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 of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, MacroBusiness.

Monday, 12 January 2015

AFG - Refinancing Driving the Housing Market

AFG Mortgage Index January 2015

If this was an email I'd click on the blue downward-indicating arrow denoting "low importance" - but as it's a blog post, I'll just type: this data is of middling importance.

Australian Finance Group (AFG) released its January 2015 mortgage data index this week which showed the mortgage aggregator writing $3,778 million of loans in December, an enormous 24 percent leap on the prior year equivalent figure.

AFG's figures are a marginally useful lead indicator as to what we might see reported later by the more comprehensive Australian Bureau of Statistics data series.

By way of comparison the ABS Housing Finance data in October 2014 recorded around $29,000 million of dwelling commitments to AFG's $4,755 million - only around 16 percent of the equivalent ABS reading. 

Nevertheless, the AFG index is always worth a snout, so let's take a look...

1 - Mortgages written in December

December is a "shortened" month for mortgage activity and AFG wrote 8,510 loans in December, down from 9,806 in the preceding month, but a hefty 17 percent increase on the prior year figure.

In terms of the value of mortgages written, AFG's index reported a 24 percent year-on-year increase nationally.

Interestingly AFG reported that some 37.3 percent of loans written releated to refinancing, suggesting that the sector of the market which is set to grow in stature in 2015 is again the investor set.

2 - Mortgages sold by state

The charts below reveal their own stories, including a massive ramp up in mortgage volumes in New South Wales and to a secondary extent, Victoria.

AFG's data is not seasonally adjusted so expect to see things picking up again from early in the new year, at least based upon historical trends.

Western Australia has flattened at the state level and may now be trending down as mining town activity winds back.

The average mortgage size in New South Wales has increased very significantly by nearly $100,000 since early 2013, representative of rising dwelling prices.

The average mortgage size in Queensland has steadily ticked higher from $344,000 at the end of Q2 2013 to above $370,000 at the end of Q4 2014.

3 - Investor activity

More than half of the New South Wales mortgage market is investors at the present time, with AFG reporting 50.4 percent investor loans for the premier state.

A hint of a spike in South Australian investor activity in the month of December (perhaps?), but the monthly percentages do tend to gyrate, so look to follow the trend.

4 - Which cities to outperform?

New South Wales mortgage volumes written by AFG have increased by a rip-snorting 90 percent since December 2012, which obviously is pushing prices higher in Sydney. 

Melbourne has also seen dwelling prices rise, but the trend in housing finance data may suggest a housing market which is stalling.

The city with the most steadily improving housing finance data trends is Brisbane - this has not yet been reflected in strong increases in dwelling price in this cycle. 

So I'd look to invest in Brisbane.


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