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'.

Saturday, 29 October 2016

Sydney unit prices rise to record high

Sydney apartments picking up again

Sydney unit prices rose by +4 per cent over the year to September 2016, according to Residex, to be be +20 per cent higher over the last two years. 

Sydney's median unit price now sits at a record high of $705,000, having increased by +44 per cent or $217,000 since July 2012.

Interest rates have fallen sharply since then too, so the supply response should now be in full swing.

House prices in Sydney began to increase again in September according to Residex, up by +1.9 per cent in the month to a median of $1,069,000.

However, Sydney house prices are now only +2 per cent higher than one year ago, despite being +24 per cent higher over the last two years (and +61 per cent higher than in July 2012).

Despite the apparent slowdown, auction clearance rates have surged higher again in recent weeks, which tends to be a precursor to rising dwelling prices. 

Tides changing?

Dr. Andrew Wilson of Domain Group noted in a presentation recently that affordability constraints both for prospective buyers and renters of houses in Sydney are biting, to the extent that the median unit rental price ($525/week) is now almost as high as that of the median house ($530/week).

Furthermore, there has been a recent uptick in house vacancy rates in Sydney to a year-high of 2 per cent, while unit vacancies tightened as tenants apparently look towards the slightly more affordable options.

Dr. Wilson's view is that this makes a "nonsense" of the perceived apartment oversupply in Sydney, and ultimately this will bring more investors into the Sydney market rather than fewer.

I've linked a copy of the 40-minute presentation below if you're interested in watching it.

Whether or not this proves to be the case over time, the figures on more than one index do now show annual price growth for Sydney units as being higher than price growth for houses in the harbour city.

It's worth acknowledging that house prices have been rising faster than this in some the inner suburbs of Sydney, while median prices may on occasions understate price growth as affordability pressures bite (as properties in the lower price quartiles may transact more frequently). 

Around the traps

Brisbane house price growth has steadier, increasing by +7 per cent over the last two years.

The worst performing market was Darwin, with the median house price declining by -9 per cent over the year to September 2016.