Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
TERM DEPOSIT RATE CHANGES
Aotearoa Credit Union raised rates today.
OFF THE BOIL
In the year to November, the average price for a lifestyle block was $1,145,000. But in November that dipped to $1,010,000. There were 816 lifesyle blocks sold in the month, which was -30% less than the 1158 sold in November 2020, according to REINZ data released today. They trumpeted a 'Spring surge', but actually that is only if you bundle up September, October and November. In fact the surge is well passed and the November data looks pretty weak to us.
GOOD DEMAND DRIVES UP FARM PRICES
Farm sales in November didn't make year-ago levels either, with 188 units sold in the month compared with 207 in November 2020. That took the three month total to 361. However, 188 for a November is +20% higher than the average for the prior four Novembers. The average price is now $37,710 and up a sharpish +10% in a month. REINZ reports that the median price for dairy farms hit $45,000/ha which according to our data is +35% higher than a year ago, and holding these very high per hectare levels that started kicking in in August. 35 dairy farms sold in November (c.f. 23 in November 2020) and even more impressive was the 61 finishing farms sold in the month, the most for this category since March 2018. Prices for finishing units rose +15% in a year on a per hectare basis. We are hearing of global investors buying up farmland in the US and Australia; perhaps some of that demand is behind these higher transaction and price levels but we haven't heard of that - except for European investors who are targeting farms they can harvest carbon tax credits from. Maybe the elevated finishing farm sales are for farming at all, just carbon credit tax arbitrage? The dairy farm demand however will be being driven by higher dairy prices.
EYES ON DAIRY PRICES
There is another dairy auction tomorrow morning, and the derivatives market is suggesting prices are due to rise +3.2% for WMP and +2.7% for SMP. Given the NZD has fallen -1% since the last auction, there is a good floor forming under the farmgate milk price payout forecasts. Westpac's $9/kgMS is looking a safer bet.
McKINNON REPLACES McKINNON
The NZ-funded, NZ China Council has a new chairperson, ex-ambassador John McKinnon. Apart from being New Zealand's ambassador to China in two separate postings, he has also served as Director of the External Assessments Bureau from 1995 to 1999, as Secretary of Defence from December 2006 to 2012, and was executive director of the Asia New Zealand Foundation from 2012 to 2014. He is replacing brother Sir Don KcKinnon who has retired.
MORE USE, LESS ABUSE
Credit cards got dusted off in November and used more aggressively than we have seen for a while. More than $4 bln was charged on them in the month, the most for a November ever, and +4.8% more than in November 2020. But we are not letting balances build up as much, with just on $6 bln owing on them which is -6.3% lower than a year ago. Now less than 55% of these balances incur interest, the equal lowest ever.
SIMON POWER DEPARTING WESTPAC, JOINING TVNZ
Simon Power is leaving Westpac after being passed over for the permanent CEO position to Catherine McGrath. His next gig is at TVNZ as their new CEO, replacing Kevin Kenrick and starting in March 2022. He was with Westpac for ten years after a 12 year 'career' in Parliament as a high-performing cabinet minister in the Key Government. Government-owned TVNZ is being lined up to merge Radio NZ by the current Labour Government in a confusing strategy that seems to mix the commercial business with 'public service' goals.
NZ PIPELINE WATCH
Last week, the NZX50 capitalisation fell -1.1%. The largest falls were by PushPay (PPH, #27) which dropped -10.7% in the week, Fonterra (FSF, #48) down -7.8%, and Fisher & Paykel Healthcare (FPH, #1) down -2.9%. The weekly winner was Sky Network (SKT, #43) which continued its stellar rise, up +8.1%. You can inspect profiles for all NZX50 companies here, which now have an expanded set of metrics to compare, as well as charts tracking each company's changes (including their share price).
MOVING OUT
There were more people departing from, than arriving into, Australia during the pandemic totaling -89,000 people, reversing their historical migration pattern. This led to a decline in net overseas migration in every state and territory in 2020-21, according to official data.
