Welcome to our first of these daily summaries in 2022. 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
None here either.
ANZ MORE BEARISH ON HOUSE PRICES
ANZ's latest Property Focus report said it expects house prices to decline by 7% this year, more than double the bank's previous forecast of a 3% dip in prices. This comes just a day after ANZ said it expects the Reserve Bank to increase the OCR to 3% by April next year, up from its previous forecast of 2%. The OCR is currently at 0.75%.
EMPLOYMENT CONFIDENCE UP
Employment confidence moved higher in December, now back above pre-pandemic levels. While there are growing vacancy rates, so far pay rates are not rising in response.
'RELATIVE NORMALITY'
ANZ's truckometer monitoring reports December brought more volatility in traffic flows. The lifting of the Auckland boundary saw car traffic bounce. The Light Traffic Index jumped +16% on top of an 11% increase in November, while the Heavy Traffic Index eased -0.6% but that was on the back of a strong lift in November. Heavy traffic is not far off pre-Delta levels but light traffic still has a way to go. (The Heavy Traffic index monitors truck and freight activity. The Light Traffic index monitors car and passenger movements.)
ACCELERATING RISES
Food prices rose in 2021 by their fastest in a decade, up +4.5% in the year. Fruit and vegetables are up +6.9% but meat and fish rose only +3.2% in the year. Grocery prices rose the overall average of +4.5% - but (non-alcoholic) drinks were up only +1.7% in a year. This includes coffee, fruit juice, but also soft drinks. In 2019 the overall food price rise was +2.4%. In 2020 it was +2.9%, so the +4.5% rise in 2021 is a recent acceleration. (Our independent Grocery Prices Monitor, which includes everything on a specific healthy shopping list, was up +6.5% at the end of December 2021 above the same time in 2020.)
SHELTER COSTS MORE FOR RENTERS TOO
Over the past year, Statistics NZ rental price index shows that residential rents for new tenancies rose +5.8%. But the increases for everyone who just rolled over their rent agreements rose only +3.7% - which is actually a 13 year high, as it the increases for new tenancies. But that +5.8% national increase masks the +9% rises in Wellington, the +8% rises in Christchurch, and the more than +9% rises in the rest of the South Island. The nationwide rental pressure would have been much more if it wasn't held down by Auckland's +3.3% annual rise.
NZGB TENDER RESULTS
The stripped-down NZ Government Bond tender today wasn't much to note. $200 mln was offered in two tranches, attracting $470 mln in today. The $100 mln offered for the new April 2027 5-yr bond attracted 18 bids worth $280 mln. Seven were successful at an average yield of 2.44%. The $100 mln offered for the May 2051 30-yr bond attracted 26 bids and eight were successful at an average yield of 2.99%, up from 2.81% a month ago. There are no surprises at these new higher levels; they are what the markets expected. Earlier in the week there were two Housing NZ bond tenders too, each of $50 mln. The October 2026 5-yr one got $99 mln in bids and went for an average yield of 2.83%. The October 2028 7-yr bond attracted $156 mln in bids for an average yield of 2.99%. Both yields are higher than the early December priors.
TURNING TO A TRICKLE
While our hydro lakes are still at good levels, and we are in a normal seasonal dry spell, we should also note that lake inflows have suddenly switched to unusually low levels. It might become a real problem if that fast-falling replenishment doesn't turn around in a few weeks.
KEEPING AN EYE ON THE PLUMBING
Both the RBNZ and the FMA are officially tasked with ensuring the financial market infrastructure (FMI) works as it should. They have just agreed how they will do that. There are several types of FMIs, including payment systems, securities settlement systems, central securities depositories, central counterparties, and trade repositories. Although these systems operate behind the scenes, most people rely on them working seamlessly in their daily economic lives.
MORE EMPLOYED
The Australian jobless rate fell in December to 4.2% from 4.6%, aided by +65,000 more employed, +42,000 of them full time. But they didn't get their expected improvement in their participation rate. (The New Zealand labour market data comes out on February 2, for Q4-2021. As at Q3 we had a 3.2% jobless rate.)
REALLY?
In what might be seen as an odd outcome, the Melbourne Institute is reporting their survey of consumer inflation expectations fell from +4.8% in December 2021 to +4.4% in January 2022.
CHINA CUTS PRIME LOAN RATES
China has trimmed its loan prime rates by -5 bps from the one year, and -10 bps from the official five year benchmark rate. (See charts at the bottom of this page.)
