Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of the finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts...most comprehensive analyst I follow in Oz' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

Thursday, 3 November 2016

Cost of living increases very low (except house prices)

COLI subdued

As expected ABS Cost of Living Indexes revealed very subdued cost of living pressures in Q3 2016.

The cost of living index for employee households increased by just +1.2 per cent over the year to September.

Prices were lifted marginally higher by fruit and vegetables. 

Sydney & Melbourne housing to boom in 2017

This positive news will be utterly overshadowed when the media reports SQM Research's much-awaited housing market forecasts for the 2017 calendar year tomorrow. 

SQM's central or base case predicts that Sydney will record a massive +11 to +16 per cent price growth in 2017, with Melbourne not far behind at +10 to +15 per cent.

The 'Scenario 2' forecasts, which incorporate a likely interest rate cut by the middle of the year and further regulatory action from APRA, see Sydney's price gains soaring to a huge +13 to +18 per cent, and Melbourne to +12 to +17 per cent. 

Even in the interest rate rise scenario, which for mine is an outlier with inflation tracking so far below the target range, strong dwelling price gains are forecast for the two most populous cities.

The dwelling price gains forecast for Brisbane are solid in all three scenarios. 

Bullish forecasts for Australian property markets are more or less always treated with scorn, but to be frank SQM has beaten the competition hands down over recent years, so by and large these forecasts will be treated with the utmost respect. 

SQM has included some excellent analysis over its predicted dwelling completions and supply surpluses, which will increase by 2018 (but perhaps not by as much as many analysts expect). 

I don't issue investment recommendations very often on this blog, or at all really, but SQM's Boom or Bust Report is definitely a BUY