Ep.265: The Australian Economy and its Impact on the Property Sector, with Pete Wargent

In this week’s episode of the Geared for Growth podcast, host Mike Mortlock is joined by returning guest and podcast favourite, Pete Wargent, for a deep dive into Australia’s current economic conditions and their influence on the property market.

Pete Wargent, an international property buyer, finance expert, and real estate specialist, brings a wealth of experience to the discussion. As the CEO of Next Level Wealth and Co-Founder of AllenWargent Property Buyers, Pete’s credentials are impressive. He is also a seasoned investor, frequent TV and radio guest, and the author of seven books on investing, including his latest co-authored work, The Buy Right Guide to Property Investing, alongside property expert Cate Bakos.

In this insightful episode, Mike begins by asking Pete for his analysis on the current interest rate environment and his predictions for the future. They explore the effects of the COVID-19 pandemic, particularly the government’s stimulus packages and the broader impact of lockdowns and reduced migration on employment figures.

Pete offers his perspective on the economic outlook for the next three to five years, addressing the growing divide between sectors affected by rising living costs and high inflation versus those with greater disposable income. The conversation then shifts to the ongoing productivity debate, focusing on the rise of hybrid work models and remote working, which have significantly influenced property preferences in recent years.

A key topic in the property space right now is government policy around Capital Gains Tax (CGT) and negative gearing. As the country heads towards a federal election in 2025, Pete sheds light on potential changes and their impact on the property market. The episode wraps up with a focused discussion on specific markets, with particular emphasis on Perth’s property scene.

This episode serves as a comprehensive guide to the current economic landscape and its implications for property investment. It provides valuable insights for anyone looking to understand the present state of the market and what lies ahead. Don’t miss this essential episode.

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In this week’s episode of the Geared for Growth podcast, host Mike Mortlock is joined by returning guest and podcast favourite, Pete Wargent, for a deep dive into Austr

alia’s current economic conditions and their influence on the property market.

• The current state of the economy and the trajectory for interest rates
• The drivers behind Australia’s high inflation
• The impact of the Federal Government’s COVID stimulus package
• The two to five year outlook for the Australian economy
• The dichotomy between the cost-of-living crisis and high levels of consumption
• Productivity levels and the role of Artificial Intelligence
• Migration levels and how they are influencing the property market
• Where is the Government getting it wrong when it comes to housing affordability
• Is there a cap on rental price growth?
• Political policy on CGT and negative gearing leading into a federal election

“If you look at all these countries, and the US is the same, (they’ve) been cutting interest rates so Australia is not immune to that, we’re probably just a little bit behind other countries” 3:05

“So the economy might have grown by about 1% over the past year but if you think about population growth as you mentioned that’s been running around 2 1/2% so I guess in per capita terms it’s sort of gone backwards about 1.5% but maybe that was inevitable” 9:35

“It does seem that it’s probably passed the point of the wage price growth. I think we probably peaked in the December 2023 quarter and we’re coming back down the other side now” 13:19

“One of the big discussions that’s sort of been percolating around in housing market circles is the return to office…I mean there’s two sides to that argument, in that some people might not be as productive working at home but by the same token if that’s spending 10 hours a week so driving to and from the office then that’s not particularly great for productivity either” 15:18

“I think year on year population growth will naturally fall back to a sort of more normal level but I think some of this has been driven by a base effect but in certain parts of the country particularly WA SEQ it’s putting a lot of pressure on housing infrastructure” 18:54

“Don’t forget the Labor Party lost the 2019 election pretty much on a range of very similar reforms and I’m not sure they’ll be rushing to rushing headlong into a housing election in the same way in May 2025” 28:59

“It’s really a case of caveat emptor so you need to be prepared if you’re an investor today to hold for 10 years plus. Try to stick to the parts of the economy that are a bit diversified, you don’t want to be going out to one industry towns or things like that where when the tide turns it could be brutal” 36:55

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