Pete Wargent blogspot

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

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

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

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

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

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

Sunday, 3 July 2016

UK housing's pre-Brexit surge

UK all-time highs

Nationwide's UK House Price index showed UK house price surging 5.1 per cent higher over the year to June to an all-time high of £204,968.

With changes to tax legislation having taken effect from April 5 and then the EU referendum or "Brexit" vote destabilising the economy and the government, the period ahead is now uncertain. 

That said the Bank of England has signaled that it could make history by cutting interest rates to below 0.50 per cent and adding further stimulus.

Meanwhile the currency has been whacked, which could lead to a burst of inflation.

The quarterly figures by region showed London prices up by 11.5 per cent, and outer metropolitan London up by 12.2 per cent over the year to June.

Outside London and the south-east prices have struggled to recapture their 2007 highs.

It's not that surprising. Employment in the capital city has surged to be 17 per cent higher than at its pre-crisis peak, a trend not reflected across the rest of the United Kingdom. 

City by city

The UK's Hometrack also released its 20 Capital Cities Index for the period to May 2016, which showed that the juggernauts that are the London and Cambridge housing markets have continued to streamroll ahead - as they have been for the past two decades.

Bristol has seen a surge in activity of late, to record the highest annual rate of growth. 

The oil price crash has resulted in a swift and painful flash crash in Aberdeen. 

Aberdeen has not been the worst performer, though,

Nationwide's index shows that house prices in Northern Ireland are still 49 per cent below their 2007 peak (while London prices have surged by more than 50 per cent from their pre-financial crisis highs).

Indeed according to Nationwide the gap between house prices in the south of England from the north has continued to widen to its greatest ever divide, such is the economic dominance of the capital city and its surrounds.


Back on the home front, an exiting week of news ahead, kicking off with Building Approval figures for May (-3 per cent expected), and also including Retail Trade (+0.3 per cent), International Trade ($1.5 billion), and the July Reserve Bank policy decision on Tuesday afternoon (on hold).

Perhaps more significant for monetary policy going forward, the monthly inflation data due out will provide important clues as to whether inflation has remained benign.

Elsewhere there are also US nonfarm payrolls figures due.