Okay, everybody can go and sit back down now.
For the first time in nearly two years the forthcoming review of the Official Cash Rate (OCR) by the Reserve Bank (Wednesday July 12) is not a 'live one'.
That is to say, that for the first time since the middle of 2021 the overwhelming expectation is that the RBNZ will 'do nothing'. That's right, NO movement to the OCR.
Time for us all to have a cuppa and a breather, because this past nearly two years has been a wild ride.
We've had 12 consecutive increases to the OCR, taking it from the historic-low, pandemic-emergency, setting of 0.25% all the way up to 5.5% - its highest level since late 2008.
A wild ride alright.
The speed of the rise has been unprecedented.
And it is all about trying to tame inflation.
It seems really hard to imagine now but it was only at the OCR review two years ago almost to the day that the RBNZ officially called a halt to its quantitative easing ('money printing') large Scale Asset Purchase (LSAP) programme.
And with the benefits of a truckload of hindsight, I found these comments made by the RBNZ's Monetary Policy Committee at the time fascinating:
The Committee agreed that, in the absence of any further significant economic shocks, more persistent consumer price inflation pressure is expected to build over time due to rising domestic capacity pressures and growing labour shortages. However, the Committee noted that uncertainties remain as to the pace and magnitude of any pass-through of costs onto medium term inflation, especially given reported underutilisation of labour, modest wage growth, and well anchored inflation expectations.
The Committee noted that medium-term inflation and employment would likely remain below its Remit objectives in the absence of some ongoing monetary support. However, the Committee agreed that the level of monetary stimulus could now be reduced to minimise the risk of not meeting its mandate.
Just two days later, Stats NZ released the Consumers Price Index for the June 2021 quarter and it was, as interest.co.nz reported at the time, a "scorcher", showing annual inflation bursting out of the Reserve Bank's 1%-3% target range with a 3.3% figure. Game on.
So, the August 2021 RBNZ review of the OCR officially became a 'live one', with the universal expectation that the OCR would be lifted for the first time since mid-2014. And it most certainly would have been - if Auckland hadn't decided to have the start of its Covid Delta outbreak on August 17, the day before the OCR decision.
We therefore had the strange spectacle of the RBNZ's Monetary Policy Statement on August 18, 2021 giving supporting words and context to an interest rate hike that didn't happen!
Of course we didn't have long to wait. The balloon officially went up on October 6, 2021 and the OCR was raised by 25 basis points to 0.5%.
This rise was followed by another two 25 point rises at each of the next two OCR reviews.
This steady, methodical rise of the OCR was given the mantra of "considered steps" by the RBNZ.
However, as the months went on and it became more and more clear that rising inflation was less 'transitory' and more 'runaway freight train' then so considered steps gave way to calculated leaps. In April 2022 the RBNZ went for a 50-point jump to the OCR, which was followed by another four moves of the same size. In the meantime annual inflation hit a peak of 7.3% for the June 2022 quarter.
Then, on November 23, 2022, in the RBNZ's last OCR call before a three-month summer break, the blunderbuss came out and we were hit with a 75-pointer to send us all reeling off on holiday. Merry Christmas everyone.
This year we've seen two more 50 point rises, followed by a 25-pointer at the last OCR review in late May, along with strong indications that this would be the last hike for the foreseeable future.
So, that's definitely it for now? No chances of a surprise hike on Wednesday? Well, no. Not this time.
There's been little in the way of major economic data released since the RBNZ's last OCR review on May 24 - but what there has been has definitely indicated the RBNZ should now be sitting tight.
GDP figures for the March quarter came out on June 15. The RBNZ had forecast growth of 0.3%, but in fact the economy shrank by 0.1%, giving us two consecutive quarters of 'negative growth' and putting us (by technical description) in 'recession'. Card spending data for May was "much weaker than expected", with a 1.9% seasonally-adjusted drop pointing to a significant slowdown starting.
