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'.

Tuesday, 3 February 2015

"Rate cut to turbo-charge Sydney house-price growth"

RBA takes action

The Reserve Bank dithers no longer, cutting interest rates by 25bps to just 2.25 percent.

The monetary policy decision had the desired effect on the Aussie dollar, sending the currency plummeting down to just 76.7 cents.

Perhaps the most interesting point to note is that the Reserve was unwilling to cut interest rates unless it saw more than one cut as being necessary.

Therefore this is perhaps unlikely to be seen as a "lone wolf" interest rate cut and we may well see a 2 percent cash rate soon.

Crucially the wording of the release was ultra-dovish suggesting that more interest rate cuts may follow in due course.

This point was not lost on markets which are already pricing another interest rate cut as soon as next month as being more likely than not, albeit marginally.

More than that, markets are pricing in implied yields of below 1.8 percent miles out until the second half of 2016.

This suggests that we are set for a long period of low interest rates ahead.


What then for Sydney housing?

In short, it is going to be another big year for Sydney's property market.

Noted Domain  in its article "interest rate cut to turbo-charge Sydney house-price growth".

"The Reserve Bank's cut in interest rates has prompted speculation from property experts that the Sydney housing market could be in for another boost.

Property prices across the city rose at boom-time levels of 14.1 per cent in the 12 months to December, according to Domain Group's Housing Report.
LJ Hooker national research manager Matthew Tiller said the cut was likely to prompt another uptick in prices.
"This would come on the back of another surge in demand predominantly from investors in the inner-ring suburbs".
Dr. Andrew Wilson noted that only Brisbane showed anything like Sydney's performance in 2014, suggesting that other markets were so much cooler that Australia would benefit from different interest rates for each state!
"Domain Group figures show that the capital city with the highest price growth rate after Sydney was Brisbane at 6.1 per cent in 2014.
"We probably need a state by state interest rate policy as the growth has been so different," he said."

I've made a similar point on many occasions previously - current monetary policy settings are too loose for Sydney's economy, but low interest rates is what we are set for and the housing market will likely now move into overdrive.

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There were a couple of other very interesting releases today on international trade and record building approvals, but, hey, let's save some of the fun for tomorrow!