Pete Wargent blogspot

PERSONAL/BUSINESS COACH | PROPERTY BUYER | ANALYST

'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.

Friday 31 May 2024

Housing credit hits the accelerator

Housing credit accelerator

Housing credit growth picked up to 0.46 per cent in April 2024, which was the strongest growth since all the way back in August 2022.


The growth in housing credit over the past year has largely been driven by owner-occupiers, though it does look as though anemic investor credit growth has also bottomed out now. 


As such, the housing credit impulse has picked up further pace, pointing to solid housing price gains ahead.

The past year has been characterised by low stock levels, but over recent weeks there's been an increase in listings in outer-Melbourne and outer-Adelaide which may subdue the pace of price growth in these markets somewhat.


With reasonable growth in business credit, total credit growth in the economy was decent at 0.46 per cent in April. 

The partial indicators released to date suggest that the economy grew only by around 1 per cent over the year to March 2024, and has been going backwards in per capita terms.

The CapEx figures were a bit better than hoped, so we might just sneak a positive result, though NAB is forecasting GDP growth of zero for the March quarter.

James Foster previewed the upcoming GDP growth figures here - it looks like another soft one overall. 

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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Book release!

Buy Right Book

Reminder to pick your copy up from Amazon herefrom Amazon here (or click on the image below):

You can also buy a copy (or a box!) from our publishers here, and check out our free accompanying podcast series hereour free accompanying podcast series here

Enjoy the read, and don't forget to send us your selfies :-)

Thursday 30 May 2024

Building approvals trend to lowest since April 2012

Unit approvals drying up

There was a bit of a pull-forward of demand leading to a small rise in detached house dwelling approvals in Melbourne and Brisbane ahead of changes to the building code.

And approvals for houses in Perth are surging, but overall house approvals fell -1.6 per cent in April.


Unit approvals are tanking, with appetite for development remarkably low in cities such as Perth, Brisbane, and Adelaide, in spite of chronic housing shortages. 

Sydney could only muster 950 units approved in the month, and Brisbane 308, while I believe Melbourne is likely to see approvals sink in the second half of the year as destructive land tax changes kick in.


Overall, the trend for houses is holding up, but unit approvals are plummeting.


The trend for dwelling approvals is at the lowest level now since 2012.

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Wednesday 29 May 2024

Housing construction slows 3pc over the year

Monthly inflation indicator 3.6pc

Economists had expected the monthly inflation indicator to come in at 3.4 per cent over the year to April.

It's a fairly new and volatile index, and you could drive yourself mad trying to forecast it each month, but in the event we got a slight upside miss at 3.6 per cent over the year.

Fruit and vegetables prices have temporarily jumped according to the ABS, due to poor weather and growing conditions for crops. 

Petrol prices were also another +2.2 per cent higher in April and considerably higher over the year, but have since dropped sharply - probably back down to around where they were around a decade ago, even without the subsidies - so next month's reading should be somewhat better for fuel. 

With state and Federal governments set to distort the headline inflation figures with subsidies over the remainder of 2024, it's worth keeping  a closer eye on the other measures, such as inflation excluding volatile items (4.1 per cent), and trimmed mean inflation (4.1 per cent). 

Source: ABS

All in all, a bit disappointing, it must be said, but the more important figures will be the next quarterly inflation numbers released on 31 July.

As such, there hasn't been too much of a change in market pricing, h/t Martin Whetton of CBA:

It feels like some of the inflation story from here may be driven by global factors, such as oil prices, which are essentially beyond Australia's control.

James Foster ran through the inflation figures in more detail here in more detail here

Higher rates are working...

It does seems as though higher interest rates are working to slow consumer spending, business hiring, and wages growth...as well as housing approvals, and now construction.

I wonder whether we'll follow in Canada's footsteps, where with record high population growth the unemployment rate suddenly spiked from 5 per cent to 6.1 per cent, changing the whole perception of what policy measures will be need needed ahead.

Source: Statistics Canada, Trading Economics

Housing construction slows further

Building approvals are at decade lows in Australia, which is perhaps no major surprise given policy settings, but it had been expected that the high number of dwellings in the pipeline would sustain housing construction at a strong level. 

In the event housing construction work done slowed by a further -1.2 per cent in the March 2024 quarter, to be a disappointing -2.8 per cent lower over the year.

As widely reported, many construction firms are collapsing into insolvency or administration, and so in turn some of the approved residential projects have been mothballed or cancelled.

Queensland has been one bright spot for apartment construction work done, driven by strength in activity at the Gold Coast, but New South Wales and Victoria remain a long way below the previous cycle's highs. 


Overall, the construction of units, apartments, duplexes, and townhouses has not really responded to record high demand for residential space, partly since the costs of medium-density construction are around 50 per cent higher than pre-pandemic levels, and there's little profitable margin to build at today's prices, except in some premium and coastal locations. 


Detached house construction activity had been fairly strong in Perth, but also slowed in most states and territories over the March 2024 quarter.


Some of the capacity challenges for housing have arguably been due to the strength of activity in highly paid public infrastructure projects and in mining engineering, with engineering construction running at levels we haven't seen since the resources construction boom years. 

The wrap

Overall, construction work done slumped by a disappointing -2.9 per cent in the March quarter, pointing to another weak quarterly GDP growth figure for the Aussie economy.

One good thing from this week's figures is that the costs of housing construction - and the prices of rents - are not rising as quickly as before. 

This morning's building approvals figures must surely be a bit better than the desperately low 12,950 last month, and indeed we should see a temporary pull-forward increase in Queensland and Victoria, in the rush to beat changes to the building code.