And then in the past week or so we've seen a sharp rise in the number of non-performing mortgage loans, an NZIER Quarterly Survey of Business Opinion showing some marked declines in labour market and capacity pressures, credit bureau Centrix's latest monthly Credit Indicator Report showing higher consumer arrears and mortgage delinquencies, and the latest Crown Accounts for the 11 months to May 2023 showing a deteriorating financial position, with tax revenues coming up more than $2 billion short of projections - a clear sign of a slowing economy.
There's more than enough there to justify the RBNZ being able to raise its hand once again and say 'no more' to OCR rate rises - at least for now.
So, given that we won't have what has been the natural focal point of the OCR reviews for the past two years, IE a moving rate decision, this time we'll have to busy ourselves with looking at the details in the RBNZ statement and accompanying record of the Monetary Policy Committee meeting.
This decision will not be accompanied by a Monetary Policy Statement - that will come with the next review, slated for August 16, 2023. This time, therefore, there will not be any updated forecasts.
What we will need to pay attention to is whether there is any marked variance in the commentary from the previous one in May, IE whether there's anything that suggests the RBNZ may be changing its mind about no OCR hikes for the foreseeable future. This is what the RBNZ said in May in its key sign-off paragraph:
The Committee is confident that with interest rates remaining at a restrictive level for some time, consumer price inflation will return to within its target range of 1% to 3% per annum, while supporting maximum sustainable employment.
I would expect a similar 'key' paragraph to end the OCR statement in the coming week. What the above statement tells you in effect is that the RBNZ is by no means declaring 'victory' over inflation yet (not with it still at 6.7% as of the end of March) and that it isn't intending to raise interest rates now, but it doesn't want to see them fall either.
So, in other words the RBNZ thinks it's done enough hikes, but rates need to stay restrictive to ensure inflation really is killed. The RBNZ's forecast (as of May) is that it won't start dropping rates till the second half of next year. It's unlikely to say anything about the timing of rate cuts in the coming week, since such talk without a full explanation - probably through a Monetary Policy Statement - would cause the financial markets to start second-guessing.
The RBNZ would be very happy with where wholesale interest rate pricing is at the moment, since at current levels (at time of writing) falls in interest rates are not being priced in till next year. That's a change from the situation till recently when a fair few observers and market participants were expecting there could be falls later THIS year. The RBNZ absolutely doesn't want such speculation and so, as I say, it will be happy with current sentiment in the financial markets.
And there we have it. The 'heavy lifting' (of interest rates) is done. Now in the parlance of the RBNZ itself it is time for us all to 'watch, worry and wait'.
*This article was first published in our email for paying subscribers early on Friday morning. See here for more details and how to subscribe.
163 Comments
by Future | 7th Oct 22, 2:34pm
The Seal has been Broken. This is how the Scroll reads.
Interest Rates will continue to go Up from here and Stay Up for a Long Time.
Banks will sell Mortgages at 10% +. ( Double Digits ). The OCR Forecast Peak Goalposts will continually be Moved Higher and Higher ! 10% Interest Rates Next Year, Guaranteed !
The World will go into the Biggest Financial Crash Ever Recorded !
There will be many many examples here in NZ of Property that once sold for $1,000,000 Sell again at $200,000 or less. -80% Crash in Home Prices will be common. This will take time to play out.
It is NOT about High Interest Rates to Fight Inflation. It IS about High Inflation to Justify High Interest Rates. Ponder on this before the Seal is Broken on the Second Scroll.
The Prophet.
If that is the case all construction workers will be out of jobs. all homeowners will would have lost everything they might as well stop working and go on benefit because they wont be able to pay of mortgage ie walk out of the home with the key in the door banks will collapse, you and your parents wont have any retirement funds. 10% might mathematically be on the cards however house prices dropping by 80% is really unlikely.
personally i just don,t see it. However I am sure this is as much a mute point as discussing something with a flatearther.
Just the one. You should ask TTP Tim the same question.
by ToThePurloined | 5th Jul 23, 1:52pm
Hi Chairman Moa,
Maybe if you spent less time on ‘writing’ frivolous sing songs and poems, and more time exploring investment property, you would realise that the data shows that the bottom is in and there has never been a better time to invest in property.
