What happened Friday

Business / news

A review of things you need to know before you go home on Friday; some interesting retail rate changes, house price expectations reset lower, freight costs jump, swaps rise, NZD up, & more

3rd Jun 22, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE RATE CHANGES
Many today, including from SBS Bank, Heartland Bank. The Heartland Bank floating rate change is interesting because they cut it to 3.75% which is now the lowest mortgage rate across all cards, fixed or floating.

TERM DEPOSIT & SAVINGS RATE CHANGES
SBS Bank launched a 4% one year term deposit rate, the highest for that term since 2015. They also raised savings account rates. ICBC and WBS also raised rates, as did China Construction Bank (CCB).

EXPECTATIONS RESET LOWER
According to the May edition of the ASB Housing Confidence Survey, house price expectations are crashing back to earth. 'The surprise, if anything, is that they [house price expectations] didn't fall further,' says ASB.

FLATTENING OUT
Construction activity appears to be flattening out at about $8 bln per quarter. New residential construction work is still showing growth, but non-residential work has slowed according to the latest data from Stats NZ.

SOME TRANSPARENCY
We have now completed the drill-down analysis for the 2022/23 Budget. From the overall summary of Spending by functional departments, but can drill into more detail on Social Welfare, Health, Education, Treasury's responsibilities, and Transport. That detail gives fascinating insights and accounts for 70% of the planned $150 bln spending that is budgeted (38% of GDP). The Revenue to be collected is detailed here.

EX-ANZ BANKER DAVID GREEN JOINS WESTPAC NZ'S BOARD
David Green, formerly a senior ANZ executive, joins the Westpac NZ board from next week as an independent non-executive director. Green has most recently been Singapore CEO and Head of South East Asia, India & Middle East at ANZ. Prior to that he was ANZ NZ's Head of Institutional Banking. Mary Quin is retiring from Westpac NZ's board after six years.

ITS NOT TRANSITORY
Freight contract Toll Global Express has announced it is raising freight rates by 9.8% on July 1, 2022. It is also increasing pallet hire charges at the same time. These increases are indicative of what businesses are facing in cost increases from the service sector. (H/T TR) ANZ thinks inflation will peak at 7% by the end of June.

BACKWARDS FAST
In Australia, there has been something of a crash in mortgage lending. Lending to owner-occupiers is down -7.3% in April from March and down a stunning -12.8% year-on-year. Even lending to investors fell -4.8% in April from March. There are getting more commentary there of "a great house price correction' being underway, targeting a -15% to -20% from peak to trough. Negative equity worries are rising.

SWAP RATES RISE
We don't have today's closing swap rates yet but they have probably firmed. The 90 day bank bill rate is back up +2 bps today at 2.49%. The Australian 10 year bond yield is now at 3.52% and up another +2 bps ahead of Tuesday's RBA review. The China 10 year bond rate is now at 2.82% and up +1 bp. The NZ Government 10 year bond rate is now at 3.67%, and up +6 bps from this time yesterday and still below the earlier RBNZ fix for this bond which was up +2 bps at 3.70%. The UST 10 year is now at 2.92% and and down -1 bp from yesterday. A week ago it was at 2.74%.

EQUITIES RISE
On Wall Street the S&P500 finished up its Thursday session a strong +1.8% higher earlier today. That is now only +0.4% higher than where it started the week. Tokyo is up +1.1% in morning trade there. Hong Kong is closed for Tuen Ng Festival. Shanghai is closed for their Dragon Boat Festival holiday. The ASX200 is up +0.7% in early afternoon trade and heading for a weekly gain of +0.6%. The NZX50 is up +0.3% near our close, but will book almost a +2.9% weekly gain.

GOLD UP AGAIN
In early Asian trade, gold has risen +US$27 from this time yesterday to US$1871/oz.

NZD RISES, BUT FLAT FOR THE WEEK
The Kiwi dollar has moved up against the greenback, now at 65.6 USc and more than a +¾c rise since this time yesterday. But it started the week at 65.4 USc so there has been little net change over the past five days. Against the AUD we are marginally softer at 90.3 AUc. Against the euro we are holding at 60.9 euro cents. That all means our TWI-5 is up to 72.2.

BITCOIN RISES
Bitcoin is now at US$30,622 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been very modest at +/- 1.8%.

Enjoy your long weekend (and, Go the Blues!). This recap will return on Tuesday, June 7, 2022.

