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'.

Thursday, 28 May 2015

The long slow march to zero...

Crapex again

Australia's long slow march to zero interest rates continues, it seems.

Private new capital expenditure declined by 4.4 per cent in the first quarter to be 5.3 per cent lower than one year ago at $35.9 billion.

Mining capex has now fallen from $24.2 billion to $18.9 billion, and investment levels inevitably have a long way to fall yet given the scale of the boom.

The state level data shows how Queensland and Western Australia will bear the brunt of the declines.

Western Australia has held up relatively well to date, with some iron ore investment still washing through the quarterly data.

Mining still accounts for a whopping 84 per cent of capital expenditure in Western Australia on this survey.

However, Queensland is already into a very sharp decline from $12.1 billion of total capital expenditure in Q3 2013 to just $7.9 billion in Q1 2015.

While "other industries" are picking up a small amount of the slack, Queensland's mining and resources regions seem likely to be in for a tough few years ahead.

I've already listed a number of Queensland regions which I expect to endure the worst of the fallout, so there is no need to re-cap on that here.

Expected declines for mining ahead

The most alarming part of this release was not, however, the "actual" expenditure to date, but the "expected".

Total capital expenditure is broadly expected to fall by nearly 25 per cent from $149 billion in 2014-15 to just $104 billion in 2015-16.

The main driver of this is to be another sizeable decline in mining capex, from $78 billion to only $52 billion.

Diagram: Financial year actual and expected expenditure - Mining Capital Expenditure

So much for the forthcoming normalisation of interest rates - markets are already beginning to look for another cut.