However, I expect to see unit approvals in Victoria fall to 15-year lows in the second half of the year due to tax changes and comparatively less favourable policies for landlords. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Tuesday 28 May 2024

Podcast mini-series: Cautious optimism (Episode 6)

Buy Right podcast

Our book is in the stores from today, so please send us your selfies when you've bought your copy.

In episode 6 of our podcast mini-series, Catherine and I discussed how and why you need to be cautiously optimistic in your property investment quest.

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


You can buy our book here (or in all good bookstores from today, including at airport stores).

Real retail spending continues to decline

Retail recession

Retail turnover missed market expectations in rising only +0.1 per cent in seasonally adjusted terms in April, following a decline of -0.4 per cent in March.


Source: ABS

Turnover of $35.7 billion was well below the November highs of $36.3 billion.

Given the rampant growth of the estimated resident population to 27,273,000, and given the surge in retail prices through the pandemic period, these are very soft figures pointing to an ongoing decline in retail volumes.

Shane Oliver of AMP shows this in a graph of nominal retail sales versus real retail spend per capita, which has been in a long and steady decline for some time now. 

It's interesting to see how much the border closures and stimulus payments spiked spending through 2020 and 2021, at a time when supply chains were so heavily disrupted. 

However, those days are now long gone, and the consumer economy is slowing...


Source; Shane Oliver, AMP

Overall, there were declines in spending over the month on food and clothing. 

James Foster ran through the key details in more depth here in more depth here.

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Podcast mini-series: Why Property? (Episode 5, and book launch day)

Construction insolvency #2,321

Another day, another construction insolvency.

This time it was veteran building firm Stevens Construction which went into administration, leading to 10 projects across New South Wales being halted and all employees made redundant.

Book launch day!

In other news, it's book launch day for us!

Join Catherine and I as we discuss the merits and downsides of real estate as an asset class, in episode 5 of our Buy Right podcast mini-series.

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


You can buy our book here (or in all good bookstores from today, including at airport stores).

Monday 27 May 2024

Win a copy of our new book

Money Magazine competition

Our new book is launched tomorrow.

You can enter to win a copy with Money Magazine here (or click on the image below):


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P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Sunday 26 May 2024

2-Sense: Election battleground to centre on immigration

2-Sense podcast

This week on the podcast, Batesy and I discussed proposed immigration cuts and what it means for property, and much more.

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


You can also watch the YouTube version here (or below):


---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Friday 24 May 2024

Melbourne investors come under pressure

Listings surge in Melbourne

The latest figures show that total property listings overall remain subdued.

However, there has been a surge of new listings coming to market in once capital city: Melbourne.

CoreLogic showed this in their latest figures:


It would be difficult to pin this on one specific factor, but it seems that a decent share of investors are selling up.

Melbourne has relatively lower rental yields compared to other capital cities, and recent changes to property and other taxes (Airbnb, vacancy taxes, "Covid levies", etc.) and tenant rights have not helped landlords, compounding the increase in mortgage rates.

The latest blow for investors will be land taxes being ratcheted up in Victoria to help pay for the state debts. 

This has taken the edge of housing prices in Melbourne relative to other cities.

The question is whether new housing supply is now stymied as investors shy away from new apartments, and whether a rental shortage ensues. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Housing supply takes another blow

UK immigration balloons

The UK's Office for National Statistics released the latest figures for net immigration, and they were once again huge.

Three or four Prime Ministers ago (it's hard to keep track, to be fair!), the Conservative Party's David Cameron promised to bring immigration down "to the tens of thousands", but as it turned out, we got...well, effectively millions!

Net immigration over the past three calendar years has cumulatively totaled +1,915,000. 


It's a lot of extra people for a small island.

The shambolic Tories will quite rightly be ousted at the polls on July 4, but it's a Hobson's Choice and I don't know whether all that much of note will change under the PM-elect Sir Keir Starmer.  

Parallel trends

It's interesting how so many parts of the world are facing similar challenges at similar times over recent years - lockdowns, student housing shortages, energy shocks, services price inflation, rental crises, and housing shortages, to name but a few. 

Academics in the UK periodically come up with borderline Stalinist proposals for reallocating the supply of housing stock, usually with some kind of carbon emissions and ecological undertones woven therein, the latest of which appears to be taxing people for having under-occupied bedrooms.

The definitions of what might constitute a 'spare' bedroom seem to hark back to the period of Polish communist rule to my untrained eye...


I'm not sure forcing 19-year-olds to share bedrooms with 4-year-olds is the right solution to anything, but there you go.

Of course the common sense solution to a housing shortage would be to lower immigration and build more homes....but in the UK, as elsewhere, this is not proving to be so easy.

Caboolture West knockback

Back in Australia, the latest figures showed G8 University international student numbers ballooning 17 per cent higher than last year to new record highs, while policy settings are crippling the prospect of new housing supply.

Not only have mortgage rates moved significantly higher, we have 3 percentage points lending assessment buffers in place to restrict borrowing, and construction firms are killing off proposed projects all over the place, with insolvencies in the sector already at decade highs.

AV Jennings revealed this week that it won't be proceeding with a planned 3,500 homes at Caboolture West due to "expected costs not aligning with forecasts".



This comes in spite of an enormous and sustained surge in demand for housing across south-east Queensland.

Infrastructure and building costs have increased significantly, and to proceed would put greater stress than expected on the group's balance sheet, reported The Australian today. 

The AV Jennings share price closed at 32 cents, underscoring what a challenging time it's been for developers to make projects work. 

With tough land tax thresholds coming into force in Victoria, I expect to see medium-density approvals fall to 15-year lows in Melbourne in the second half of 2024.

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

  1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here

You can also check out a few of our recent property investment purchases here

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with over 32,000 unique listeners per month.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with over 3.6 million hits here

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,000 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to pre-order here or on Amazon here - follow our book release and forthcoming release on Facebook here and at our Buy Right podcast series here

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.