Pete Wargent blogspot


'Must-read, must-follow, one of the best 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, Markets & Economics Editor, Sydney Morning Herald.

'I've been investing 40 years & still learn new concepts from Pete; one of the best commentators...and not just a theorist!' - Michael Yardney, Amazon #1 bestseller.

Tuesday 30 November 2021

Housing credit impulse cools

Housing calming down

Decent news for the Aussie economy, with credit growth bouncing back up to 5.7 per cent. 

Business credit growth recorded another solid month to be up 5.3 per cent over the year. 

Housing credit growth picked up a bit further to 6.7 per cent, the highest level since July 2017. 

Although owner-occupier credit growth was very strong at 9 per cent - the highest since 2016 - investor credit growth was still quite muted at only 2.6 per cent over the year to October.

Although housing credit growth is still rising, it's no longer accelerating in the same manner, so we should expect the rapid housing price growth to taper over the coming months. 

With mortgage rates creeping higher, activity in the housing market is likely to be less dramatic next year. 


Australia's seasonally adjusted current account surplus printed at a record high $24 billion in Q3, driven by rollicking iron ore and coal exports to China, while other global trade has been severely hampered. 

The cumulative surplus for the calendar year is set to be mind-bogglingly high, the like of which we've not seen before. 

The national accounts partials suggest that the economy probably shrunk by a few per cent in Q3, but we can expect the rebound to be strong over the year ahead given the accumulated war chest of household savings. 

Building approvals now on the wane

Approvals in decline

Building approvals fell 13 per cent to a seasonally adjusted 15,911 in October, driven by a sharp 38 per cent drop in attached dwelling approvals (such as units and townhouses). 

Building approvals for houses were still strong in Melbourne, but are probably now peaking out as the HomeBuilder stimulus drops off. 

From month to month the figures for units can be very lumpy, and approvals for units in Sydney dropped sharply from last month's spike of 3,319 last month to 1,673.

The rolling annual average shows the trends more clearly.

With rental vacancies nationwide at decade lows, the international borders set to reopen soon in 2022, and regulatory shifts to capital weights for interest-only lending pending, there may well be quite a shortage of rentals in the post. 

Property showcase: Investing beyond your own backyard

Property showcase

I joined Smart Property Investment to discuss investing beyond your own backyard here (or click on the image below):

Saturday 27 November 2021

Record auction volumes

Auctions surge

A record day of auction volumes, as sellers try to lock in a deal before the Christmas lull.

Sydney recorded solid results, while Melbourne continues to cool on very high volumes.

Source: Domain

Market dynamics have changed a bit - the buyers that miss out have become more confident of finding another option now. 


Oil prices were down 13 per cent yesterday, while gas and diesel futures fell by more than 12 per cent, as markets feared government responses to a new virus variant. 

Travel ETFs also got walloped as governments moved to restrict travel from Africa, and markets fear a derailing of the global recovery. 


Uploaded this week's podcast onto YouTube in case you want to catch it there instead:

Friday 26 November 2021

Looking for value

Global value investing

Tune in for Part Two of our discussion with global value investor Tim Staermose. 

Check it on on Apple podcasts here (or click on the image below):


You can listen to the whole podcast back-series on Apple here.

You can also tune in to the full podcast series at SoundcloudStitcher, or Spotify.

You can download our new e-book here.

Don't forget to leave us a friendly review, as it helps us to get the word out!

Hottest property location in 2022

Property on ausbiz TV

Where is the hottest property market for 2022?

I discussed the deluge of auctions and the outlook for next year with Annette Beacher at ausbiz TV here (or click on the image below):

BIP SHOW! Property market outlook

BIP Show

Tune in here on Acast (or click on the image below):

You can also check it out at Apple podcasts, Amazon, and all the rest, of course.

Top 30 investor suburbs

Top 30 suburbs for <$1 million

In today's API Magazine - check it out here (or click on the image below): 

Thursday 25 November 2021

New Podcast: Can you still renovate profitably in today’s market?

Property Pod

Tune in here (or click on the image below):

You can also tune in on Spotify, Apple podcasts, etc. 

Sydney apartment shortage in 2022?

Slower construction

There's been a notable decline in the average number of persons per dwelling over the past couple of years.

For this reason, even without the immigration taps switched on, more dwellings are needed, and indeed bond deposits taken in Sydney haven't slowed at all this year, in spite of the disruption.

