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.

Thursday, 19 February 2015

UK market update

UK labour market recovers at pace

I haven't looked at what is happening in Pommieland for a while, so let's take a quick shufti through the latest chart packs.

The Office for National Statistics (ONS) released its latest labour market statistics for December 2014 which showed total employment up by another +103,000 on July-September and up by a massive +609,000 on a year ago to 30.9 million.

Unemployment has also fallen dramatically by another 496,000 over the past year to just 1.98 million.

The unemployment rate has tanked from 8.4 percent to just 5.7 percent in only 3 years, with the help of low interest rates and the Bank of England's gilts-purchasing programme.

Policy has worked.

Meanwhile inactivity fell sharply employment rate has surged to 73.2 percent.

Total pay was up 2.4 percent on a year earlier, while the January 2015 inflation reading of 0.3 is at the lowest level since "My Old Man's a Dustman" was number one in the charts - or actually the lowest on record for this data series.

Therefore real wages are at last rising nicely too.

Interest rates may take a little while to be hiked with headline inflation this low, but the strong employment figures suggest that hikes may soon be in the post.

The low inflation figures have partly been driven by lower fuel prices and core CPI is some way higher.

The usual embittered pundits picked quibbles to pick weaknesses in the figures, but essentially the labour market has recovered strongly over the past three years. 

Finally, on to house prices. 

UK house prices were up by 9.8 percent over the past year, driven largely by a strong 10.2 percent gain in England.

The Northern Ireland property bubble and burst remains one for the ages.

Looking at house prices regionally we can see that it is effectively a case of London and the south-east versus the rest.

These figures are not seasonally adjusted but show that  London's market is now peaking out after an incredibly strong run - London's average house prices boomed by an extraordinary 77 percent since bottoming out in March 2009 (largely driven by foreign buyers).

For the reasons explained here previously, the south-east will now pick up the growth mantle and indeed the south-east has already recorded 11 percent year-on-year price growth.

Britain's other regions have performed dismally to date by comparison, with real house prices in regional Britain down by 35 percent in real terms despite mortgage rates now being available from 1.19 percent with HSBC on a 2 year fix.

Quite clearly there is no property bubble ex-London despite what the media reports.

Mortgage volumes were well and truly gummed up by the recent and painful Mortgage Market Review (MMR) - the quintessential Sarbanes-Oxley of mortgage markets - but it seems that stamp duty reform is beginning to fire up the market away from London (at long last).

I'd take a bet that mortgage volumes will begin to recover too as the paper-shuffling of the MMR recedes into the rear-view mirror.

As expected the capital city market - and particularly that of Prime Central London - has outperformed regional dwelling prices by a huge margin.