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Chinese property investment tipped to surge, fears of hold-up in Greek deal, US closer to entering TPP; UST 10yr yields rise to 2.37%; NZ$1 = 68.4 US¢, TWI-5 = 72.2

Chinese property investment tipped to surge, fears of hold-up in Greek deal, US closer to entering TPP; UST 10yr yields rise to 2.37%; NZ$1 = 68.4 US¢, TWI-5 = 72.2
24th Jun 15, 7:50am by Jenée Tibshraeny

Here's my summary of the key issues from overnight that affect New Zealand. 

A real estate company says we can expect to see Chinese property investment in New Zealand ramp right up, as China eases its restrictions on privately held capital. A report released by Juwai.com says Chinese buyers are expected to inject nearly US$11 billion into New Zealand real estate, as its Qualified Domestic Individual Investor programme allows people to buy overseas property. Juwai.com says we should improve our education system and increase the number of direct flights to China, to further attract investment. 

Greek lawmakers have reacted angrily to concessions Athens has offered in debt talks. The Greek parliament's deputy speaker has warned new budget proposals made on Monday might be rejected, preventing aid from being unlocked to save Greece from defaulting and exiting the euro. 

The US has cleared one of its highest hurdles to enter the Trans-Pacific Partnership. The Senate has narrowly voted to end debate on legislation which gives President Obama the trade-negotiating power he needs to seal the deal. The fast-track bill is expected to be passed overnight.  

In New York, UST 10yr benchmark yields rose slightly to 2.37% this morning, following a sharp climb yesterday.

US oil markets are marginally higher with the US benchmark price at US$61/barrel, and Brent crude at US$65/barrel.

The gold price has fallen to US$1,177/oz.

The New Zealand dollar has continued its downward trend against the US and Australian currencies, starting the day at 68.4 US¢ and 88.6 AU¢. It's strengthened to 61.3 euro cents,amid fears the Greek parliament won't approve a debt deal proposed by Euro-zone leaders. The TWI is at 72.2.

If you want to catch up with all the local changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here »

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45 Comments

by  surfisup  |  24th Jun 15, 8:40am 1435092047

Why is it that these people in china are being allowed to lock my children out of the NZ property market? I'm ok , i got my house. But, my kids!! I found it rather easy to buy a house in central auckland back in the mid 90's-- wages compared to prices were great -- my first house cost 2.5 times my annual pretax salary....today, it is harder to buy a house in even the worst suburbs.

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by  xingmowang  |  24th Jun 15, 8:55am 1435092915

I am sure ppl from the AUS, the USA, the EU, South Africa, India etc are doing exactly the same.

It is just that media etc can easily point its finger to Chinese as they look so alien to you.

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by  bw  |  24th Jun 15, 9:17am 1435094233

You, allowed your children to be locked out of the New Zealand property market. So did I, and most other property owners pre 1998. It was easy! Prices went up; we looked smart that the houses we bought a few years back had doubled in price, and none of us was going to stop it. Frankly, none of realised what a treacherous state the New Zealand, and the Worlds', economy was in. We've had two wake up calls since then - DotCom and GFC - and STILL we do nothing about it. Sure, some of us jump up and down and point fingers at each other, but who amongst us will be the first to agree to have their assets halved, or more, in value? Maybe you would, and maybe I would, but most New Zealanders? No way! When the Chinese property market freed up in '98, it was inevitable, looking back, that they had it sussed. They were going to swap paper for hard assets, and they will continue to do so until all of us have nothing left to swap. Well played, China.....

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by  OnwardsUpwards  |  24th Jun 15, 9:24am 1435094653

If you want to blame something, then blame Labour. You give China to much credit. The Chinese are just as clueless as the next person.

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by  PeterPen  |  24th Jun 15, 9:30am 1435095053

No they are not. Even simply business families act strategically, long-term. And dont even start talking about theie mandarins. Educated people. Engineers, scientists, mathematicians. Not our half-witted lawyers, economists, beancounters.

Simply look at the result. Took China 40 years, just two generations to go from 3rd world to near superpower. It is not a coincidence - although they mostly benefit from the decay of the West that has largely given up on itself.