What the DGM trolls that frequent this website fail to realise, is the consistent resilience of the NZ property market. Simply put, there is not better investment to make that provides one with security over their financial future.
Of course, I am but a lowly renter, but I can’t help but get excited over the clear bottoming ... Read more
2
by Chairman Moa | 5th Jul 23, 1:58pm
Sorry I've spent enough time in my youth in Palmerston North, it is shxt this time of the year, wet, damp and windy as...!
One moment please, but Auckland DID NOT decide to have a lockdown. Ask 95 to 99 percent of Aucklanders. Ardern happened to be in Northland at the time and was given a heads up so she could escape lol
So thats on the Covid Queen and lets not forget, the whole kitchen cabinet.
if Auckland hadn't decided to have the start of its Covid Delta outbreak on August 17, the day before the OCR decision.
In business, it is customary to get one's turnover, deduct one's costs, and the rest is profit. Wait. It turns out that not all costs are allowed to be deducted. What will stop this bunch refusing to allow other costs to be deducted from one's profit? They have already done it once. They seem to think they have got away with it. Only an election will instruct them otherwise, I'm thinking.
I quess the bond markets will take over from now on and it is clear overseas investors want some premium on New Zealand Debts and therefore wholesale interests rates have been increasing since the last hike by the RBNZ. Our account deficit will determine how high those wholesale rates will go, but by looking at the collapse of Forestry export prices, the downward pressure on dairy prices and the 20 -25 % reduction in orchard harvests. With tourism hanging in about 66% of pre-pandemic, we will be in for some rough times.
Auckland info copied from a site where a much wiser person than me compiles this information. I'm not able to link to it directly or risk getting banned but feel free to search it up yourself...
Auction Statistics For This Week - Some observations:
-
On a week-on-week basis, the number of properties offered for auction has continued to increase sharply to 175 properties (or an increase of 35.7% from last week) even as we head into the winter season which traditionally slows down. This is by far the highest level since I started tracking this in March 2023.
-
The auction clearance level has gone down slightly on a weekly basis to around 39%. Approximately 56% of properties offered at auction got passed in which is a slight increase from the previous week. Given the sharp increase in auction inventory, the number of sales this week has also gone up to 68 properties - the highest since March 2023 - which is impressive given that the major banks have announced interest rate hikes.
-
Prices appear to be dropping with the percentage of sold listings which sold under the 2021 CV is now at 74% (compared to 65.9% in the previous week) (note: this calculation excludes those sold by Ray White where prices are undisclosed).
-
Median sale price and average sale price are at $1.11M and $1.141M respectively.
-
Median and average sale price-to-CV ratio for sold properties at auction sat around 93.1% and 88.4% respectively - both ratios have gone down from last week (94.7% and 94.4% respectively for the week ending 30 June 2023).
-
16.3% of the total number of listings received zero bids (excluding those that are undisclosed by Ray White). This has decreased compared to the previous week (23.5%), suggesting that the auction rooms are seeing more action.
Even if the OCR didn't increase but if the US dollar owners against which we borrow are not ready to lend us cheap, then what?
NZ is a bunch of small islands at the end of the world with big climate change issues. No one is going to risk their money on us unless we get better in managing ourselves. We are poor and in shambles.
Look at how we construct and maintain what ever crap we construct. Seriously we need to get better soon or we will be worse than a third world Country who are getting better every day while we are getting worse.
Not sure about the borrowing from US dollar owners here.
We do import loads of tech, oil, fertiliser etc. We export less ($ value) crap timber, milk powder, tourism and bachelor degrees for overseas students.
Now, this is the important bit... We close the NZ $ gap in trade by 'exporting' interest-earning NZ Govt Bonds (and some other NZ financial assets). NZ Govt Bonds are tradable financial assets that offer a return slightly above the benchmark US securities (mainly because OCR is higher than Fed rate).