STAYING PUT
But Kiwis living in Australia will have to wait until the end of February before they can return home, amid fears of Omicron.
LOCAL PANDEMIC UPDATE
In Australia, pandemic cases in Victoria were 1243 reported today. There are now 13,355 active cases in the state - but there were 6 deaths today. In NSW there were 3057 new community cases reported today, and another big jump, with 18,798 active locally acquired cases, and 2 deaths. Queensland is reporting 86 new cases. The ACT has 16 new cases. Overall in Australia, 89.4% of eligible Aussies are fully vaccinated, plus 3.6% have now had one shot so far. There are increasing reports of testing and hospital facilities being overwhelmed by demand. In contrast, there were no Omicron cases in New Zealand at the border, and 28 new community cases today. Now 90.8% are double vaxxed, 94.5% of Kiwis nationally aged 12+ have had at least one vaccination, and the equivalent Australian rate is now at 93.0% of all aged 12+.
GOLD SLIPS
In early Asian trading, gold is at US$1790/oz and -US$12 lower than this time yesterday and marginally lower than where it closed in New York.
EQUITIES MOSTLY POSITIVE
Wall street closed lower with the S&P500 down -1.1% in its Monday trading. The DJIA and NASDAQ were even lower. Tokyo, which fell a hard -2.1% yesterday is recovering much of that today, up +1.6% in early trade. Hong Kong is starting today with a +0.6% recovery, and Shanghai with a +0.2% recovery in very early trade. The ASX200 is up +0.5% in early afternoon trade and making back all of yesterday's fall. The NZX50 which had a strong gain yesterday, is level-pegging near the end of its Tuesday session.
SWAPS LITTLE-CHANGED
We don't have today's closing swap rates yet. They are likely to be soft. The 90 day bank bill rate is unchanged at 0.94%. The Australian Govt ten year benchmark bond rate is up +2 bps at 1.59%. The China Govt 10yr is little-changed at 2.88%. The New Zealand Govt 10 year bond rate is now at 2.24% and down -3 bps and still below the earlier RBNZ fix for that 10yr rate at 2.29% (unchanged). The US Govt ten year is now at 1.43% and +5 bps firmer.
NZ DOLLAR GOES LOWER
The Kiwi dollar is now at 67.1 USc and even lower than its open this morning, down another -½c in a day. Against the Aussie we are also marginally softer at 94.5 AUc. Against the euro we are down -½c at 59.5 euro cents. That means the TWI-5 is now just under 71.9 and threatening its four month low again.
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BITCOIN ON HOLD
The bitcoin price has marked time at US$46,682 and almost exactly at the level at this time yesterday. Volatility over the past 24 hours has been moderate however at just over +/- 2.1%.
This soil moisture chart is animated here.
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72 Comments
Earlier boosters is good thinking, a no brainer in fact. In the last month or so the government via Robertson & Little have insisted that NZ’s health system was coping & would continue to do so and a major participant in that feature was the 90% vaccination threshold. However their continual stalling actions on opening up, and particularly Auckland, contradict that assertion completely. NZrs were repeatedly told that vaccination was the key weapon and responded accordingly, & satisfied that government criteria. That was all surmised and calculated on the basis of Delta & an expectation that it would move entirely eventually through the community. OK there is now a new variant, more contagious apparently, but that should not affect the same strategy, if the hospitals etc are geared as we have been assured they are. I think the government knows full well the hospitals are in a dire state and they are speaking out of the side of their mouths & with a forked tongue as to admitting that reality. In that regard Omicron is another handy smokescreen isn’t it.
There are a lot of p155ed of Kiwi's abroad and if they all vote against Labour they'll be done for. If they are going to maintain a hard border then they need to increase MIQ capacity, it's unacceptable we have Kiwi's abroad unable to get home to see family due to a chronic shortage of spots.
Disagree.
Why accommodate people in a high density manner right in the heart of the city when it could be out near the airport somewhere.
And as I say, could be repurposed for much much needed emergency housing, which hotels aren't appropriate for.
Not rocket science.