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by  OnwardsUpwards  |  24th Jun 15, 10:45am 1435099520

Wrong. They are not long-term strategists. They are long term losers. The west has walked over China for hundreds of years and will continue to do so for hundreds of years more. Only a small percentage of Chinese are highly educated and their academic achievements pale in comparison to smaller countries like Germany or Israel. So stop with fear mongering that the Chinese will take over the world. They won't. Ever.

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by  PeterPen  |  24th Jun 15, 9:27am 1435094840

Could not agree more. Simply be good and sell to fellow kiwis at much under market price and not to the cashed up Chinaman. Who goes first??? Exactly!

NZ and AUS used to be exceptional countries. Life wasn't luxurious, but it took most decently educated people only a few years to pay down a house and be materially essentially FREE. Free to drop out of crappy jobs, free to not suck up to the managers, free to take a year off, free to life a few streets from the best Sydney beaches as students (!) ... So we all traded it for a few glass beads that were offered to us. Our greed has destablized our countries and the world politically, economically, financally. It has wrecked our way of life. It has sold out our jobs and lands to people who mostly do not even respect us (and in hindsight, rightly so). Many of our children will never enjoy the freedom and stability we had.

What a bunch of hypocritical underachievers the boomers and their offspring are. Anxious little worms not even men enough to vote for political parties that uphold their traditions and culture. Yuck!

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by  Guido  |  24th Jun 15, 9:46am 1435095972

Auckland city of sellouts.

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by  cowboy  |  24th Jun 15, 10:20am 1435098034

No I didn't and did everything in my power to stop it.

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by  Triple  |  24th Jun 15, 2:40pm 1435113639

Did anyone notice they gave no date for implementation of the "new investment rules"? No details are provided at all.

The “report” was sourced from a real estate company (Juwai.com) who are hardly a reputable independent source for information.

I don't trust anything a real estate company says.

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by  Stephen Hulme  |  24th Jun 15, 9:32am 1435095158

Greek lawmakers have reacted angrily to concessions Athens has offered in debt talks. The Greek parliament's deputy speaker has warned new budget proposals made on Monday might be rejected, preventing aid from being unlocked to save Greece from defaulting and exiting the euro.

Greece is a sideshow. The eurozone has failed..

Take this from Oskar Lafontaine, Germany’s minister of finance, on the very eve of the launch of the euro. He talked of “the vision of a united Europe, to be reached through the gradual convergence of living standards, the deepening of democracy, and the flowering of a truly European culture”.

We could quote a thousand other such stanzas of euro-poetry, but that single line from Lafontaine shows how far the single-currency project has fallen. Instead of raising living standards across Europe, monetary union is pushing them downwards. Rather than deepening democracy, it is undermining it. As for “a truly European culture”, when German journalists accuse Greek ministers of “psychosis”, that mythic agora of nations is a long way off. Read more

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by  PeterPen  |  24th Jun 15, 9:54am 1435096490

What are "Greek lawmakers" reacting to angrily eaxctly? The largest debt forgiveness in human history of 200 billion Euros in 2012? The fact that the other 360 billion Euros they have borrowed will also never be paid back? The tens of billions Greece bagged and squandered since joining the EEC in the 80s?

It is a sign of how ethical standards across the entire so-called "West" have fallen to below zero that anyone would even listen, let alone talk to or - excuse me - feel sorry for these shonks.

This is disgusting. There are a lot more urgent issues in this world. How can any politicians or journalist even waste their time on Greece.

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by  OnwardsUpwards  |  24th Jun 15, 11:14am 1435101247

The Greeks are angry because they , the Greek tax payer, have had to bail out German and French banks. Those banks should have lost from their bad debts on Greece. that's the way the so called free market is supposed to work right? Don't forget the billions that Greece forgave the Germans over Germany's Mediterranean holiday circa 1940's

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by  sharetrader  |  24th Jun 15, 12:16pm 1435105015

correct if you read back you will find it was the ECB that forced the greeks to take on the debt that was private and should have been allowed to fail, that was then shifted to the governments books
can anyone see that happening here if we had a property crash, are our big 4 to big to fail as the yanks say so the government will have to step in.
maybe that is why this government is allowing the ponzi scheme to keep going, they dont want to be in power when people fiqure out what has happened and the bill that will come with it

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by  PeterPen  |  24th Jun 15, 8:58pm 1435136299

Did the ECB also force Greeks (private and public) to stack up a fantastic 560 billion Euros in debt in the first place? Right, it is always someone else's fault. Responsibility for one's own actions has been abolished, cf SCF.

