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.
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"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'.
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Sunday, 8 September 2013
UK house prices soaring
When I wrote my first book, I spend some time elucidating on why those who said that the UK housing market was permanently dead in the water were wrong - particularly with regards to London and other key hubs of the south-east of England.
Supply isn't coming online with dwelling construction at the lowest level in decades, demand is increasing, there is a migration to the south-east underway, a chronic housing shortage is in the pipeline and credit markets are loosening by the month.
Few lessons have been appear to have been learned from the financial crisis.
If anything, the UK Government appears more determined than ever to fire up the housing market in order to kick-start the economy.
In my opinion, there is a risk of a bubble being inflated in Britain, so great care should be taken with regards to lending standards.
From the UK Daily Telegraph:
Property values are rising at their fastest rate for three years and first-time buyers are at a six-year high, new figures reveal, creating a “virtuous circle” which has given banks and building societies more freedom to lend at the current historically low interest rates.
The result is a “contagious” confidence in the housing market, which will have a knock-on effect for the wider economy, according to industry experts.
The latest evidence of Britain’s economic recovery comes days after forecasts for the country’s annual economic growth were doubled from 0.8 to 1.5 per cent.
The Halifax’s latest monthly index recorded an annual rise of 5.4 per cent, taking the price of the average home up from £160,292 to £170,231, the fastest rate of growth since 2010.
Meanwhile figures compiled by LSL Property Services’ First Time Buyer Monitor showed 26,100 first-time buyers took out loans in July, the highest number for six years and a 45 per cent rise on the same month last year.
David Newnes, director at LSL, said: “Mortgages are much more affordable for first-time buyers compared to last year, which has opened the door to thousands of would-be buyers who were shut out of the market.
“Economic confidence is returning, nudging many more buyers in the direction of property, and nudging lenders to offer more loans to buyers with smaller deposits. The uptick in confidence, beneficial to both parties, is contagious.”
The recovery in the property market has also eroded negative equity, giving banks greater confidence to lend. Analysis conducted for The Daily Telegraph shows the value of bad mortgages, where borrowers were unable to keep up with repayments, has fallen 40 per cent since the peak of the financial crisis in 2009.
Accountants UHY Hacker Young, which analysed Bank of England data, found the value of mortgages written off for the year to March was £543m, compared with a peak of £902m five years ago.
Mark Giddens, head of private client services at the firm, said this could help create a “virtuous circle”. He said: “This improvement in the market has meant more homeowners struggling with their mortgages have been able to sell up without having to worry about negative equity. In cases where the worst has happened and homes have been repossessed, an improvement in the housing market means banks are able to achieve better prices on repossessions sales.”
The Government’s efforts to support the property market include last year’s Funding for Lending scheme, which made £80 billion available to banks for loans, the vast majority of which has gone to mortgage lending.
In April ministers launched the Help to Buy scheme, lending 20 per cent of a new-build property’s price, interest-free for five years, for those with only a five per cent deposit.
The scheme will be widened beyond new-build properties in January and will also be available to people moving up the property ladder."