Yet new apartment building are being supplied at anything like the same rate as they were only three years ago. 

The latest figures for the September quarter reported another huge decline in construction work done in New South Wales and Victoria, perhaps in part due to lockdowns. 

The construction cycle can take 5 to 10 years to work its way through, such is the lead time and lag associated with the dwelling approval process, pre-sales, through to the construction phase and completion.

Bookmark this one: a surprise apartment shortage in Sydney and south-east Queensland by the end of next year?

Engineering to the rescue

Despite the decline in attached dwelling construction, overall construction held up well in Q3, despite the lockdowns, at $54 billion (only -0.3 per cent for the quarter). 

The better-than-feared result was partly thanks to engineering and infrastructure work continuing in Victoria. 

BIP Show!

BIP Show

I'll be on the BIP Show this week with Paul Colgan, James Whelan, and Ken Veksler, talking about how far interest rates might rise in Australia through this cycle and when, and the related impact on housing...and a whole load of other stuff as well.

Tune in on Friday...don't miss it!

Investing beyond your own backyard

Borderless investing

I discussed investing beyond your own backyard with SPI on this short podcast here:

Tuesday 23 November 2021

Mortgage stress plunges to all-time low

Stress dissipates

As many of us have been pointing out for 18 stress is actually at record low levels, across the borrowing cohorts.

Source: Roy Morgan Research

It makes absolute sense, of course.

Household incomes have increased, mortgage rates fell to record lows, and households are sitting on a record war chest of cash and deposits. 

Why wouldn't stress be low for most borrowers?

Monday 22 November 2021

The end of boom conditions

Flood of auctions

SQM's auctions tally for this week confirms the end of boom conditions for Melbourne and Sydney.

Sydney has over 1,700 auctions scheduled for the week, which will begin to separate the wheat from the chaff in terms of property desirability.

Melbourne has almost 2,000 auctions scheduled across the week. 

Source: SQM Research

Brisbane is still running hot to trot. 

4 reasons models don't point to 30pc declines

Housing hype

There's been some lively debate about whether the prospect of the cash rate rising from close to 0 per cent to around 1 per cent would inexplicably see the housing market 'crap its pants', for want of a better idiom. 

Intuitively, this doesn't seem remotely likely, given what's happened to interest payments over the past dozen years.

That's my top-line take, regional variances notwithstanding.

Melbourne price growth is actually cooling, Perth has already flattened out, and Sydney's surge in listings is also calming things down a bit. 

In Brisbane, though, as we have clearly seen on the ground, price growth has actually been accelerating, and Adelaide is also flying. 

Of course prices will necessarily drop by a few per cent from their nominal peaks - whenever they prove to be - as they always will (almost by definition in a low inflation environment). 

But nationally and in nominal terms, prices won't be falling any lower than today's levels, in my opinion.

4 factors from housing market models

That's my take, anyway.

But what do the Reserve Bank discussion paper modellers themselves say about the prospects of a 30 per cent crash due to rising interest rates?

Well, clearly not, notes Trent Saunders, co-author of a key paper modelling Australian housing prices.

Here are four reasons why. 

Firstly, because inflation is exogenous in the research discussion paper model, so modelling estimates are based upon changes in real rates.

Were inflation expectations were to move materially higher, therefore, then any related impact on housing prices would correspondingly be lessened. 

Given the model was used in 2019 to isolate the impact of lower real rates, it doesn't make sense to translate estimates across to forecasts today, given that the context is not the same. 

Secondly, the response of prices in the housing market model is non-linear, notes Saunders; so logically interest rate cuts should've had a greater impact as rates approached zero. 

Thirdly, any impact on housing prices would be relative to baseline forecasts.

Thus, if forecasts were for housing prices to increase by, say, 2 per cent per annum, then only relative to these forecasts would the impact on prices be seen.

Fourthly, and moreover, as we discussed in a recent article, such dramatic predictions or a crunch would need to assume no other change in macro variables, which is clearly unrealistic. 

Improving economic conditions

In reality, in my opinion, we should be expecting employment growth and population growth to come roaring back over the next couple of years, comfortably offsetting even a potential 1 per cent increase in interest rates.

We also might expect hikes to the cash rate to be delivered in a considered and gradual manner, even if funding costs are rising. 

