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A review of things you need to know before you go home Tuesday; another floating rate rise, more TD rate changes, expect to live longer, more houses everywhere, higher inflation expectations, swaps rise

A review of things you need to know before you go home Tuesday; another floating rate rise, more TD rate changes, expect to live longer, more houses everywhere, higher inflation expectations, swaps rise

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
The Co-operative Bank has increased its floating rate by +10 bps to 5.75%.

DEPOSIT RATE CHANGES
Westpac followed ASB and changed a range of term deposit rates, some up, some down. Details here.

RECORD LOW BIRTH RATE
Stats NZ updated the nation's birth rate as at December 2016 and that showed it at a record low level. Part of that is a dramatic reduction in the teenage birth rate which has more than halved since 2008. Our death rate is also trending lower although not at a record low in December. Our overall birth rate is down to 12.65 per 1000 population while our death rate is at 6.64 per 1000 population. (The teenage birth rate is now just a touch under 16 per 1000.)

A LONGER RETIREMENT
Statistics NZ also released its 2014-2016 life tables which shows life expectancy at birth for females is now 83.4 years and 79.9 years for males. More importantly for you, if you are aged 45, you can expect to live to at least aged 82.7 if you are male and to 84.6 years if you are female. If you are aged 65 and male, expect to live unlit at least 84.3 years and if female, to 86.5 years. These are medians, so half will live longer. And you should probably add some years to these figures; Stats NZ works out this detail based on the records of people who have recently died. The sample of those alive might be more meaningful if you are still in that group!

STANDARDS CLAMPDOWN
The New Zealand Qualifications Authority has cancelled the registration of Linguis International Institute as a PTE. The NZQA quality assurance process identified serious concerns in relation to educational performance and compliance with NZQA rules. It is the third such institution to be closed by officials recently.

ANOTHER DROP IN THE BUCKET
The Government plans to build 34,000 houses in Auckland over next decade on land currently with 8,300 state homes on it. That will raise the number of state houses to 13,600 with the rest sold off into the open market. But over ten years means this project alone will only go a small way to solving the housing imbalances in the Queen City.

THE TOWN THAT CAN
Auckland may be falling short of building the new houses it requires, but Queenstown isn't. The Queenstown-Lakes Housing Accord, with six months of the original accord still to run, will likely meet the target of 1750 new residential sections and homes in the three years to October 2017. The monitoring reports released today show 1634 consents have been issued to date and, with six months to go, the target is likely to be exceeded.

CHRISTCHURCH CAN TOO
Building can start on a $300 mln, 600-home development at Riccarton Racecourse after the Government approved the final step for the Christchurch Racecourse Reserve Trustees and Ngāi Tahu Property initiative. Yesterday Cabinet approved the Riccarton Racecourse Development Enabling Order 2017, which lifts the land’s reserve status and allows the development to start.

EXPECTING FASTER RISES IN THE CPI, BUT SLOWER RISES IN HOUSE PRICES
The latest RBNZ survey of inflation expectations has revealed a sharp drop in what people thing will happen to house prices. This survey says a +3% rise is expected over the next year, and that is down from +5% three months ago. As for general inflation, the survey see's respondents expecting it to rise to over 3% within a year, and to over 3.7% in over five years.

WHOLESALE RATES RISE
The run of wholesale rate drops ended today. Swap rates are up +2 bps for terms of 2 years and longer, except the ten year which is up +3 bps. The 90 day bank bill rate however is up +1 bp today to 1.99%.

NZ DOLLAR FIRMS AGAIN
The NZD is still in its general range although with a further slightly firming trend. Against the greenback it is now at 69 USc. On the crosses we are at 93 AUc, and 62.8 euro cents. The TWI-5 is now just above 73.8.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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Source: CoinDesk

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11 Comments

New Zealand’s housing market is the most over-valued among the so-called G-10 economies and the most at risk of a correction, according to Goldman Sachs.

In research published this week, the investment bank said there is about a 40 percent chance of a housing “bust” in New Zealand over the next two years, which it defines as house prices falling five percent or more after adjustment for inflation.

The report looks at housing markets in the G-10 countries -- those with the 10 most-traded currencies in the world -- and finds they are most elevated in small, open economies such as New Zealand, where house prices have rocketed in recent years. In Auckland, the nation’s largest city, the average price has surged 91 percent since 2007 to more than NZ$1 million ($688,000). Read more

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You missed the bit which said 'Goldman said its model is “just one tool” and has “a few key drawbacks,” including predicting housing busts too often.'

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No I didn't - just like you I read more.

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Definitely an issue with the squid's model - it only thinks there is a 40% chance of a bust - my non-existent model puts it at close to 100%. Difficult to know when exactly, difficult to know the trigger, difficult to know whether we'll go the Japan or Ireland path, but IMHO it has to happen (in real $ terms). We don't produce enough to pay our way in the world and our immigration pump is running on fumes and will be turned off by Winston and whoever he goes into Government with.

I was chatting with someone in professional services today and the flow on effects from property slowing are already being keenly felt, and we've barely even begun the adjustment.

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A tentacle laid upon my sholder and a deep sachs voice whispered... "your mine"

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Don't worry, we have your deposits.

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"Building can start on a $300 mln, 600-home development at Riccarton"
That's going to be great for the already falling house prices due to too many houses...

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Similar I believe to power system planning, if you put a big new power station somewhere, the power price in that area drops. So the benefits of putting it there are nowhere near what they would be if the power was able to be sold at the previous levels.

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Making house prices fall is an essential part of making houses affordable. Hyperinflation in house prices is harming a lot of people. FHB have to save for many years, up to a decade or more and then they are stuck with a 30 year mortgage. So much for saving for retirement.

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Presumably they will have to pull down the 8300 state houses , before they can build the 34000 new homes , so not a great short term gain .

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"They define a bust as a 5 per cent decline in real house prices"

- 'nuff said.

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