Whilst NZ Govt Bonds remain well-rated, we can continue to close our trade deficit with Govt Bonds. The downside is that we now have $70bn of Govt bonds held overseas (58% of the NZ Govt bonds that the Crown doesn't own itself) meaning that there is an increasing flow of NZD interest payments going to overseas investors (adding to the currenct account deficit). We had just $35bn of bonds held overseas in 2020.
The risk here is that we slip into the same position as developing countries / emerging markets - where we lose our ability to set monetary policy domestically because we have to keep our interest rates (bond yields) up to make NZD and Govt bonds attractive relative to other internationally traded assets. Remember that trade in currency and financial assets make up well over 90% of global trade (the $ spent trading actual real goods is tiny in comparison).
The scenario you outline in the last paragraph is one that should give pause to anyone with concentrated exposure to the NZ property market. I wonder how much complacency has formed around a set of generational tailwinds (declining interest rates, favourable taxation treatment, and buoyant immigration). It's been a one-way leveraged bet for a long time.
Sure, but at the same time anyone taking the opposite side of the bet would have lost a lot of money over the years while waiting for the apocalypse! My own view is that I'm comfortable owning my family home, but that's enough. It's never been easier to invest in a diverse range of international assets, so that's where the rest of my portfolio is allocated.
Absolutely 0 probability.
The most current documentary for insights, of the current time we are in: Incase 0 probability is in question?
We are going 6% plus....Our Govt Bonds will be there very soon anyway!
From 2.10 mins.......is Gold from Mark Baum.
The Big Short (2015) - Arrival at American Securitization Forum & Baum interrupts the Presentation - Bing video
Nice clip.
It is said that the Prophet smiles when we see the full extent of the cluster fuck we are in.
A high employment recession: Those on benefits and with expensive life-styles will take a relatively bigger slice of the pain this time than workers and the austere. But the expensive life-style brigade are affording it so far.
I would give you good odds on that bet on 6% - zero chance of that. Go back and look at the swap rates in 2008 and you will see almost exactly the same pattern. This last surge in NZ swap rates is a deadcat bounce before things start to break.
The big unknown here (and the difference to 2008/09) is the US economy running hot as they invest heavily (with fiscal deficits) in building infrastructure and restoring industrial capacity, whilst other dumbass countries like NZ opt for the 'let's have a recession because there is no alternative' approach.
It won't happen. The NZ economy cannot cope with OCR at 6%+ (or even 5%+ for much longer) because our business and household debt is 150% of GDP. Do the maths... credit costs of 8% - 10% would mean interest payments on debt of 12% to 15% of GDP, or $45bn to $55bn per year. Household consumption expenditure is only about $220bn!!
So, if we see upwards pressure on bond yields (and thus downward pressure on bond prices) because the Fed is actually stupid enough to hike rates (I doubt it) then we can expect RBNZ to step and start buying bonds, or at least signalling that it will at a given floor price.
Exactly, it's not so much about how our averages will change, it's about how those changes will roll out and have an effect. Ecosystems are very fragile systems and have evolved to operate within narrow boundaries. Significant changes will mean significant disruption, you're dreaming if you think the disruption will be minor because NZ is diffrunt.
And it is all about trying to tame inflation
I think it is now increasingly clear that the impact of OCR hikes has been almost solely on house prices. The impact on actual consumer prices is marginal. Our prices have risen and fallen (a bit) with price in countries that have barely touched their interest rates. We are price-takers - imports make up one-third of our consumption, and the price of the stuff we produce internally is driven by the prices we can get abroad.
The real risk now is that our high credit costs are pushing so hard on business costs that we will have inflation for longer in NZ.
It has also affected the value of commercial properties Jfoe. Like homes they do not like higher interest rates . Some syndicates will be putting money into them to prop them up which not be appreciated by their members. Equities have had a great six months or so but that could change anytime as I personally believe the American bourses are over cooked.
