Pete Wargent blogspot

Co-founder & CEO of AllenWargent property advisory, 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.

"Pete Wargent 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 and charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, and author of the New York Times bestsellers 'End Game' and 'Code Red'.

"Pete's daily analysis is unputdownable" - Dr. Chris Caton, Chief Economist, BT Financial.

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Saturday, 17 August 2013

Housing loan approvals - subdued FHB activity lingers

Total housing loan approvals are heading back towards record heights of above $20 billion as Aussies pile back into real estate.

There have been a few reports of the Sydney market going "ballistic" today and silly prices being paid for standard properties (even more so than usual, I mean) at way above reserve prices.

This is not good news for anyone really, unless you're a Sydney vendor who has decided to move to the bush or take a 'seachange'.

Note in the chart below how the increase in housing loan approvals is being driven by investors and repeat buyer owner-occupiers.

The level of first homebuyer (FHB) activity has remained subdued to date.

If market prices continue to increase without a pick-up in FHB activity, this will not be a happy outcome and home ownership levels will naturally decline.

With people tending to move dwelling more frequently than in the past, some younger buyers may elect instead of buying a place of residence, to rent and buy an investment property. 

This has the advantage of reducing transaction costs as you don't have to pay stamp duty each and every time you move house, and also allows younger investors to capitalise on Australia's negative gearing tax legislation (although any potential first homeowners grant may be foregone if the property is not lived in by the purchaser).

Younger buyers can be tempted to undertake this strategy in order to get a foot on the housing market ladder.

The downside effect on market forces is that the housing market gradually has a proliferation of investors with a buy-and-hold mindset, which can 'clog up' the existing housing stock for potential homebuyers and possibly push prices upwards.

Housing Loan Approvals graph