 2014 quarter and 22.2% over the past year, seasonally adjusted.

The Housing Industry Association noted that "all states and territories except South Australia experienced strong growth in the quarter."

The annual number of housing starts at 176,981 is now very close to hitting an all-time high, with a record high likely to be seen later in 2014.

It was a +12.8% surge in detached housing starts which underpinned the surge in the March 2014 quarter:

Source: HIA

Increases were recorded in the quarter in the ACT (+31.6% q/q), Victoria (+15.4%), Western Australia (+12.4%), Northern Territory (+5.9%), Queensland (+1.3%), Tasmania (+5.3%) and New South Wales (+2.5%).

Only South Australia recorded a decline in starts in the quarter (-7.8% q/q).

Over the past year, commencements have collapsed in Tasmania, but increased elsewhere in response to low interest rates and, generally, rising dwelling prices.

The hidden plus for housing markets such as Adelaide and Hobart is that the lack of strong increase in prices over recent years (and correspondingly, therefore, construction), while seeing the local economies at risk of dwindling into recession, has also seen vacancy rates tightening.

Such is the nature of a housing market cycle.

Source: HIA

For all this, the value of residential construction work done pales into insignificance when it is married up against the colossal spend on Australia's aggregated resources mega-projects.

Thus, while the boom in resi construction is much welcomed and will see a handy multiplier effect across other parts of the economy, this won't in itself be enough to save the economy.

Incidentally, this is why the RBA has been making a few noises about house prices this week.

Why? Because it knows full well that another rate cut (or cuts) appears increasingly likely to be needed and it wants to quell a little of the likely exuberance in advance. 

With Sydney investor loans increasing by the month, and borrowing rates falling anyway, further cuts to the cash rate to below 2.50% only appear likely to add fuel to the fire.