Yeah it's pretty clear that, in the short term, monetary policy is effective at addressing capital market disfunction and inflating/deflating assets prices, but is extremely limited in curtailing consumption. Fiscal policy is the right tool for that job, but no politician is incentivized to take that course when they can shelter behind the Reserve Bank's coattails.
"And there we have it. The 'heavy lifting' (of interest rates) is done"
And here's where we differ. In metaphorical terms, it's much more likely to be:
"The low-hanging fruit (of national economic rebalancing) has now all been picked"
That stepladder we’ve dragged out that has 5 1/2 step to it? It's going to be nowhere near big enough to get up to where the real problems lie. (Oh and that ladder we are using? It's hard to figure out what the lettering on it says, after the battering it has taken over the last 15 years. Is that "Made in Chi...." China or Chicago? Whatever. That's where our next ladder is coming from)
Orr has had his contract re-newed in the last year but for probably 5 years. I doubt if he could be booted out by Nat.Act without a huge golden handshake.
I do believe Robertson will be rewarded by Orr for re-appointing him by not making an OCR change. If Orr lifts by 0.25% this coming week then it'll be no change next time around which will still be before the election.
The problem for the RBNZ is that us Kiwis are still partying like drunken sailors (perhaps we can blame on our heritage as "once were ocean travelers")
It will stop dead eventually??
Double problem: we are borrowing to spend like the drunken sailors. Like a big night out on a hell bender - not really caring how much it costs, just want the fun of the party to go on and on.
Its now the morning and we start on a new set of beers........delayed the ever more painful, yet inevitable hangover.
The overseas investors are now waking to the once fairly solid NZ sovereign credit market, and seeing us for the thin depth and basket case we are becoming. Lets see how the next few months of Govt Bond auctions go......they will be much higher imho, as our National risk premiums shoot up.
The Govt/Treasury will likely be paying over 6% soon (OMG) as our Debt gets more stinky.
The Highly enDDDebted have no escape hatch and are stuck enslaved of the bowels in the doomed Russian Kursk sub.......sinking without trace.
Got to respect the LandLords staying at wheel, as the ship goes down! (or sub in the Kursk case)
The NZ economic hangover is going to be one for the ages.......but remember were still happy and finishing the last of the beers midmorning.
How old are you ? 60+ ? Plenty of people have already shut their wallets, those that are still spending are about to have their wallets shut for them or else they will find themselves out on the street. The sad thing is that if National do get in, they will be starting right at the bottom of the custard barrel. If you cannot see tough times coming you are blind Freddy.
See you have an issue comprehending?
You seem somewhat ageist Zwifter? Some of the best and smartest people I know are in the 60s!
Me, I'm many, many years away from that golden age.
You, just out of Kindy I see. Don't worry, you will catchup.
I have the athletic ability of a 21 year old and the mental gymnastics of a Dr Micheal Burry. Glad to see you keep coming back to learn a little, Zwifter:)
Many are still partying now (but on borrowed tic) - so this economic disaster will be MASSIVE when it hits and swamps many boats completely.
Is inflation on the wane...
Lots of comment recently on the cost of a coffee and a suger bun being madness. The lobying from the speculative and the bankers is to stop here. But what's really best for NZ and the average person?
Election is coming. So choose. What's best for NZ or what's best for bank profit and asset speculation.
Easy choice really.
If the cost of a coffee and a bit of custard slice is the only worry you have in life then that's a bit of a joke. Quite a percentage of the NZ population are about to get smashed as their mortgages roll over and they will have to find hundreds of dollars extra a week so even a $3.80 coffee would be off the menu anyway.
A significant reduction in enslavement to bank debt. A game that is for the benefit of very few, at the expense of everyone else.
Let's see what happens.
Land tax from TOP and continue the anti speculation rules. #notnational.
Edit. The pathetic polls on National show how many think that. Afters Labours crap show this year they should be polling 50%+
Thank you, what about medical staff, education, crime, farmers? It seems you really dislike National. "Lets see what happen" I think that is your problem, if labour wins I keen renting my property to KO tenants the goverment pays good rent and interest is tax deductible. If national wins i can rent to working families they pay rent and interest is tax deductible, you see its the "lets see what happens" as you suggested that makes me think you place your hope in others and not yourself.
