Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
DEPOSIT RATE CHANGES
ASB has sliced -25 bps off its SavingsPlus bonus saver account.
MOTORING ALONG
Used import car sales in June came in at 13,339 for the month. That is +11.2% higher than the same month a year ago and has these imports running a rate of over 157,000 per year. You have to go back to mid 2004 and the heyday of 'Japanese imports' to find a similar rate.
TAX FLOWS DRIVE BIG SURPLUSES
The Crown accounts for the eleven months to May came in very strong in the report out today. The surpluses are building up fast. On an OBEGAL basis, the eleven month surplus is $4.5 bln. On a full accounting basis including all valuation gains and losses, it is a massive $11.1 bln. Both measures are far ahead of forecast. In fact, the $2.3 bln surplus just for the month of May 2017 is the highest monthly OBEGAL surplus ever. The lolly jar is full, ready for the election scramble. Every interest group will have its hand out. Income taxes collected from individuals are running +6.5% more than for the equivalent period last year. For companies it is up +17.1%. GST is ahead +8.4%. (And here are some interesting tidbits; fuel taxes and RUC are only up +3.1%, proving we are travelling further on a litre of fuel. Energy intensity is falling. And tobacco taxes are down -5.8% showing that higher taxes are in fact reducing demand.)
RENTS TURNING LOWER
Yesterday, we reported lower growth in house prices, or even some falls. Today we got rent data and that shows stable rents in June at $420/week for a 3 br house, a level we have been at all year. In Auckland, the June level is now $600/week which is the lowest level since September last year. In Wellington levels are static. Christchurch rents have dropped sharply to $410/week and that is a level that was normal in June 2013.
LENDME CHANGES NAME, GETS UNDERWAY IN AUSTRALIA
New Zealand peer-to-peer lender LendMe has changed its name to Zagga and has launched in Australia, having obtained the required Australian Securities and Investments Commission licences. CEO Marcus Morrison says Zagga has facilitated $7 million of lending to date in Australia. The chairman of Zagga Australia is ex-Westpac NZ CEO Peter Clare. Since its December 2015 NZ launch, Zagga says it has processed more than $5 million worth of loans, the average of which was around $350,000 for a two year term, with an LVR of 55%. The average investment is about $150,000 but ranges from $1,000 to $1.5 million. Investor returns to date have ranged from 6.44% to 11.00% net of fees per annum.
STUNNING IMPROVEMENT
The New Zealand Government wasn't the only one reporting large positive results. The Australians also reported a very healthy improvement in their trade surplus of goods and services. It came in at +AU$2.5 bln in May, far above the -$2.0 bln deficit in the same month a year ago. For the twelve months to May, they had a AU$9.4 bln surplus, way better than the -AU$36.4 bln deficit in the 12 months to May 2016. (And for the cynics, the contribution from NZ banking profits was a year-on-year decline.)
DOWN IN VANCOUVER TOO
The housing sales slowdown is not only appearing in Auckland. It is showing up in Vancouver, Canada as well. The Real Estate Board of Greater Vancouver reports that residential property sales in the region totaled 3,893 in June 2017, an -11.5% decrease from the 4,400 sales recorded in June 2016, which was an all-time record. Last month’s sales were +14.5% above the 10-year June sales average. Their market is splitting into an apartment section, which is rising in demand, and a house section which is seeing falling demand.
WHOLESALE RATES UNCHANGED
There has been a -1 bp slip in all rates today, partly mirroring the -2 bps fall in benchmark rates in New York overnight.
NZ DOLLAR UNCHANGED
The Kiwi dollar is essentially unchanged as well at 72.7 USc. On the cross rates we are a little higher, trading now at 95.7 AUc and at 64.1 euro cents. That leaves the TWI-5 at 76.8. Bitcoin has risen today, up +1.4%% from this time yesterday to US$2,621.
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17 Comments
In relation to stunning improvements I noticed the following article whiling travelling. Earnings per share are up in all markets. This probably needs further investigation but this is a surprisingly positive result.
http://www.cnbc.com/2017/07/05/the-global-economy-is-doing-something-it…
Can someone please explain to me what is going in with rental prices in Auckland. I keep hearing about this "housing crisis" that means there aren't enough houses, and this is why the price of houses is at stupid levels. Bu if you want to carve out credit growth, the best proxy for the price of houses as a thing that provides accomodation is the rental price. And while there has been stead growth in Auckland over the last 5 years or so (3-4% compounding) this to me is a material but not a significant increase and is totally disconnected from house price growth ie yields has fallen to 3% ish. If there really was a shortage, rents would be up sharply in Auckland. They're not. So what gives? The prices tell us that the market for housing as accomodation is well balanced. Seems to me this "housing crisis" talk almost constitutes a hysteria. I hear the net immigration numbers, and they sound big, but.....they're not in the price. It's just an excuse to justify the speculative frenzy?
Would you REALLY be wanting to pay more than $600 a week rent in Auckland ? Thats pretty much all of many peoples take home pay after tax and its more than many peoples mortgage repayments. Whats happening is at these prices more people are getting crammed into a house and others are living in the garage. All those people coming into the country have to live somewhere so yes there is a housing shortage, or more precisely a shortage of affordable housing on the crap wages we still have in NZ.There is local evidence in my street of a couple getting married and still living in the parents house, this sort of thing must be on the rise as well.
I am not so much focused on the nominal rent amount as the rate of increase over the last 5 years. At a time when a huge shortfall in accomodation has apparently arisen, thus forcing purchase prices to hugely increase, rental increases have been what I would call modest. Forget the media anecdotes, just look at the numbers. It doesn't stack up. And rents in Auckland are flatlining.
I assume the speculative frenzy is entirely over capital gains, a bit of FOMO and people have to rent out their investment properties as they may be struggling to flip the properties for a gain. I guess that capital gains + 3-4% rental return stacks up for many people.
There's still no shortage of houses to buy and I guess that applies to rentals with the latest figures. Maybe the housing crisis is about price more than anything. With the number of houses sitting empty is it really a supply issue, I don't know.
The housing shortage hinges around a very elastic and hard to measure ratio: the number of resident per dwelling. It's considered to be at 2.9 resident per dwelling (that dates back to 2013). Change that ratio just slightly to 3.3 and the "shortage" miraculously disappears
This is a very valid point on the number of people per dwelling basically reduces the shortage to zero. Also the fact that houses were sitting empty waiting to be sold (capital gains speculation) are could now be going up for rent creating 'active supply'. It would be interesting to see some numbers from trade me etc on the number of houses for rent over the last 12 months.
The Bear Market in Commodities
http://www.theepochtimes.com/n3/2263899-the-bear-market-in-commodities-…
What Does Dr Copper Tell Us About Global Growth?
http://www.dlacalle.com/what-does-dr-copper-tell-us-about-global-growth/
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