We discussed some of these variables such as employment growth, the immigration reboot, fierce competition between lenders, low out-of-pocket expenses, and the ability of households to absorb higher repayments comfortably in this recent article here (or click on the image below):

Saturday 20 November 2021

Extra listings cool the market

Market cooling into Xmas

Melbourne's preliminary clearance rate declined to 69 per cent this week, according to Domain.

With over 1,000 auctions listed in both Sydney and Melbourne, buyers are better placed than before, with a bit more choice and scope for reasonable negotiation. 

Source: Domain

More balanced housing market conditions ahead.

Podcast: Hunting value, African lions

Global value

How do investors go about seeking deep value in frontier markets?

The Global Value Hunter Tim Staermose explains in a two-part podcast...with part one below.

Tune in here (or click on the image below):


You can listen to the whole podcast back-series on Apple here.

You can also tune in to the full podcast series at SoundcloudStitcher, or Spotify.

You can download our new e-book here.

Don't forget to leave us a friendly review, as it helps us to get the word out!

Thursday 18 November 2021

Personalised 'Where to Buy' report

Where to buy?

It's the ultimate property market question: where and what to buy?

Using AI and proprietary data, the unique free Where to Buy tool save you time and research in determining where to buy based upon your required criteria.

You can check it out for free here (or click on the image below):

Wednesday 17 November 2021

Wages growth stutters along

Wages still sluggish

Wages growth was somewhat disappointing, coming in at 0.6 per cent for the September quarter and 2.2 per cent for the year. 

Wages growth hasn't breached 3 per cent for a scarcely believable 34 quarters on the bounce now, and it's unlikely to turn on a dime. 

The result will be a disappointment to anyone expecting interest rate hikes any time this year or next, although at least wages growth is off the lows now.  

Public sector wages growth was just 1.66 per cent, which is significantly negative in real terms, after accounting for inflation. 

Remarkably, private sector wages growth of just 2.40 per cent was the strongest result in 6½ years. 

Tasmania was the strongest performer for the fourth quarter in a row, with the 2.7 per cent growth in the wages price index the best figure for the state since June 2013.

South Australia was the slowest at 1.8 per cent, but in truth there wasn't much to pick between the states and territories. 

Of course, lockdown restrictions were still in place in the third quarter, which may have muted the trends. 

And in real time, the lived experience seems to be that the costs of wages, and certain goods, materials, and services have jumped, at least for some Australians. 

However, today's figures back up the Reserve Bank's assertion that wage rises have not been uniform.

And in the end wages growth of 2.2 per cent is still very sluggish compared to the 3 to 4 per cent that would be preferable.


More detailed analysis from data king James Foster here

Lowe says "no, no, no" to markets

Lowe not for turning

For those interested in such matters, today saw the delivery a very interesting speech from Governor Philip Lowe.

Summarily, although there has been a spike in inflation in some areas, the conditions which have produced lower inflation over the past decade and more have not gone away (globalisation, improvements in technology, the ability to outsource work to Asia, etc.).

Although wages are expected to rise from here, the latest data and forecasts do not warrant an increase in the cash rate in 2022, stated Government Lowe once again. 

You can read the transcript here (or by clicking on the image below):

Financial markets still beg to differ, pricing for a potential salvo of interest rate hikes in the second half of calendar year 2022. 

Source: ASX

Lowe confirmed that whatever markets may think, the Reserve Bank will not hike rates to stamp out housing price growth. 

Where to next?

Lots of moving parts here, of course. 

Generally speaking, my recent experience in Europe suggests to me that although we might to see an initial "hedonism trade" as folks get excited about experiencing sociable activities again, working practices may take plenty longer to get back to something akin to 'normal' than expected. 

Also pulling against the reopening euphoria will be Aussies desperate to travel overseas again after a two-year hiatus, leaking their Antipodean 'stimmy cheques' and Aussie dollars overseas, while the swelling of the labour force as international students and other arrivals return may also cap wages growth before it takes off in earnest. 


In real time, Australia went through 38 million vaccine doses delivered today.

New South Wales has now double-dosed more than 90 per cent of its population aged over 12, so Sydney will be first cab off the rank for an economic sugar hit as the international borders reopen.


It was great to see my recent podcast with REA Group's head of economic research Cameron Kusher soaring up the Apple podcast charts, so thank you kindly for tuning in, sharing, and leaving reviews. 

If you're time poor and not a podcast person, you can also now check it out here on YouTube (and listen in at 1.5x or 1.75x playback speed, if preferred!).