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50 Comments

by Foxglove. | 3rd Jun 22, 4:28pm 1654230514

Mr David Green from ANZ employee to Westpac director. That is something of a quantum leap by any measure. Appreciate the banks prone to, and often do, pinch, or more politely acquire, staff off one another but hadn’t thought the habit got up as high as board level. Oh well, all’s well in the chums club then?

by nktokyo | 3rd Jun 22, 4:53pm 1654232033

Maybe he was just good at his job

by Foxglove. | 3rd Jun 22, 6:36pm 1654238214

Maybe? Would damn well have to be, one might suggest.

by Justa comment | 3rd Jun 22, 4:22pm 1654230163

Looks like the TD curve is about to invert. 5yr TDs still very low. (just noticed China Construction Bank has gone 4.4% 5 yr, well above ASB at 3.8%, barely above Kiwibonds with no risk) Those Heartland mortgage rates very low, where are they getting cheap funding at BBB?

by Antz | 3rd Jun 22, 6:20pm 1654237225

RBNZ's Funding for Lending Programme (FLP)?

by Justa comment | 3rd Jun 22, 7:27pm 1654241251

Maybe. Maybe subsidized from the reverse lending rates where they have a virtual monopoly. In any case they wont be offering these rates by november. The FLP will be effectively dead by august as it hits 2.75% or 3. Was due to finish Dec in any case.

by Antz | 4th Jun 22, 8:45am 1654289125

Only for new lending? I though FLP funds to the banks were for 3 years ...

by Justa comment | 4th Jun 22, 12:59pm 1654304364

yes but the interest rate changes with the OCR. So not so attractive soon at over 3%.

by HouseMouse | 3rd Jun 22, 4:31pm 1654230713

I finally wrote a complaint to the Herald on their unbalanced coverage of the housing market, going back many years. Below is the content of the complaint. I expect I will receive a lame response, but at least I got this off my chest. Who knows, maybe I will raise it with the relevant authorities.

Good afternoon,

I am contacting you to complain about your newspaper’s coverage of the housing market over several years. In particular, the coverage offered by OneRoof.

In my opinion, your coverage of the housing market has been very unbalanced for a number of years. OneRoof, in particular, has consistently featured writers with very ‘bullish’ (I would argue unbalanced and biased) views of the housing market.

For example, Ashley Church and Tony Alexander have, in their articles over the past several years, shown very little acknowledgement of the real risk of significant house price falls, and the former’s rhetoric goes so far as to label people suggesting otherwise as ‘Doom and Gloom Merchants’ (or equivalent). As recently as January 2022, Mr Alexander was projecting house price increases of 5% in 2022, despite the obvious strong headwinds of the CCCFA, rising interest rates and surging housing supply, which should have been suggestive of *at least* minor price falls. In Auckland, prices are already down more than 10% from their peak in November 2021, applying the REINZ HPI measure. There is every possibility that house price falls, from peak, could exceed 20%.

I am very curious as to why the NZ Herald, which supposedly upholds journalistic principles, has allowed this coverage to become so unbalanced? Is it because your paper has become so beholden to real estate advertising revenue? Is advertising revenue trumping balanced journalistic rigour?

I am sure that you aware that many members of the public are heavily influenced by articles across the mainstream media. When most articles have been pumping up the housing market (not only in the NZ Herald, but in most media platforms, with some rare exceptions such as the interest.co.nz website), a very strong sense of ‘Fear of Missing Out’ (FOMO) can be generated. I know of several first home buyers who bought their first homes late last year, largely because of FOMO. At least one or two of them could be facing significant negative equity in the near future. Yet, if you read mainstream media, including articles in OneRoof over the past few years, most people would not think that what is now occurring – potentially a very significant house price correction – was a realistic prospect.

This is incredibly disappointing journalism, and has me consistently contemplating whether I continue with my Premium subscription.

by Nifty1 | 3rd Jun 22, 4:39pm 1654231178

I just wish authorities would pull up TA and Church for providing financial advice when they're not qualified to... One Roof etc should be stung aswell for publishing these articles and not including any disclaimers etc...

by Kiwi Tim | 3rd Jun 22, 4:37pm 1654231051

Love your work. Maybe try other news outlets to see if they would do article. Stuff should run this.

by Nifty1 | 3rd Jun 22, 4:39pm 1654231196

Stuff is just as guilty

by Kiwi Tim | 3rd Jun 22, 4:43pm 1654231387

Agreed but any young go getter journalist could write an epic piece around media influence over housing market if they did a little digging. Guess it could be a career stopper though.

by Hummy | 3rd Jun 22, 5:08pm 1654232914

People should understand if things look to good it probably is. Education in economic and history would help us a lot.

by northman46 | 3rd Jun 22, 5:55pm 1654235730

I’ve commented polite criticisms before on Stuffs housing “news”, which are typically just housing industry advertisements, and those comments never get approved.

