What comes next?
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).
4 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.
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"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'.
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Friday, 16 December 2016
Here comes the infrastructure boom
Sooner or later Australia will enter a residential construction downturn, ending a boom that in the circumstances has done a fine job of plugging the gap left by the drop in resources investment.
What comes next?
The only viable answer is infrastructure, as I looked at in a bit more detail here.
The good news is that infrastructure investment should now be set to take off.
For example, there are some huge road projects in the pipeline.
Throw in rail and buildings projects that are outside the resources sector, and you get a big projected uplift in major construction projects, almost doubling to reach a forecast of $20 billion per annum by 2018.
Source: Boral (ASX: BLD)
At its peak mining capital investment touched an even higher $24 billion per annum in 2012, since retracing to $10 billion.
It's worth noting, however, that resources capex may not have a whole left further to decline, for the reasons discussed here previously.
As such, massive investment in roads infrastructure is expected to translate into stronger materials demand from now forth, and this forms an integral part of a broader pipeline of infrastructure and commercial construction activity.