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 Hmmm...one of the world's most popular & widely-read financial publications.

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

Monday, 18 January 2016

Congestion

(Near?) record new motor sales in 2015

Later this morning the ABS will release figures which show that sales of new motor vehicles for the year to December 2015 were at their highest ever level, or somewhere very close to it. As usual, I'll analyse the figures here.

This data series is of interest for more than one reason. Firstly, because new motor vehicle sales are a worthwhile indicator of economic health, as well as of household budget strength and confidence. 

After all, very few of us would opt to buy a new car if we believed that our household budget is likely to be stretched over the year ahead, or if we lacked confidence in job stability.

Secondly, following trends in traffic usage is one of the ways in which I aim to steal an edge in the property market.

This is something I learned from London, where today properties located with 500 metres of a Tube station command a whopping 10.5 per cent premium or an extra £42,000 on average, according to research by Nationwide (and confirmed by pretty much anyone who lives and works in London).

Lest there was any doubt, a short walk to Woolies in Spring Hill this morning confirmed to me that as the population expands over time Australian capital cities are heading for the same fate, with the traffic banked up on Queen Street forming a seamless snake stretching from the Valley to the Victoria Bridge.

Congestion to worsen

Now you might justfiably say that you'd like to see statistics to back up my hunch. 

In that context, the Australian Government's recent report "Traffic and congestion cost trends for Australian capital cities" presents some interesting base case scenarios for the avoidable cost of congestion for Australian capital cities, which is estimated to be around $16.5 billion for the 2015 financial year, having grown from about $12.8 billion for 2010. 

Motorised passenger travel within Australian capital cities has already grown tenfold since 1945, with the urban travel time for capital city residents rising to 85 minutes/day per capita across the last decade (which is "miles" above the historical average, pun to be pardoned).


Projections of the associated costs of metropolitan congestion rise dramatically to around $30 billion by 2030, with total projected vehicle-travelled kilometres travelled expected to increase by around 2 per cent per annum through until 2030. 

Traffic delays are expected to increase at a broadly comparable rate of 2 per cent per annum, the cumulative impact of which will be dramatic.


The consequence will be greater congestion, particularly in the four most populous capital cities, with the cost impact to be felt most keenly in Brisbane and Perth from a percentage increase perspective, based upon upper baseline projections. 

Costs of congestion are also projected to approximately double over the next 15 years in Sydney, Melbourne and the other capital cities. 


The component impact will come in the form of extra travel time and travel time variability, with inevitable distorting impacts on property markets.


In turn, I expect this to put pressure in inner suburban land values, and in particular the value of properties located close to direct light and heavy rail links to the city - which is exactly what we've seen play out in London over the years. 

Conversely additional traffic on the roads of capital cities is ultimately likely to make fringe suburban dwelling comparatively less attractive, given that it can be impossible to reach employment hubs in under 45 minutes travel time, as found by Grattan Institute research.