I checked the terms and conditions of commenting but couldn’t find any reason as to why my comment wouldn’t be approved, other than because they can.

by Smudge02 | 3rd Jun 22, 8:07pm 1654243628

Likewise, they seem very wary of anything that puts the property sector in a bad light.

by Independent_Observer | 3rd Jun 22, 4:39pm 1654231154

Good work HM....nicely done.

by Albert2020 | 3rd Jun 22, 4:45pm 1654231534

Nice work HM, let us know the reply, if any.

by HouseMouse | 3rd Jun 22, 5:06pm 1654232785

Thanks to you all. I'll let you know the reply. I fully expect a disingenuous response.

As I say, I might take it higher.

by AdamJay1990 | 3rd Jun 22, 4:54pm 1654232044

Good stuff. The thing that really irks me is that, in order to give financial advice in NZ you must be (rightfully) accredited. However, when it comes to naive Kiwis pouring money into the biggest financial investment of their lives, it seems that anything goes. The things that RE Agents and these "analysts" get away with saying in terms of property investment is criminal.

by wortho | 3rd Jun 22, 4:59pm 1654232355

Nice, be interesting alright any reply. Indeed we’ve cancelled our subscription to Herald. Had to ring them though, you can subscribe online but not cancel, of course then they drop their rate to $1 a week etc try to get you to stay. Made it even worse.

by HouseMouse | 3rd Jun 22, 5:11pm 1654233063

I should cancel, out of principle. The only thing that has kept me subscribed is that they still have a handful of decent writers (Fallow, Wilson, O'Sullivan, Hooton), amongst lots of garbage, plus some of their better articles on breaking issues are generally behind Premium.

by tomjones_04 | 3rd Jun 22, 5:07pm 1654232856

Good stuff HM. I read a dreadful piece from Church today going on about the vilification of landlords etc. The two main ‘economists’ that you mentioned (TA and AC), are so mentally polluted by the RE industry, it makes for uncomfortable reading as it’s almost cult like. Well done for trying to expose it for what it is, I’m interested to hear the feedback.

by HouseMouse | 3rd Jun 22, 5:12pm 1654233169

If TAB were offering odds on me getting anything other than a lame, defensive, disingeuous piece of BS as a response, they would probably be higher than 20 to 1...

by rolande | 3rd Jun 22, 5:10pm 1654233036

The whole One Roof thing is an egregious conflict of interest.

And too many social media driven click bait stories.

by agnostium | 3rd Jun 22, 5:29pm 1654234162

Good work

Ashley Church today - I'm not an expert (now everything he said is going to shit) "I’m always extremely uncomfortable at being introduced as a “property expert”

https://www.oneroof.co.nz/news/latest-news/ashley-church-have-we-seen-t…

Ashley in Feb - (when he was still in denial phase): "They’ve provided me with a high profile career as an ‘expert’ in property and the housing market"

https://ashleychurch.com/how-to-be-an-expert-commentator-on-anything/

by HouseMouse | 3rd Jun 22, 5:30pm 1654234226

The guy is a joke. But what's even more of a joke is the airtime that the Herald has granted him.

by J.C. | 3rd Jun 22, 5:36pm 1654234591

This is incredibly disappointing journalism, and has me consistently contemplating whether I continue with my Premium subscription.

You admitted to subscribing to Granny Herald Mousey. Not something to be proud of.

by HouseMouse | 3rd Jun 22, 5:40pm 1654234856

Haha, yeah :) ....Most of it is trash.

But in my opinion there's still a handful of very good journos there, like I said. Although a couple of them are partly retired, like Brian F.

In a year or two there might be one or two left, and I certainly won't subscribe for the sake of one or two good writers...

Can't see much potential in the younger crop coming through, probably says a lot about the extent to which journalism has fallen from grace...

Jenee is OK, but still a long way off the depth and nuance of some of those really good older writers.

by Foxglove. | 3rd Jun 22, 6:22pm 1654237350

Kate MacNamara, outstanding researcher, exposer and explainer.

by HouseMouse | 3rd Jun 22, 6:33pm 1654237987

True, she's very good too :)

See, there's still some gold nuggets there amongst the trash...

by Foxglove. | 3rd Jun 22, 6:38pm 1654238315

ditto!

by Uninterested | 3rd Jun 22, 8:01pm 1654243265

Simon Wilson writes absolute trollop. I have stopped reading anything he writes now.

by Harry B | 3rd Jun 22, 6:38pm 1654238290

Well done

I have been getting emails from real estate agents asking me not to believe what we read about house price declines ,it’s just not true they say

Even had an agent call to tell me the same thing in person

There is no attempt by the media,TV journalists etc to ask the hard questions

7 Sharp on TV1 is also a classic, It’s amazing the number of experts they interview about housing or interest rates

You don’t see them talking to people like Sharon Zoller from the ANZ see says it how she sees it and a lot of it is quite pessimistic

Look forward to seeing the Herald response!,,

by Justa comment | 3rd Jun 22, 7:31pm 1654241461

Yes and TVNZ, last week the reporter commented that if the housing market does fall 15% it will only be back to the november highs. Wrong, sloppy, and biased. I am certain that is what the reporter said.

by Uninterested | 3rd Jun 22, 8:02pm 1654243378

Exactly 15% is 15%.