Also medical staff (and other govt workers) would benefit from a reduction in their largest expense being rent or mortgage payments.
A close friend has been training medical specialists for twenty years. The extortional levels of rent and house prices is the no1 reason so many are exporting their skills and tax to Straya. You see the same thing in the tech sector.
About 5% have returned. A massive tax loss and skills loss.
Averageman, i could not agree with you more, as per your comment "#notmynational", rent increases under national has been minimal, under Labour house prices is going through the room and so did house prices. the very party you support is the one that is contradicting what you would like to achieve. I think you falling for spin.
Robertson fudged the debt % last year by adding in the NzSuper fund.
https://i.stuff.co.nz/business/128607232/how-far-has-grant-robertson-sh…
To me, it reads that the current Net core crown debt is 36% of annual GDP excluding NZ Super Fund. The Government "is changing", not "has changed", the way it presents its debt.
Net core Crown debt stood at $127 billion at the end of March, an amount equivalent to just over 36% of the country’s annual GDP, and is currently projected to peak at just over 40% of GDP next year.
But the new Treasury forecasts will show a much smaller ‘headline’ figure, as the Government is changing the way it presents its debt.
It is an easy choice. Do you (a) want to become financially dependent on Govt welfare to get by and thus be eternally trapped as a Labour voter, or (b) do you want the country fixed so that the professional class of people like doctors, nurses, and teachers actually want to move here to work?
Your post clearly shows the traditional bipartisan mentality of NZ voters which has kept us swinging back and forth from problem to problem for generations. Please consider thinking objectively and read policy statements from other parties than national and labour, its a new world out there when you break from a narrow viewpoint
Your smug response is assuming a whole lot. Anyway there are very few other parties to follow. I do know about TOP who I assume you must be referring to. I quite like them and would if they could be in coalition with Labour, but my vote is best used to keep National out especially since it is looking so close. It would be great if TOP could win an electorate. And would be helpful to them if the minimum threshold was reduced to 2%. Do you still think I have a narrow viewpoint?
Hahahahhahhaahhhahahh
Good one.
Do you know many doctors, teaches and nurses that are voting Act? You'd think the would if they thought Act would be helping them no?
Act is mega rich libertarians, old grumpy white men with a smattering of National supporters who recognise that Luxon is useless but can't bring themselves to vote for Labour.
ACT aren’t libertarians. ACT are the ‘I should be able to do whatever I want and to hell with anyone else and while you’re at it protect my monopoly’ party.
Actually that’s probably not ACT. ACT probably want to be libertarians. But there’s no way their masters, the Epsom Old Boys Club will allow it.
Has the RBNZ accomplished it's day job objectives?
Probably not - Inflation-indexed bonds - factors spreadsheet
The economic setting that got us here over the last many decades have changed before our eyes; so slowly we didn't see it - until now. The biggest change? Our productive workers, most of us, have all aged. We haven't replaced ourselves, and our working aged are needed everywhere. A headline from the UK this morning, that could just as easily be from here, Australia or any European country:
A leading Tory on Sunday calls on ministers to reopen the UK’s borders to tens of thousands of young workers in order to tackle acute labour shortages that he says are driving up inflation.
And we are all going to compete for that workforce with exactly the wrong tool, if we are to combat Inflation - higher wages. If New Zealand had any sense it would try to attract that workforce with a slogan of "Come here and earn half as much, but it will buy twice as much" but it won't. It will join in the "Come here, and we'll pay you more to buy less". Inflation is about to roar, everywhere, and if we think interest rates are going to placidly lie down and go to sleep during the furore, we still don't see what's before our eyes.
2 more interest rate rises to go. Looks like it will be post election though. Inflation will be more persistent. We are sitting at 6.5% inflation while USA is at 4.7%. Fed funds rate signals show 6% by end of the year. So any lower OCR in NZ will just mean inflation stays up. There will be a couple years of pain 2023 and 2024. 2025 is up for debate, too many variables.
