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.

Friday, 17 October 2014

What's going on in the UK?

ONS release shows record UK employment

The Office for National Statistics (ONS) has released a range of data this week in Britain. Let's take a quick run through some of the more interesting stuff.

Firstly, the rate of UK employment growth slowed to 46,000 in the June-August quarter, but the total increase in employment over the past year remains extraordinarily high at 736,000 (click charts to expand):


Sceptics point out the increase in zero hour contracts as having distorted the data. although the glass half full types would point to the fact that recent jobs gains have been largely of the full time variety.

Unemployment dives to 6pc

The best part of this ONS employment market release was the massive drop in unemployment with 538,000 fewer unemployed persons than the prior year, and the total recorded as unemployed falling to 1.97 million.

That is the largest fall in annual unemployment across the entire data set since records began in 1972. The jobless rate fell to 6 percent, which is the lowest headline rate of British unemployment since 2008.


That's the good news.

Real earnings decline further

The less good news is that real wages growth has been the weakest on record in recent years and earnings growth remains very sluggish.

Pay growth increased by 0.7 percent in the year to August 2014, and even with inflation now declining this represents an ongoing decline in real terms.

With such weak wages growth in evidence, the rate of inflation has dived from above to 5 percent to only 1.2 percent as denoted by the chart below.

There is just no way that interest rates will be hiked any time in 2014 with a chart such as the one below in evidence (the UK inflation target is 2 percent) and the Bank of England confirmed as much in a speech today. 


Markets

With US stock markets taking a battering this week, the FTSE took a bath in sympathy, getting crunched by 2.8 percent yesterday.

Meanwhile the ONS mix-adjusted house price index rose to 207.7 in August, its highest level on record and more than 12 percent higher than its pre-financial crisis peak. 

Large volumes of first time buyers have poured back into the market over the past year.

In truth the below house price index chart has been driven almost exclusively by London since that time with prices in the capital rising by 19.6 percent over the past year to be a whopping 39.5 percent higher than their pre-financial crisis peak.


Source: ONS

Regional price growth away from London and its commuter counties has been non-existent in Britain since 2009, although a number of regions have rebounded in the past year (see below) to at long last recover their financial crisis losses.

As the London market gets set to take a breather, a ripple effect will now follow across the south-east of England. Over the past year the strongest gains by region were as below, with the south east now taking up the capital growth mantle as the London market hits a plateau in the months ahead.


Source: ONS