Then again 15% is a complete and utter guess. Might be 30%.

by Nzdan | 3rd Jun 22, 8:17pm 1654244269

Well 15% is 17% if we're talking falls. And 30% is 42%.

by Waikatohome | 3rd Jun 22, 10:22pm 1654251727

Great work HM. The likes of the Herald and Newstalk ZB have a lot to answer for. Although she is a talented presenter, Heather Du Plessis Allan rarely, if ever, mentions that her mother and brother are real estate agents in Pukekohe. They should declare conflicts of interests when giving their opinions.

by Miguel | 3rd Jun 22, 11:13pm 1654254800

Great work. I'm not holding my breath for any sort of thoughtful response from them.

After the Irish property bubble numerous studies identified the Media played a key role in perpetuating and exasperating it:

https://www.researchgate.net/publication/263725836_The_Role_of_the_Medi…

In particular, news organisations acquired direct stakes in an inflated real estate market by purchasing property websites and receiving vital advertising revenue from the real estate sector. Moreover, a number of their board members were current or former high officials in the finance industry

Sound familiar?

by DDDDebt | 4th Jun 22, 3:40pm 1654314021

Champion effort HouseMouse!

I'm pretty sure you'll be the first item on the agenda at the next NZME board meeting! :)

by Brock Landers | 3rd Jun 22, 4:49pm 1654231799

Platinum Jubilee for our Head of State.

https://en.wikipedia.org/wiki/Platinum_Jubilee_of_Elizabeth_II

Enjoy the special commemoration Queen's Birthday weekend.

by HouseMouse | 3rd Jun 22, 5:29pm 1654234167

Maybe others could write to the Herald, too. That took me 10-15 minutes to write that email. Barrage them:

formalcomplaints@nzherald.co.nz

by Wrong John | 3rd Jun 22, 5:40pm 1654234844

You're right. It's not only Queens Birthday Weekend, it's Queenies platinum anniversary celebration weekend. I've only ever known one English Monarch. Just. Her Majesty.

by Foxglove. | 3rd Jun 22, 6:26pm 1654237581

Interesting point. my mother, a centenarian obviously, has known four monarchs in her lifetime. It might well be that few in future generations will ever have that same experience.

by HouseMouse | 3rd Jun 22, 5:44pm 1654235040

Auckland townhouses for rent finish the working week at 483 listings on TradeMe:

https://www.trademe.co.nz/a/property/residential/rent/auckland/search?p…

Been monitoring since March when it was around 420 listings. Was hanging around 440-460 listings for quite a while, but has consistently been up around 480 over the last 1-2 weeks. Let's see if it cracks on to 500, as more new townhouses are completed.

by Hardly | 3rd Jun 22, 6:28pm 1654237687

I loved the herald article saying today the glut was forcing landlords to compete for tenants. I guess it’s not true that costs inflicted on landlords are inevitably passed on to tenants.

by nktokyo | 3rd Jun 22, 8:10pm 1654243844

They are in time because the glut gets absorbed.

I've had to drop rent plenty of times over the years to attract somebody. Part of being in trade.

by strobe | 3rd Jun 22, 10:15pm 1654251320

A few from auckland

https://homes.co.nz/address/auckland/auckland-central/225-430-queen-str… - Loss 65k after 5 years

https://homes.co.nz/address/auckland/blockhouse-bay/456-blockhouse-bay-… - Only went up 100k after 7 years

https://homes.co.nz/address/auckland/otahuhu/21-murdoch-street/XQMPW -300k under RV

by Zachary Smith | 4th Jun 22, 8:00am 1654286445

I'm not very convinced. First one is an apartment, second one seemed way overpriced in 2015 for some reason and the third one, we can't really go by RV as to what it would really be worth. Price seems about right.

However, I think it is good to keep searching and posting these sort of things so we can analyze them.

by strobe | 4th Jun 22, 8:27am 1654288046

I wish I had a better way of searching sold prices, homes takes about 3 months to turn from TBC to the price... so these are some of the only ones that prices came online. In australia, domain.com.au prices are updated almost straight away and you can filter out the hidden home prices but here its a struggle to search through, but they'll come through.