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
Kiwibank raised its floating rate today by +50 bps to 7.0%, the lowest of all the main banks. Kookmin Bank raised fixed rates, Heretaunga Building Society raised its floating rate.
SAVINGS & TERM DEPOSIT RATE CHANGES
Kiwibank raised its 30 day Notice Saver by +40 bps to 2.80% and its 90 day Notice Saver by +25 bps to 3.50%. But it raised all its online call accounts to 2.60% which was +50 bps for retail clients and +60 bps for business clients. Term deposit rates were raised by Kookmin Bank and Heretaunga Building Society as well.
HIGHER THAN EXPECTED
Food price rises stayed at a 13-year high in September at 8.3% with soaring fruit and vegetable prices a key contributor to an overall food price inflation figure that's come in much higher than economists expected. Food prices make up 19% of the CPI data so today's update is likely to keep next week's CPI data release also higher than expected.
PRESSURE EASES FOR RENTERS
Stats NZ reported today that pressure on housing rental rates seems to be easing. The said in September 2022 compared with September 2021 the index for the stock measure of rental property prices (all units) increased 4.1% whereas the the index for the flow measure of rental property prices (those that turned over recently) decreased -1.3%. Rent increases vanished in Auckland in September, but are still rising fast in the South Island.
THE START OF A LONGER RETREAT
QV said the average value of NZ homes has dropped more than -$100,000 since January. Auckland and Wellington were both down almost -$190,000 in the same period. They say the average decline in average dwelling values on an annual basis is the first in more than a decade - and they expect them to keep falling.
RISING YIELDS
There was another well supported NZGB bond tender today for $400 mln which brought 105 bids worth $791 mln. 24 bidders won something from the $200 available for the April 2025 offer and got a yield of 4.37%, up from 3.66% 4 months ago. The $150 mln May 2032 offer was won by 24 bids at 4.51%, up from 4.20% two weeks ago. And the final $50 mln was won by 12 bids at 4.89%, up from 4.52% two weeks ago.
RESILIENT
NZ Bankers' Association figures show that as of June only a little over 1% of those with a mortgage were behind with their payments - a percentage that's actually dropped in the past six months. In contrast, nearly half of mortgage holders are still ahead with repayments.
SWAP RATES STILL FIRM
Wholesale swap rates are firmer on local trends yet again although they may be lesser than recent rises. The key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +3 bps at 3.95% and back at its highest since January 2009. The Australian 10 year bond yield is now at 4.02% and up +2 bps from yesterday. The China 10 year bond rate is unchanged at 2.76%. The NZ Government 10 year bond rate is now at 4.52%, and down -2 bps but still above the earlier RBNZ fix for this bond at 4.49% which was down -2 bps from this time yesterday. The UST 10 year is now at 3.92% and down -3 bps from this time yesterday.
EQUITIES IN SUBDUED TRADE
Wall Street ended lower today with the S&P500 down -0.3% at their Wednesday close with a late sell-down. Tokyo is down -0.4% at their opening. Hong Kong started today down just marginally. And Shanghai has started down -0.2%. The ASX200 is up +0.3 in early afternoon trade, but the NZX50 is down -0.2%.
GOLD HOLDS
In early Asian trade, gold is at US$1672/oz and up +US$5 from this time yesterday.
NZD FIRMISH
The Kiwi dollar has firmed +20 bps from this time yesterday to be just over 56.1 USc. Against the AUD we are more than +¼c firmer at 89.3 AUc. Against the euro we are up a similar amount, now at 57.8 euro cents. That all means our TWI-5 is at 66.9 and up +30 bps.
BITCOIN HOLDS
Bitcoin is marginally firmer today, now at US$19,126 and up +0.3% this time yesterday. Volatility over the past 24 hours was low at just over +/- 0.6%.
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75 Comments
They say the average decline in average dwelling values on an annual basis is the first in more than a decade - and they expect them to keep falling.
Obviously, in nominal terms, historically significant. Psychologcally a big hit. How that flows through to consumer sentiment / behavior is crucial for the economy.
It's happening across the Globe. Maybe for individually different reasons, but the underlying rationale is the increasing cost of debt.
