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.

Wednesday, 7 January 2015

How are Households Shaping Up in 2015?

January 2015 Chart Pack

The Reserve Bank's Chart Pack is always worth a gander, being consistently and independently produced...and free from spin.

You can view the full chart pack here.

Below let's run through what the RBA has found this month for households and the housing market in two parts.

Part 1 - Households and finances

Retail sales growth is humming along both in terms of values and volumes, largely driven by Sydney retail as we analysed here.

Retail Sales Growth graph

Savings ratios have been elevated since the financial crisis as households shored up their finances, but the ratio now appears to be gradually declining again as low interest rates encourage investment in growth assets. 

Household Saving Ratio graph

Consumer sentiment indices have been knocked around a little by budgets and other adverse news, but remain fairly close to where they have been averaging for the last 35 years.

Consumer Sentiment graph

Household wealth in Australia is now at record highs in absolute terms. In terms of net worth as a percentage of annual household disposable income, asset values are growing nicely, and liabilities are holding steady.

Household Wealth and Liabilities graph

Interest paid as a percentage of household disposable income has declined in tandem with mortgage rates - indeed mortgage serviceability is at the best level in more than a decade.

Household Finances graph

Part 2 - Housing Market

Stimulated by rising dwelling prices, building approvals brushed record highs, but have now seemingly passed their peak. We will see an oversupply of dwellings in a few regions - one would be wise to steer clear of these, of course. 

Private Residential Building Approvals graph

Housing loan approvals rise to record highs, largely driven by investors in this cycle, the direct result of low borrowing rates. 

Housing Loan Approvals graph

And finally to housing prices. As we expected some years ago, due to an inherent undersupply of dwelling stock and infrastructure, Sydney prices are soaring towards $1 million. 

With both the M2 and the M7 closed again yesterday and barely a day passing without news of diabolical traffic woes, expect there to be a continuing surge of demand for properties located close to key transport hubs such as rail or light rail links.

Housing Prices graph

Elsewhere, Melbourne has been looking peaky for months but has held up reasonably well to date. 

Perth's market is trending slightly up but only moderately, while Canberra is now all set for a downturn. The Adelaide market - and particularly its economy - remains unconvicing,

Counter-cyclical investors should be scoping out opportunities in Brisbane, where housing finance is gathering momentum - as reconfirmed today by AFG's December Mortgage Index data.

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