As for house prices, should dip another 10% over next 18mths and possibly under replacement value. It will recover slowly from there.
Yes correct. Where the USA SuperMaxTanker charts - the NZ 12ft dinghy, must follow.
- Higher interest rates for much, much longer, than all anticipate.
NZ housing will settle 40 to 60% down in REAL terms, from 2021 peak. Wellington already down near 40%.
- So still 2 to 4 years of hefty housing market declines/high inflation losses to come and interest rates sticking in the 6.5 to 10% or higher range.
Housing - a terrible store of value, in a high inflation environment!
The market confidence is completely shot to pieces.
Sure ......Just NOT in the high inflation periods of the 1970/80s or the last 2+ years worldwide. Do you need the chart??
Yes Debt is the killer right now and why Zwifter is drowning in the soaking sweat beads of High Debt Leverage.
Maybe Z can sell to a needy FHB, at a big discount, before the next price rung lower, gets smashed out?
Z comes here for helpful and compassionate advice? - Not just my side hustle as a comedy guru.....
By the way My family bought their first house in New Zealand in 1976 and never looked back. Its was $19K at the time if my parents can recall it correctly, just checked Homes and its still exactly the same house with nothing done to it and its is now $1.46 Million. Do you need a calculator to work out the gains on that ?
Unfortunatly the bankers and speculators, I mean National campaign funders, only care about the $$$ not your kids or civil stability. Nats are still tone deaf to this. After Labours last term they should be polling 50%+.
Why why why....kiwis don't want a return to ponzi politics before people politics.
I was tied to the Nats in the past. Agree with much of their platform still !
However, with their policies to reconjure totally non-productive Tax Dodges, Refire a destructive housing Ponzi.
If they see this groundswell against Ponzi politics and withdrawer and apologise - I'm back.
For now I'm NotNational.......many, many are.
It might. If you want professionals like Doctors to move here to fix our broken health system, you might have to just hold your nose and vote for policies that might attract them to come to this country, as they have their pick of places to go.
Currently (as in the last 6 months) a record number of people have died in NZ, and its not from Covid. So if your choice is between your children dying from lack of medical treatment or tax cuts for a doctor earning $200k a year, which do you choose?
Yes, why has New Zealand's excess mortality been so high since the end of 2021? And why is this never mentioned in the press?
https://ourworldindata.org/grapher/excess-mortality-p-scores-average-ba…
Just another opinion, of course.
(The) “extraordinary 40-year run is finished” as an era of cheap debt is replaced by higher interest rates.....The “mismatch on buy and seller expectations” after economies emerged from the Covid pandemic compounds matters. He suggests it is almost as if..... managers are unwilling to accept that their assets are not worth what they think they are. If debt is going to cost more and there is less available, then logically funds cannot pay the same price as when interest rates were almost 0pc and debt was more accessible.
There is a “huge amount of pain” to come which will be concentrated among some firms, rather than being evenly spread across the industry. The change in the interest rate environment has happened much faster than anyone expected. “There will be relentless pressure across all aspects of society and some businesses will go over the cliff.”
https://www.telegraph.co.uk/business/2023/07/08/interest-rates-risk-pri…
David is being overly polite. I suspect his analysis would be completely different if delivered after a few beers and in private.
As I don't have to be polite, my analysis would be as follows:
1. The NZ government was doing all - and some would argue, more than - was necessary to keep the NZ economy afloat during covid.
2. So why then did the MPC of the RBNZ decide it would be necessary to flood - "drench" might be a better word - the NZ economy with MASSIVE sums of cheap money?
3. Surely one would expect the MPC of the RBNZ to know that massively constricted supply chains due to covid would reduce supply and basic supply/demand theory would result in prices going up?
4. And then Pootin! The MPC of the RBNZ seemed to have NO memory of the oil shocks of the 70s !!! WTF! Aren't all economists taught this at University? When an energy shock hits - the sudden and massive rise of energy costs flows into everything really, really quickly! Yet they kept money really, really, really cheap?