You'll be waiting a long time for bodies to pile up. Don't listen to the people pedalling doom for a few column inches or votes.
South Africa, the country furthest ahead, is already peaking it appears: https://mediahack.co.za/datastories/coronavirus/dashboard/?s=09
Any article/opinion I've seen so far the cccfa gets the blame but it would appear from those comments that it's the banks using it as an excuse.
My daughter was looking at a place to see the price it set for a place nearby they were interested in. It sold for about 50% more than they are interested so still some out there going.
Based on past outbreaks the OCR needs to continue to rise as planned, or its same old same old all in on housing and further rent/ living rises. The last 18 months of too much easy money has got us where we are, the next generation cant buy a house and are getting scr#wed for rent without any hope in sight.
That is a miserable clearance rate! I’ll wait until the new year before I pass judgement but I think the CCCFA may have caused a bottle neck. I’m sure things will get ironed out as banks and brokers will still want to get deals over the line.
Looks like an adjustment period…. Or something more major! Time will tell
Re TVNZ & RNZ merger. This is part of a major Labour Govt strategy: to merge everything possible.
All hospitals/DHBs to be merged, all Polytechnics now merged with their head office in Hamilton, all Local Bodies and/or assets to be centrally governed, govt depts assessed for merging, Media to be funded by central Govt & approved/accredited, etc. Mandate laws for emergency use.
This allows for central control and the removal of all local autonomy for NZ communities.
To be fair a lot of those DHBs and local bodies have performed very poorly. Council loves to blame infrastructure for the lack of housing, yet they are the ones who can't seem to build any infrastructure. The government should take transport from the councils as well as water IMO.
Almost every decent transport project in Auckland is a govt one. AT just talk it up but never have the funds or ability. Watercare just seem to bleed money, my water bill is close to my power bill now yet we have droughts and poos going into the sea and CEOs being paid stupid money.
Watercare actually seems to be the one effective entity since their separation from and protection from council politicians. They just have a long list of deferred maintenance to catch up on.
Councils used to collect three water levies then spend them elsewhere. Now at least Watercare gets to ensure they're spent on waters.
As an aside, they don't control droughts and there are limits we will hit against when increasing population to keep housing costs high and labour costs low. There aren't easy options for new dams and the Waikato river will face competing demand pressures soon.
So Auckland had a whole 21 cases today, less than Bay of Plenty or Taranaki on a per capita basis and with higher vaccination rates. Yet Auckland is still the sacrificial lamb with a red light. How can they justify this?
The problem with this over cautious approach is that Auckland may never get to orange or green before Omicron / winter / whatever else happens. Taking away our freedoms when things are going really well is going to backfire when it all turns to crap, Auckland needs a break sometime before then.
I agree too, I was so lucky to have been fed and watered by my boomer parents. It still amazes me how selfless they were as they wasted so much money on me, they even let me sit in their heated room. They could have put that wasted money directly into buying more properties or growing their own personal wealth. I will be forever in their debt.
"Something something pull yourself up by the bootstraps, something something we didn't have iPhones or Netflix back in the day, something something hard work, sacrifice and fewer takeaway coffees."
The boomer narrative. My New Year reading list includes 'The Fourth Turning: What the Cycles of History Tell Us About America's Next Rendezvous with Destiny'. Interested in the taking of power from the boomers by the millennials / Zoomers.
The bush telegraph says that the increased dairy prices are due to a combination of family corporates plus some urban corporates looking for diversification into dairy. The interest in finishing farms is a mix of direct and indirect effects from forestry sales, with vendors of farms destined for forestry needing to find a new 'home' for their money.
KeithW.
Minister spoke about postponing Australia quarantine free travel from 15Janary to end of February but what about international travel, has that also been postponed till end Feb from 24th Feb or....no update from minister nor any media asking as unable to think beyond Australia.
It appears that Government policy on keeping borders closed is increasingly divergent with New Zealanders views. As much as their early Covid-19 response made them popular their current response appears to be putting them at odds with the countries desire to move onwards.
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