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.

"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.

Invest in Sydney/Brisbane property markets, or for media/public speaking requests, email pete@allenwargent.com

Tuesday, 11 October 2016

What's going down with first homebuyers?

Revision

The ABS produced its muchly awaited revised first homebuyer numbers today. 

As flagged previously, the numbers are a bit lower than previously reported, although the month to month movements remained broadly consistent with what we have already seen. 

The statistics more or less confirm what we already knew: that there are fewer first homebuyer loans being written than there were in the lead up to the financial crisis (though actually not that many fewer Australia-wide). 


Unfortunately the figures don't shed any light on how many first-time buyers have elected to buy an investment property instead of a home (which the NAB survey implies more than accounts for the downward shift in first homebuyer numbers). 

And nor does these series cover first homes bought without finance i.e. for cash, thanks to the so-termed 'bank of Mum and Dad'.

Unlike Britain, Australia doesn't have agonizingly high rates of inheritance tax, and thus in my opinion inequality is likely to increase in favour of those lucky folks with wealthy parents. 

Sydney effect

Drilling down to the state level, not at all surprisingly the impact of higher prices on first homebuyers has been felt most keenly in Sydney. 

Not that we actually needed a graph to confirm this!

Even the majority of middle-aged peeps have given up trying to buy homes in the more desirable suburbs, while investors have practically been running riot since mid-2012. 


Elsewhere there doesn't seem to me to have been all that much of a change.

Loan sizes revised down

The data for the average first homebuyer loan size has been revised down for recent years, although the chart patterns still tend to mirror the averages for non-first homebuyers. 

One interesting observation here is that the average first homebuyer loan size over the past ten years has not increased at the same rate as median house prices. 


You could read any number of things into this statistic (and no doubt people will!). 

For example, the figures could support the recently held argument that parents are tipping in far greater deposits than they were during 2008 and 2009, being the period when the first home owners grant (FHOG) was doubled. 

It has to be said that the divergence does seem to begin at the right time for that to be the case.

Anyhoo, here are the figures at the state level, which I've just tidied up on a 3mMA basis to smooth out some of the jagged edges (the chart'd give you a headache otherwise). 


First homebuyers look to be steadily gearing up again in Queensland, and particularly in Tassie of late, as the Hobart market tightens and rents rise.  

In 2014, first homebuyers in Western Australia were taking on larger loans on average than anywhere in the country. 

And in 2015, the Northern Territory became the very epicentre of first homebuyer extravagance. 

This is no longer the case - in either location.