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'.

Tuesday, 21 March 2017

House prices frothy

Prices up strongly in Q4

The average price of a home rose by $78,900 in New South Wales in 2016, and by $54,300 in Victoria.

On the other hand average prices fell by $25,300 in Western Australia, and by $24,900 in the Northern Territory.

A proper mixed bag, you might say. 

Residential property prices rose by 4.1 per cent in Q4 2016 - right at the top end of the range of market forecasts - to be 7.7 per cent higher in 2016.

Melbourne (10.8 per cent), Sydney (10.3 per cent), and Hobart (8.8 per cent) recorded the strongest growth over the year. 

Prices fell by a further 1.5 per cent in Darwin, to be 7 per cent lower over the year, but there was another signal that Perth might be a step closer to turning a corner, with prices nudging marginally higher in the fourth quarter of the year.

The headlines will quite rightly generally speak of a divergence in price growth with Sydney and Melbourne leading the way by far. 

That said, looked at another way and over a longer time period, price growth may arguably be converging. 

Dwelling stock up to $6.4 trillion

The total value of dwelling stock has now increased by more than $2 trillion since Q3 2011, and increased by $0.49 trillion last year alone, following a short period of slower growth. 

This takes the total value of the dwelling stock to $6.44 trillion, or a record high ratio of 3.9 times annual GDP (half a decade ago the ratio was considered somewhat high at 3 times GDP).

At the state level some $1.1 trillion of the increase in the value of dwelling stock was seen in New South Wales, and a further $569 billion was centred in Victoria. 

Houses performing better

Detached house prices have generally outperformed units since 2003 rising by 111 per cent, compared to 83 per cent for units and apartments. 

In the December quarter Sydney houses prices increased by a thumping 6.1 per cent, and unit prices were up by 3.1 per cent.

The equivalent figures for Melbourne were 6 per cent and 2.8 per cent respectively.

Finally the preliminary estimates shows an increase in the number of dwellings of 39,600 in the quarter to be 172,800 higher over the year. 

Over the past five years the number of dwellings has increased considerably faster in Western Australia (11.8 per cent) and Victoria (10.1 per cent) than has been the case in New South Wales (6.4 per cent). 

Melbourne's record population growth is absorbing this rate of dwelling construction, however, with vacancy rates in the Victorian capital declining close to a 10-year low in December. 

The wrap

Overall there were rapid increases in prices in the December quarter driven by the two largest capital cities plus Hobart, with the Reserve Bank referencing frothy conditions in its March Board Meeting Minutes. 

There haven't been many signs of the market cooling over the first three months of 2017 either.