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.
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Saturday, 31 December 2016
Housing market pivots back towards investors
Annual credit growth ticked up to 5.4 per cent in November 2016, while the growth in broad money increased by a somewhat stronger 6.4 per cent.
Deposit growth has been very strong in recent times, and as banks tweaked deposit rates term deposits saw a solid 8.8 per cent increase over the year (following a long period of being understandably shunned by yield-starved investors).
Business credit had a better month to see annual credit growth ticking back up to 4.9 per cent, while housing credit continued to cruise along at a 6.3 per cent annual growth.
Housing credit seems to be maintaining a fairly consistent rate of growth, but within the headline figure annual credit growth relating to investors is speeding up from 4.6 per cent in August to 5.6 per cent in November.
The regulator has set an arbitrary speed limit of 10 per cent for investor credit, so if this uptrend continues APRA may well be getting twitchy fingers by the second half of 2017.
Total business credit increased to a record $868 billion in November, but the pace of growth has continued at a slower pace than housing credit, while personal credit is actually shrinking.
The annual increase of housing credit of 6.3 per cent was slower than the 7.4 per cent seen at the same last year, though a glance at a compound interest table shows that this rate of growth still implies a doubling in less than a dozen years.
With business credit growth only moderate, and personal credit in decline with mortgage buffers and the use of offset accounts at record levels, the share of outstanding credit relating to housing is now 61.4 per cent, up moderately from 60.9 per cent a year ago.
A better result for business credit this month, while housing market momentum appears to have pivoted back towards investors after previous regulatory intervention.
The rate of investors credit growth is a trend to watch for 2017.
CoreLogic's final housing market index figures for 2016 showed that Sydney recorded the strongest increase in home values over the calendar year at 15.46 per cent, although Melbourne wasn't all that far behind with 13.68 per cent.
Brisbane was much steadier, at 4.40 per cent growth.