Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Must-read, must-follow, one of the finest property analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for in-depth analysis' - David Scutt, Business Insider.

"I've been investing 40 years yet I still learned new concepts; one of the finest young commentators" - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts, the most comprehensive analyst I follow in Australia...follow Pete Wargent' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

'Superlative work' - Grant Williams, founder RealVision.

Friday, 11 July 2014

First homebuyer data incomplete...

Today's Housing Finance data from the Australian Bureau of Statistics revealed some excellent news for housing construction, with the number of loans for the construction of dwellings hitting a 52 month high.

Meanwhile, the housing finance figures in detail revealed a market which continues to be very strong, with the total value of investor loans ripping up to new record highs on a rolling annual basis.

I will upload my chart pack later to show the results in detail.

Unfortunately we have had to endure a couple of years of gross misinformation about "an entire generation of first homebuyers" being "locked out" of the housing market by "greedy speculators".

This is all old ground, but in short an entire generation of first homebuyers obviously never was locked out, and in fact, in many instances the speculators in question were in fact first-time buyers themselves.

As we said all along, you have to listen to what the data is actually telling you and analyse it critically.

You also have to use your on-the-ground experience, which never once suggested to us that younger people as an entire generation were wilfully ignoring the housing market.

On many occasions they have been buying investment properties instead of a place of residence, but they are still there.

With interest rates at record lows and only low deposit requirements, why wouldn't they be?

In any case, how could prices be rising strongly if an entire sector of the market was inactive?

It obviously never made any sense at all.

I've variously explained the reasons for the confusion arising, including here, and here, and here, and here, and here, and probably lots of other places too.

But then, praise be to heaven, look what the ABS finally reported today:

"An investigation is underway to evaluate the robustness of estimates of loans to first home buyers.

In collecting this information, lenders are asked to report all loans to first home buyers. 

Concerns have been raised that under-reporting could occur if some lenders were only able to accurately report on those buyers receiving a first home buyer grant..

Most data on first home buyers are collected by the Australian Prudential Regulation Authority (APRA) under the Financial Sector (Collection of Data) Act 2001. APRA is contacting lenders on behalf of the ABS to investigate whether lenders experience any difficulties reporting on loans to first home buyers. The outcomes from the investigation will be published on the ABS website."

If you consider the likely terms of reference of the investigation, it seems doubtful that anything will come of it.

In short, APRA will phone the lenders, the lenders will say "no issues here, guv" (as indeed, one would), and that will likely be the end of that.

But at least both the Reserve Bank of Australia and the ABS have now at long last acknowledged the issue, and not before time, one might add.