Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory & buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place) - clients include hedge funds, resi funds, & private investors.

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 better property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

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Saturday, 13 July 2013

Owner occupied housing finance +1.8% in May

The value of owner occupied dwelling commitments increased for the 4th consecutive month in May (+1.8% seasonally adjusted).

The number of owner occupied commitments also continues to surge upwards (+2.6%) in May to 49,636, and is up for the 7th month in a row. The trend is up very strongly over the last couple of years.

Graph: No. of dwelling commitments, Owner occupied housing

Source: ABS

And the value of total dwelling commitments continues to surge (+2.0%) as it has been doing over the past year:

Graph: Value of dwelling commitments, Total dwellings

Source: ABS

Investor commitments are up a massive 24% over the year to date and are rapidly approaching all-time highs. 

This global trend towards real estate as an investment asset class is one I have discussed plenty and in part explains why I believe that inner and middle ring suburbs of the four major capital cities are likely to fare significantly better than other areas.

I've also been suggesting for months that first homebuyer commitments will gradually recover as those on the sidelines increasingly do not expect prices to fall, and they were up for the 5th month in a row, recording a 17% jump in the month of May. 

However, some caution should be exercised on this figure, as the 17% increase is still on a fairly low base and the result is likely distorted by grants and may soften in July once the grant rules are shifted in Victoria, Tassie and the ACT.

There are a lot of theories as to whether these strong figures across the board will or will not continue to move up at such a strong pace.

I'll analyse this in more detail tomorrow, but for now it's fair to say that yet another strong result means that those forecasting a housing bust will have to put the champagne on ice for a long while yet.