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, 15 January 2015

Record Sydney Investor Lending (Again)

Lending finance to business softens further

The ABS released its Lending Finance data for November 2014, revealing another soft result in aggregate.

Housing finance in aggregate remains very solid and at or around record highs as we looked at here on Monday.

However, commercial finance came in at a seasonally adjusted $37,992 million, some 2.6 percent lower than the preceding month's result and well down on th~$47,500 million level we saw only in July last year.

This indicates a likely softening in business investment and reinforces the case that interest rates are likely to fall lower in 2015 - and probably more than once.

Other forms of lending finance including personal and lease finance remained soft.

It's not quite true to say that business financing is "drying up" - after all in aggregate some $73 billion of capital raising has been rattled up on the securities exchange over the past year and it can't all be for debt refinancing, while other companies continue to tap up debt markets.

Initial capital raised on the ASX is tracking at the highest level in yonks, kicked forward by the impact of the ~$6 billion Medibank float.

And to be sure many small business folk look to use lines of credit secured against housing these days rather than conventional small business loans which necessarily attract higher rates of interest.

Nevertheless it was another weak result for commercial finance and crucially the trend is clearly softening, which suggests that investment in the non-mining sector is not as strong as it needs to be.

Property investment loans by state

A small subset of the Lending Finance data which very rarely attracts any media coverage at all - essentially because it isn't plastered on the front page of the media release and therefore actually requires a modicum of research (tsk!) - is the split of property investor loans by state.

This is pretty important data for investors who want to know which markets are firing and which are not - and it's important for the regulator APRA to know which markets are in danger of overheating.

This data series is not seasonally adjusted and perhaps unsurprisingly in original terms property investor loans declined in every state and in every territory in November 2014...except, that is, for one.

NSW lending soars off the chart again...

My chart axes have once again been rendered obsolete by market action in New South Wales (NSW), where property investor lending has soared off the chart by recording well over $55 billion of property investor lending over the past year.

The five largest states saw ~$121 billion of property investment over the past 12 months, a monster increase of 27 percent from the November 2013 figure.

At the two extremes, NSW has seen investor loans soar by 55 percent on a rolling annual basis over the past 12 months, while South Australia has seen only a miserly 7 percent increase in annualised investor lending values with its monthly volume now threatening to roll over.

After a sizeable increase of 29 percent over the past year, lending in Victoria seems to be paring back in recent months.

Brisbane appears set to be the mover with Queensland recording a tidy 20 percent+ increase in investor lending values which has not yet been reflected in strong dwelling price gains.

The monthly figures for November showed that NSW recorded a massive $5,289 million of property investor lending.

This was once again the greatest figure ever recorded in any month by any state and about 2.5 times the volume of lending we saw through 2012.

Further price gains ahead for Sydney's inner suburbs in 2015 then - unsurprisingly.

A point made on this blog previously is that property investors generally don't care all that much about what happens to the price of all properties in Australia...only the properties that they own themselves.

Owners of real estate in inner Sydney continue to benefit indirectly from a generally poor performance of regional property markets and other secondary cities over the past 6 years post "peak household debt", with policy makers are set to persist with record low interest rates in 2015.

Brisbane has lagged through this real estate cycle, but is now gaining traction.


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