And 200 billion Euros in debt forgivness, the highest in human history is of course also not worth a mention.

Amazing how the Greek "us poor victims" propaganda is even working its way into NZ.

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by  sharetrader  |  24th Jun 15, 9:31pm 1435138292

is anyone forcing aucklanders to take on more and more debt to buy property? which is taking higher levels of income to service and reduce there consumer spending power which will ultimately lead to a downturn in the economy, its a product of government policies and cheap credit. when things turn as the GFC did to the greeks in 2008 it will be oops how did that happen. our government told us all good no problem here

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by  PeterPen  |  24th Jun 15, 8:54pm 1435136093

To be precise, it was mostly French banks that had lent to Greece, not German. France would have probably collapsed, if the Greeks had defaulted, hence the French insisted on the whole bail-out nonsense. Incidentally, where in the market-driven "West" were market forces allowed to work at all? In only one case, Lehman. Everyone else got bailed out, so what is so particular about Greece.

And if nothing else works, I guess we are retreating to anti-German resentments, huh? How cheap. And how silly. I am sure you have never been to Greece and seen first hand how totally corrupt and mismanaged the entire country is. Even Turkey is doing better.

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by  sharetrader  |  24th Jun 15, 10:25pm 1435141525

im not worried about the greeks as they are only 3% of the EUR . we should be worried about NZ debt though we don't have much left to sell to get it under control

http://www.nationaldebtclocks.org/debtclock/newzealand

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by  Mike B  |  24th Jun 15, 10:02am 1435096920

Citizenship for sale

NZ like most other broken Western countries is selling citizenship

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by  muntijaqi  |  24th Jun 15, 10:55am 1435100147

Doesn't common sense tell us that if something is overpriced we should not buy it?

I still don't get why the cries over people being locked out of home ownership. Can't they simply rent? As far as I am aware rents are still affordable because they are linked to real economy (salaries) and not to speculation. I rent and it's 30% of my household income.

Or is it that what they are angry about has nothing to do with affording a house but affording a LOAN?

I suspect people, generally, are not mad about the fact that prices go up in an insane way. They are mad because they cannot join the speculative party. Unequal taxation system in NZ makes them look for capital gains rather than a roof over their heads.

If they could, they would gladly do so. Have a look a mum and dad investors. Deeply inside most of them truly believe prices will always go up, that's why they keep talking about "property ladder", "first home", and such dogmas. It's deeply attached to the culture and THAT IS the dangerous thing. The problem of bubbles is that they attract fools, who are the last ones to step out and the main reason to have policies that encourage and reward this madness so the whole system ends up suffering the consequences.

Hypocrisy.
Stop buying, stop being part of the problem. Let the speculators play their speculation game and demand that taxpayers money does not get into that. You should be happy if it's true that they come from overseas with overseas money, that would be good news when prices collapse and our financial system is not destroyed. We wouldn't get then our relatives unemployed and our savings lost.

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by  Brendon  |  24th Jun 15, 11:03am 1435100637

Muntijaqi I suggest you read Shamubeel's Generation Rent and also Prof. James Belich's history books to get an understanding of our culture and underlying attitudes to housing etc.

This is not to say I disagree with you regarding renting. Like Shamubeel says in his book we should make renting more like owning a home -with such things as long term leases, longer periods for eviction notices. More allowances for pets and interior decoration etc.

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by  muntijaqi  |  24th Jun 15, 11:21am 1435101673

I agree with allowing long term leases.
I have to move now to a different house after only a year despite having been an excellent tenant and it's really annoying. I can't stand dealing with real estate and their castings, providing references again, etc. Luckily I will pay less for my new place.

I am not against property ownership, I'd like to own my home one day, but just not at any price. Common sense rules.

And Auckland's market is nothing related to common sense or the trouble of renting. We are talking about 7-8 times annual household income to purchase a house (+interests).

It's related to an attractive 14% annual market value increase and the belief that we all can get richer by selling properties to each other. After all, money is cheap and created out of thin air.. After all, no taxes on capital gains!

There is no way to stop this bubble. The only we can do as a society is to ensure that when it bursts only the speculators and fools suffer the consequences.