5. And then - way, way too late - the MPC at the RBNZ finally realised they screwed up - and screwed up BIG TIME! Rates started to rise. But ... with another WTF moment they started with 0.25% increments. Wrong again. Should have been, "Normalization, folks!", and straight back to 3.00%!
And what happened from that point was inevitable. (Including gifting billions of profits to overseas banks!)
This chronically inept response from our RBNZ will go down history. It will be studied for generations to come. It will become an example similar to to the Bays of Pigs where groupthink takes over from sound economic judgement.
Sack. The. Lot. They are incompetent!
More spruiking from Oneroof, focusing on the original 80s sale price.
No mention that it sold for $1.2m, down from the $2.2M peak estimate. $1M price fall is pretty hefty!
https://i.stuff.co.nz/life-style/homed/selling/132510874/this-auckland-…
https://homes.co.nz/address/auckland/point-england/10-bagnall-av/zODO2
Already documented that agents can manipulate the estimate algorithm on Homes.co. to show a higher price. Very visible and a straightine upwards at the time of listing without a corresponding lift in the locations average. Manipulation...for a fee. Homes.co...owned by Trademe.
Or they struck oil or something in the back yard.
yep, all sorts of unsubstantiated nonsense.
A simple data entry error on the date most likely, entered the listing date instead of the selling date? I dunno what agno thinks they (whoever "they" is) gain by altering the date of sale on a price estimation website by a few weeks?
As for the price manipulation, I had a quick nosey, and 3 Bagnall Street and 37 Erima Ave have the same jump in estimated price and to my eye the same general overall shape on the price estimate, so something in the estimation algorithm changed, way back in Feb/Mar 2022 and those three properties (and no doubt others) got a significant bump because of it. Not just the one house so there goes Averagemans' price manipulation theory, which didn't make sense in the first place unless the house has been on the market for ~15months.
The peak estimate was $2.21M not $2.1M, look at the range figure.
The reason why they want to backdate the sale is because the last revision to the algorithm was on 29 June so if they backdate it this sale will not be counted when they run the next one. If it were included in the next run it would show that the current $1.5M estimate is 300k over. This would have a significant impact on the average prices in the area as they are based on sales and sales volumes are very low.
If you can't understand why an industry that makes money by taking a percentage of a sales price would benefit from higher prices then there is little hope for you ...
Ah, the implied I have secret knowledge again. You don't, you are just another plonker talking shit on the net.
There is a difference between not getting the data into the system, and getting the data in with an incorrect sale date. The system can't use data it doesnt have, but once it's in the system it does get used.
True.
This is why "mum and dads" who claim to be "investors" - that many here say 'they should buy what they know' - need be fully aware they know nothing.
What's interesting about this is that the ROI of buying for $42k way back in '82 and selling now for $1.2m looks like a great return on investment. On paper: $42k to $1.25m after 41 years is about an 8.4% ROI
But it's not. Subtract rates, insurance, fees, maintenance, etc, and it is good but nothing to get that excited about. And as you point out - as "investors" - they have sold at the wrong time and lost heaps.
And further - they've been land banking. This is why we need a land tax - or better, a comprehensive CGT. The opportunity cost to us all has been significant.
Peak OCR? Maybe not.
https://www.afr.com/markets/debt-markets/three-more-rate-rises-on-the-c…....
Australian households face up to three more Reserve Bank cash rate increases, after carnage in global bond markets stoked speculation the central bank will be dragged into the US Federal Reserve’s efforts to tame inflation.
“Central banks including the RBA don’t want to hike rates, but they might be forced into it,” said Vimal Gor, chief investment officer at Sydney asset manager Trovio.
A weakening Australian dollar, which dipped to a low of US66.01¢ early Friday morning, could deteriorate further as investors shift capital to higher-yielding currencies like the US dollar.
This would force the RBA to resume its most aggressive monetary tightening cycle in a generation that has already pushed up the cash rate by 4 percentage points since May 2022.
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