LOCAL PANDEMIC UPDATE
In NSW, there were 30,826 new community cases reported yesterday, a small fall, now with 278,324 active locally-acquired cases, and 25 more deaths. There are now 2,781 in hospital there. In Victoria they reported 21,966 more new infections yesterday, a small rise. There are now 239,402 active cases in that state - and there were 15 more deaths. Queensland is reporting 16,812 new cases and 9 more deaths. In South Australia, new cases have slipped to 3,482 yesterday with no more deaths. The ACT has 982 new cases and Tasmania 927 new cases. Overall in Australia, 74,904 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 46 cases stopped at the border, plus 39 new cases in the community. There are 525 active cases in isolation. Only one person is in ICU with Covid at present.
GOLD UP
In early Asian trading, gold is at US$1839 and up US$26 from this time yesterday but a little softer than the New York close.
EQUITIES MIXED
Wall Street fell another -1.0% on the S&P500 today, in a late sell-off. Tokyo is dup +0.5% in opening trade. Hong Kong is up +1.8%, while Shanghai is down -0.3%. The ASX200 is down -0.1% in early afternoon trade. The NZX50 is down -0.7% in later trade today and led lower by Summerset (SUM, #14, down -3.1%), Ebos (EBO, #9, down -2.6%), and Air NZ (AIR, #35, down -2.0%).
SWAPS RISE
We don't have today's closing swap rates yet. They are likely to be a little higher for both the one and two year durations again today. The 90 day bank bill rate is up +3 bps at 1.08%. The Australian Govt ten year benchmark bond rate is unchanged at 2.00%. The China Govt 10yr is also unchanged at 2.75%. The New Zealand Govt 10 year bond rate is now at 2.61% and up +4 bps and now above the earlier RBNZ fix for that 10yr rate at 2.60% (up +2 bps). The US Govt ten year is now at 1.84% after hitting 1.90% then falling to 1.82% and now back up.
NZ DOLLAR LITTLE-CHANGED AGAIN
The Kiwi dollar is holding at 67.8 USc and unchanged from this time yesterday. Against the Aussie we are softer at 94 AUc. Against the euro we are marginally firmer at 60 euro cents. That means the TWI-5 is still just over 72.2 and little-changed.
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BITCOIN LOWER
The bitcoin price is now at US$41,777 down by -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.7%.
This soil moisture chart is animated here.
Keep ahead of upcoming events by following our Economic Calendar here ».
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72 Comments
Throughout most of 2020/2021 listings actually decreased on Saturday and Sundays, now they go up on Saturday and Sunday too. Won't be long until listings are double what they are now. The speculators know the game is up. Sleeping pill sales must have shot right up with all those sleepless nights.
Residential rents for new tenancies rose +5.8%. But the increases for everyone who just rolled over their rent agreements rose only +3.7% - which is actually a 13 year high.
This is excellent news!
The Labour government's pseudo-accounting standards resulted in a cost pass through to renters.
Coupled with the self-inflicted credit crunch affecting first home buyers; thus locking them in into permanent renters, this is a mighty windfall for every landlord!
💵 Time for a major rent revision across the country. 💵
I need to go bid a couple of old whiskeys again this year.
Good question. My understanding is, sort of. Banks' appetite for credit is influenced by its perceived riskiness - in this case collateral valuation risk. It is just one of the metrics they take into account when setting policy at the macro level.
In other words, they look at risk associated with each individual borrower, and make credit decisions in the context of the macro picture, which shapes credit policy. This is why banks employ economists.
Probably. After checking your smashed avocado consumption, and your maternity leave requirements, they would then instruct you to offer 7% less on the potential property, thus self fulfilling their prophecy. After all, the only reason property prices ever rise is because banks are willing to lend more on them, so ipso facto, the reverse must also be true.
https://www.stuff.co.nz/national/crime/300500009/businessmans-wife-jail…
5 years for defrauding $18.7m. Roughly $250k of tax avoided per month of penalty? Very healthy earnings rate.
Anyone who's made quick money is never honest money.
Highly paid real estate agents are also white collar criminals. Just no way to report them.
Only poor employees are slaves in this country paying ever increasing taxes and ever increasing price for items.. Thanks to inflation.
Where to report financial crimes.. I would like to make a few calls to them. Government coffers might make a few more millions by catching them.
https://www.nzherald.co.nz/business/hamish-rutherford-consumer-lending-…
Is it not funny, when cheap and easy money was being distributed everyone was enjoying the party. Thanking government, reservebank and everyone making it possible to get hand on $$$$$ and NOW when it seems that the party is about to pop...blame game started and even so called economist and experts are asking questions, which they should have been doing year or two ago.