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by  ian64  |  24th Jun 15, 11:44am 1435103096

The OBR will do just the opposite. Speculators and fools will be saved with the money of the guys like you and me who work hard pay their rents and save.

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by  cowboy  |  24th Jun 15, 12:16pm 1435105014

Some of us small landlords/property owners recognise that, try to keep rents low, offer respectable (but not fancy) properties, often more tidy than our own. We recognise that we are everyday people, not the rich lists or walking corridors of influence, just like you. And we understand that you want some savings at the end of the week to get ahead in life, a continual self improvement of position and hope and progressive realisation of your worthwhile dreams that makes life worth living.

we can't do it alone.
and we can't do it if you make us "the enemy"

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by  Brendon  |  24th Jun 15, 1:32pm 1435109555

Landlords who are targeting yield not capital gain are providing a useful service. I have no problem with that. It is the other sort who are the 'enemy'.......

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by  cowboy  |  24th Jun 15, 12:08pm 1435104486

You do understand, that provided you don't violate the Residential Tenancy Act, or other relevant Acts, that there is absolutely -nothing- stopping you from offering your rental for a fixed long term tenancy. (if you were crazy enough to do so).

In fact if you were serious, you could get around the ResTen Act by entering into a "Rent to Buy" with a default "buy back" clause. I know the government (department and elected) spit on independent contract and business that might challenge their dictatorship urges but if you act in good faith then the contract to buy puts you outside normal tenant definitions. Still crazy IMO, but if you _really_ want to offer a long term lease, the existing system does not prevent it. (which you will no doubt find to your eventual unhappiness)

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by  Brendan  |  24th Jun 15, 11:42am 1435102957

I call BS, the ratio of foreign faces at the auction house tells it true. Auction the other night, cv 1.3, sells to a poker faced Asian brother for 2.7, didn't even flinch, hand just keeps going up, 10k at a time. Its a losing battle, starting to think Winston will get my next vote! I never would have thought that comment would come from my mouth.

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by  surfisup  |  24th Jun 15, 1:27pm 1435109246

Surprised this wasn't splattered across the front page of the nz herald but it must be so common it is boring news. This 1.3m CV ... that must have been the latest upward valued CV too. It seems irrational until you consider the circumstances of the asian person.

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by  Chris_J  |  25th Jun 15, 8:58pm 1435222711

Even I voted Winston last time, as National and Act had both lost the plot and there was no else to vote for.

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by  FirstHomeBuyer  |  24th Jun 15, 12:35pm 1435106114

PESSIMIST sees a dark tunnel.
OPTIMIST sees a light at the end of the tunnel.
REALIST sees a train.
TRAIN OPERATOR sees 3 idiots standing on the tracks.

Foreign buyers to flood US$10.9 billion into New Zealand real estate:Here's the NZ version
GOVT sees a ripple
MEDIA sees a wave
FIRST HOME BUYER sees a tsunami
TSUNAMI OF FOREIGN BUYERS sees a bunch of "wise guys" standing on the beach with a measuring tape

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by  Nomad  |  24th Jun 15, 1:20pm 1435108841

We can moan until we are blue but this Govt. wont listen, they have vested interests, probably same for major opposition , Labour.
rising house prices combined with cheap labour via immigration is the last nail in Middle class coffin. Our beloved National Party is making sure to create thirld world working conditions, one example is the Early Childhood Centres , they are treating teachers like slave labour.

the immigration and foreign buyers has to be an election issue and people need to vote to get some action, Ah , this seems to be a pipe dream !!

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by  philthy  |  24th Jun 15, 10:16pm 1435140989

Labour might be better off not winning the next election, National are setting this country up for the mother of all economic crashes, if National are in power at least they can't try to do their usual trick of blaming everything on the opposition.

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by  sharetrader  |  24th Jun 15, 10:45pm 1435142702

that's the old management divert attention from me and make someone else look worse so they get the push first. to be blaming a previous government or event that happened 7 years ago is very poor. they have had ample time to do something, it seems this government will do nothing unless backed into a corner. I cant think of one major policy good or bad, whereas the previous government had heaps some good some terrible WFF, interest free student loans, free doctor for under 5's, kiwibank, kiwisaver, Cullen fund.
all we have got from this lot is one tax cut and some motorways lets not mention the hand outs to the corporates rio, skycity, warners and we now have as his major legacy he wants to leave so we will remember him, change the flag, maybe it should have a ponytail on it

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by  philthy  |  24th Jun 15, 11:01pm 1435143694

I think their plan is just to keep being a terrible government for as long as possible and hope most people don't notice, and somehow it's actually been working.

