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.

Thursday, 2 October 2014

London: extraordinary price growth

UK economy recovers

The UK economy is accelerating out of recession with GDP rising by another 0.9 percent in the second quarter (+3.2 percent over the past year) and is on track to record 3.5 percent growth in 2014.

Business investment is 11 percent higher than a year ago, incomes are now outpacing inflation and notably GDP has been revised up - meaning that UK actually came out of recession in the middle of 2013 and GDP is now 2.7 percent greater than its pre-crisis peak.

With employment rising at a very strong pace, the first interest rate hike in the cycle is getting closer. This should eventually act to slow the housing market which has been blowing off in London.

While across Britain's regions house prices have languished at around their 2007 levels, London's average price has exploded higher to sit above £400,000. This is a 21 percent gain over the past year and prices are now 31 percent higher than their 2007 peak.

By way of contrast price in regional Britain have barely increased since 2007.

London boroughs where we have bought property for our clients (and personally) have done very well and outperformed the market over the past 12 months, including:

  • Ealing +23 percent capital growth
  • Greenwich +26 percent capital growth
  • Croydon +24 percent capital growth
  • Islington +26 percent capital growth


Source: Nationwide

Although the press is focussing on these rampant gains, our sense from being in the market is that the mania phase of this cycle has now passed and the rate of capital growth is soon likely to ease back from these unsustainably high levels.

For all that, despite a pick-up in construction activity, supply is still only tracking at around half the levels required to keep pace with demand, so it's as you were in that regard.