Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & 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's 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 & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & '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'.

Tuesday, 16 February 2016

Lending finance +6.9 per cent in 2015

Lending finance 

On a seasonally adjusted basis total Lending Finance dipped back to $72 billion in December from a 7.5 year high of $75 billion in November.

The trend result (just) sits at a new high of $73.8 billion.

The below chart shows that the main driver of the +6.9 per cent trend increase in lending over the past year has been a hugely strong uplift in home loans, which increased very substantially by +21.4 per cent over the year. 

The trend in commercial lending on the other hand now appears to be softening, although total business lending increased by +9.6 per cent over the year, and has generally been tracking at somewhere pretty close to the levels seen at the peak of the mining boom.

Property market loans

The lending finance data also contains figures for property investor loans by state, which are not seasonally adjusted and therefore are presented below on a rolling annual basis. 

Investor lending increased in New South Wales and Victoria in December, but on a rolling annual basis totals are now pulling back from record highs following APRA's intervention of last year. 

Property investment loans have already dipped well down from their peak in Western Australia, although the state recorded its best result in five months in December. 

It is worth noting that in the most populous states most of the slowdown in investor lending has been quickly replaced by owner-occupier loans.

The below chart shows the raw original data for New South Wales where total commitments of $13.9 billion were recorded in December, which is +10 per cent higher than one year previously.

Moreover, if you look at loans actually advanced to NSW owner-occupier borrowers by month, lending has gone almost parabolic, which perhaps to some extent accounts for why the Sydney auction market has got off to a more sprightly start in 2016 than many had expected.

Indeed, at $23.8 billion of home loans advanced nationally for a rise of +24.6 per cent, December was the biggest ever month for home lending. 

It is not quite such an upbeat state of affairs across all of Australia's housing markets, though, and especially not in the Top End.

Year-on-year investor lending continues to nosedive in the Northern Territory, with the pace of decline in investor lending having accelerated over the past 16 months.  

By the time the frightening gradient of the trendline in this chart bottoms out we can expect to see home prices in Darwin and other Northern Territory cities having corrected by a substantial percentage. 

The wrap

Overall, it was a weaker month for commercial finance, but perhaps this was overdue given that total business lending overall was up by +9.6 per cent in the calendar year. 

Property market lending continues to rebalance away from investors and towards owner-occupiers, with low interest rates sending total home lending to new highs by the month.