What logic justify encouraging loan / debt during crisis when things could get ugly.
They gave mortgage holiday as they felt that it will be hard for people to repay mortgage BUT at the same time opened up the tap to allow free flow of debt.
If worried that people may default than why did they promoted and supported debt AND if were confident that debt is no problem THAN why mortage holiday.
Many such questions .......
https://businessdesk.co.nz/article/property/here-come-the-housing-marke…
Correct.
There's actually greater economic danger now.
As you suggest, subsidies probably won't be available because technically people can go to work (even if they are encouraged to work from home).
But once omicron spreads like wild fire, plenty of people won't go out because they either have the virus or are scared of getting it.
Assuming there's no subsidies because technically people 'can' go to work, hospo, tourism and retail might be absolutely smashed again, but without subsidies as mitigation this time...
They say that now, but wait till its out and about and the hospital system is overrun which they failed to do anything about over the past 2 years, then add in winter. I could see another lockdown but it wont be called a lockdown because then it would be seen that PM is going back on her word and that wont be a good look.
Labour has no plan in place for Omicron other than putting the country into Red Light & completely shutting the border and pushing the booster.
No extra hospital planning, no Rapid testing yet, no ability to allow NZers to get on with their lives/business, no home kits, Just waiting, watching, then shutdowns.
I don't get it. We are vaccinated up the wazoo. The rhetoric around other forums and the media in general would have an objective observer thinking that the population were all 90 year old diabetics. There are complaints aplenty from ER doctors in Australia regarding people turning up with runny noses and a sore throat.
oh please - still living off one good decision 18 months ago -- no rapid tests available for NGO health providers despite being told we could order on the 15th dec -- without these we have no chance of keeping our vulnerable clients safe --
ps - when we hit 20,000 new infections a day ( if we have teh testing capability to measure it) nailed on 10 day full lockdown as a circuit breaker -- only thing that will slow the spread down - will push it out longer and flatten curve -- and when its done we will al be happy to accept it!
We have not seen covid here-- could hardly call it humidity let alone rain let alone the torrential downpour we are about to experience -- but at least when its passed through -- we will finally move on and simply live with it !
I reckon that the NZD is very soft against AUD. (and they haven't even raised rates yet). Robbo and Orr have certainly made a mess of things haven't they.
You're a regular statamagician.
Sound familiar?
After soaring to new heights in 2021, property values are tipped to keep climbing this year, but at a much slower rate as affordability constraints, rising mortgage rates and tighter lending standards ease buyer demand and price growth, experts say.
This is the sort of news in Australia, about their market.
Same same but different.
Worked there for many years. Australians are great people. They genuinely do like kiwi workers. The pay is great, housing is cheaper, food is cheaper. The only bad thing is the petrol, it must be really bad quality because its only half the price of ours. We must get the premium gold plated stuff.
Well you're not citizens at all, second class or first, so why would they treat you as such? If you have skills then it's simple enough to gain PR then citizenship through your careers. That maybe difficult for NZ, as the biggest skill here is owning houses. It's hardly shocking they don't want you coming over and claiming benefits.
Am looking forward to the omicron fizzer. Just like how all of the previous expert epidemiologist predictions have been way off the mark. I do not want to sit around fearing the inevitable arrival of the virus, so for me the sooner the better. Of course I dont want to hear of anyone catching it and suffering, anyone who is concerned should just get triple jabbed.
What I thought was Huge news this morning. That England/UK is easing all covid restrictions asap! Masks everything will be gone. The Kiwi codgers and cotton woollers keeping us surveilled, providing vax passes and signing in will not have an excuse much longer. Being incarcerated in fortress nz will be a thing of the past.
I think this listing shows just how fake the NZ housing market and our phoney economy really is. The period of time where Kiwis could use their house as a bank to survive is over. The government and the reserve bank knew the mess we were in and instead of addressing it earlier less the charade grow. Look when it was bought and for how much and look what type of sale it is now. This disaster was avoidable.
https://homes.co.nz/address/auckland/manurewa/51-sharland-avenue/DEx02?…
You know nothing of the owners personal circumstances.
Also the RBNZ didn't make them do anything.
Finding imaginary grand Machiavellian schemes everywhere makes you sound like a nut.
Reality is sadly more boring. There won't be some death Star trench run that wipes out Chancellor Orr and a happy ending for the "good guys".
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