Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), and CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

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

"Pete 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'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - & author of Things That Make You Go Hmmm...one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Tuesday, 18 March 2014

Reserve Bank to act on rising property prices?

Board Minutes released

Depending on who you read, the Reserve Bank of Australia (RBA) has going to take all kinds of measures to control or dampen housing market activity.

There is, of course, only one source worth reading on this subject if you want to form an objective view: the RBA itself.

The Minutes of the RBA February Board Meeting were released at 11.30am this morning.

Therefore, you can make up your own mind about whether the RBA will intervene in housing markets or whether it is comfortable with dwelling price growth.

Here is the wording from the Domestic Economic Conditions section of the release which discusses the housing markets:

"Members observed that conditions in the established housing market had remained strong. Housing price inflation had declined somewhat from the fast pace recorded in 2013, although the data were less informative around this time of year owing to relatively low turnover. 

Ongoing strength in the established housing market and low lending rates were expected to support new dwelling activity. 

Dwelling investment was expected to record a slight decline in the December quarter, but a strong increase in approvals for residential buildings over recent months – both for higher-density and detached dwellings – pointed to a substantial increase in dwelling investment in subsequent quarters. 

Loan approvals and first home buyer grants for new dwellings had also increased of late. 

Members noted that construction firms were optimistic about the outlook and had reported a pick-up in enquiries from prospective new home buyers."

Macropudential measures?

And then, in the Financial Stability section of the Minutes, the RBA also discusses property investment in New South Wales and how other countries have introduced curbing measures, while noting that lending standards in Australia having not deteriorated.

Notably the RBA stated that the property markets pose no near-term threat to the stability of the financial system:

"Members noted that rising housing prices and household borrowing were expected results from the monetary easing that had taken place. 

While these factors were helping to support residential building activity, they also had the potential to encourage speculative activity in the housing market. 

Lending to housing investors had been increasing for some time in New South Wales, and over the past six months it had also picked up in some other states. 

While such a pick-up would be unhelpful if it was a result of lenders materially relaxing their lending standards, current evidence indicated that there was little sign of this occurring. 

Members noted that the recent momentum in households' risk appetite and borrowing behaviour warranted close observation, but agreed that present conditions in the household sector did not pose a near-term risk to the financial system. 

Members discussed the experience in other countries where macroprudential tools had been utilised to slow demand for established housing and their possible application in Australia."

The Minutes concluded by noting that the most likely outcome for the period ahead was interest rates staying flat at 2.50%.