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by  steven  |  25th Jun 15, 7:27am 1435174043

LOL, that's because Labour has been helping them so much! I mean when faced with pretty much obvious Labour's internal divisions, swing to the left and general incompetence, V National's steady as she goes do as little as possible script its no wonder we see 3 terms and that NZF has had such a come back. Little is showing no signs of being any better for 2017 so we'll see JK in for a historic? 4th term, maybe even a 5th as another loss might cause Labour to implode totally leaving no opposition of significance.

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by  steven  |  25th Jun 15, 7:30am 1435174205

Oh and the Green's seem to be moving from a watermelon to a tomato with Green mold if my experiences within them are any indication. Too many of the outspoken ppl dont give a rats ar*e about the environment or things Green.

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by  iconoclast  |  24th Jun 15, 2:29pm 1435112981

It's all passé - no longer fashionable - we've been desensitised - told repeatedly it's just no so

This was going around here 6 years ago when it first became evident something extravagant was going on - Basel Brush cited a real-life verifiable example of a house in Botany with a CV of $750,000 sold over the phone for $1,500,000 exactly the purchase price of entry to new zealand

As late as April 2015 John Key and Bill English were denying it's a problem, claiming the problem is an AKL council problem, one of supply, it never was a demand problem. The influencers, the media, the celebrity columnists have all toed the Government line, inluding Bernard Hickey

Now, out of the blue, as it becomes blindingly obvious that it is happening, and has been happening for a long time, one single celebrity columnist in the NZ Herald breaks rank and spills it

It's all a bit late. It's out of control. Like standing in the audience at Cape Canaveral space site launch-pad watching the rocket lift-off. Try and get that back in the box

Something has happened - like to know what it was

The price of investor-status visas has remained static all that time - should be $3 million or more by now. Guess what that would do? I guess the JK/BE duo could claim they have held prices in check by holding the price of investor visas fixed at $1,500,000. Australia's significant investor visa price is $5 million

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by  PeterPen  |  24th Jun 15, 10:24pm 1435141479

Some Aussie scholar said recently that our societies have been "atomized" and every aspect of life economized. We are no longer a society but a multi-something bunch of individuals with no sense of community. Everyone is maximizing their personal financial gains and if the rest goes under, who cares. Third World standards, really.

We should all know better. Humans are social animals. At the end of the day we all depend on each other. If we continue to screw each other, if we continue to invite people into our societies who do not even intend to be part of it and who are only used to the lowest standards of social solidarity - we will pay a very high price.

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by  Guido  |  25th Jun 15, 12:41am 1435149679

Yes thank you very much Neo-liberals, for this dog eat dog society, never before has housing cost so much, been so much mass immigration, and the future for the young so bleak.

And it has not even been successful economically, Net Investment as percentage of GDP:-

Australia -64.3%
New Zealand -69.3%

https://en.wikipedia.org/wiki/Net_international_investment_position

New Zealand is built on past glories and inflated house prices.

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by  Chris_J  |  25th Jun 15, 9:03pm 1435223030

I look at the South Island (ex ChCh) and it is doing so well without immigration and even as the government tries to wreck the regions by diverting resources and their core business to the main centres.

Imagine what the country would be like if they actually put energy into the regions.

Take Dunedin, Ashburton, Timaru, Invercargill, the houses are cheap, job prospects good and business activity strong, all with minimal traffic congestion.

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by  sharetrader  |  25th Jun 15, 10:36pm 1435228608

Just hope you don't catch the Auckland disease. Most aucklanders with kids under twelve are now know they will most likely have to rent unless they strike it lucky

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by  bigblue  |  25th Jun 15, 10:19pm 1435227576

Chinese buyer purchased 39 Spencer St, Remuera for $1,300,000 off Housing NZ - has now been on sold to another Chinese buyer for $1,960,000. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=108… Nothing done to it in between sales http://www.barfoot.co.nz/537928

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by  MortgageBelt  |  25th Jun 15, 10:21pm 1435227660

Nothing to see here. Move on. Problem to be solved by releasing more land for more new houses for more foreign or related buyers.

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