Market update (and its not about Brexit!)

The last few days have been turbulent, to say the least, with Brexit dominating the media and investment world. So this blog post will be upbeat and most definitely not about Brexit. Instead, we head to the United States, where the post-GFC housing market is returning to 2006 levels. The following graph shows foreclosures as a percentage of total loans in blue (left side) and foreclosures as a percentage of total loans started during the quarter in red (i.e. new loans for the observed period).

What we see is the massive spike witnessed from the 2008 subprime crisis in America where the housing market collapsed leading to widespread mortgage foreclosures. These foreclosures plagued the American housing market through to 2014. However, the foreclosure levels are beginning to decline and return to pre-GFC levels. As the housing market stabilises, so too will rentals and rental income providing positive momentum for the market and the economy. This has been evident in our Global Property Fund where we are currently overweight US property, with our 51 US property holdings having an average one-year return of 20.5%. We continue to see opportunity in America as the health of the economy recovers – the decline of foreclosure levels supports our conviction.                                          

by Karl Geal-Otter

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