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).

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.

Monday, 7 July 2014

Households

60 second update, straight from the July Chart Pack...

Household saving ratio remains high at around 10%.

Household Saving Ratio graph

Retail trade growth has been strong over the past year, however, may now be softening, partly as a result of budget cuts.

Retail Sales Growth graph

Consumer sentiment also took a dive post-Budget. Likely to be temporary, and appeared to be rebounding in the last week. 

Consumer Sentiment graph

On to the housing market, and reports of the death of building approvals have been much exaggerated. 

Month-to-month the figures will always gyrate quite wildly, but next month's figures will show a strong rebound. Rolling annualised building approvals are now close to all-time highs, a shade below the 1994 peak, which was driven by a huge drop in the official cash rate and rises in nominal dwelling prices.


Private Residential Building Approvals graph

Probably the most interesting chart of the lot this month for the household sector is the one below, which shows just how cheap housing has become to service in the low-interest rate environment. 

Amazing that people can write entire books on the subject of the housing market which conveniently overlook the role of interest rates where it doesn't quite fit the narrative.

Household debt levels have been flat since 2005, while the percentage of disposable income required to service interest paid has plummeted from well above 13pc to a figure with an '8 handle'. 

Household Finances graph

Housing prices are rising in Sydney, but have been fairly lacklustre over a period of some years in Canberra, Adelaide, Brisbane and regionally. Perth had a 10pc surge in 2013, but looks set to be flat in 2014. 

Housing Prices graph

Unsurprisingly, given the low interest rate environment, housing loan approvals are as high as we have seen, suggesting more gains ahead for the stronger capital city markets as summer rolls around again.

Housing Loan Approvals graph

On the favoured RBA measures, average household wealth has recovered to above $600,000, but sits a little below the 2007 peak. 

Household Wealth and Liabilities graph

Next time around, I'll look at the banking indicators, and whether Australia should be complacent about the presently very low rate of impaired housing loans, which sits at approximately 0.6%.

Banks' Non-performing Assets – Domestic Operations graph