UK’s 13-year housing market boom to end. Homeowners will struggle to make mortgage repayments and repossessions will rise next year as soaring interest rates and falling prices mark the end of the UK’s 13-year housing market boom, according to a sobering report from the Royal Institution of Chartered Surveyors
Bitter sweet, just wait until you get kicked out with no where to go & are back lining up - needing to provide a new landlord/property manager with your life history trying to get another rental. God forbid you don't have a pet or any kids...
Better Futures everyone.
How about instead of talking random averages, present real situations? You could be paying $530 rent, spending all your money and doing no investing... HPI decreases ain't going to get you anywhere. For many average people, this probably the case.
For you - has it ever been a good time to buy? I put it to anyone here, look back at interest.co.nz comments going years back and you'll see exactly the same type of arguments...often by the same people.
This is a real situation. You're presenting a false dilemma. The options are not "buy a house right now" or "rent for life". When house prices are falling, renting makes perfect sense even if you have the option to buy. I'm not sure how this is difficult to understand.
Oh shush you big meanie, celebrating renting being an upside is a bit of a unicorn.
When people lose actual jobs it'll hurt a lot worse than a decline on someone's balance sheet. Weird how that's virtually never talked about, and it's actual pain, but people want to hand wring when people lose cap gains.
It's all about morals yo.
"Even cheaper by not buying"
My parents never bought, 50+ years of renting, so they have nothing to show for all that money spent! I can assure you they would be far, far, far better off if they bought. For someone who chose the moniker "Future", your thinking is very short-sighted.
Its interesting actually. As a hobby I dipped back into crypto after the big crash. Its actually done really well (crypto was the top asset in Q3)
Even just the hobby sized holdings are generating six figures in yields. More fun than playing video games.
Still 85% in cash though (but stable coins in USD denominations are looking tasty too)
Oh yeah, I made some decent bank spotting a few things before they blew up. Money made, and absolutely nothing of tangible value occured, in a way JC is right, it makes having to produce something for money by doing or creating something kinda dumb.
Still can't see an actual business case for it that has it surpassing fiat though. Well, outside of a central bank digital currency, and average Joe investor won't be striking it rich getting on the ground floor for that.
Chebbo, you used to post intelligent comments. Buying vs renting has little to do wirh where the market is heading, it's as simple as:
Would you rather pay for 25 years to live somewhere and have nothing at all in the end
Or would you rather pay for 25 years to live somewhere and have your own house in the end?
Chebbo, it's not a false dilemma, it a very real situation which will have a massive effect on your life.
Thanks for admitting you would rather own your house after the 25 years, at which point it will of course be worth a lot more than today, thanks to 25 years of inflation.
It's "worth" no more than the day it was built, only the price or value of the tokens has changed.
Inflation in house prices good, inflation in goods prices bad. Yet a house is really only a good, a product.
There were and are many cultures that don't have this fixation on ownership and possession of more than one needs, and it doesn't negatively affect their lives. Is it just a weird construct of western civilization that we choose to impose on others? And it's even weirder that we're up in arms over inflation destroying our purchasing power, but an ever increasing number of tokens to own a home makes us rich.
But you are ignoring all the other options:
1) rent for one year, own for 24 years
2) rent for two years, own for 23 years
3) rent for three years, own for 22 years
4) rent for 4 years, own for 21 years
5) rent for 5 years, own for 20 years
Cut and paste...
24) rent for 24 years, own for 1 year.
Timing the market is more important than time in the market.
I've spent many, many, hours learning from "seasoned investors". Guarantee that I've learnt more than you, Frankie Foo.
I've read almost every thread on the Property Talk forum. It spans back a long way, through lots of changes in the property cycle. It is a contemporaneous account of how our property market has functioned through time, written (mostly) by real estate investors.
I've seen the booms and the busts, the rock stars that turned out to be false idols, and the property hysterias that have happened in the past.
But the future is always unknown. It may turn out nothing like the past... in which case there is no such thing as a "seasoned investors' or 'proven investors'. Taleb would say that a lot of investing success is due to luck, and that we look at it through a survivorship bias lense.
Really good investors probably don't go on propertytalk, that's likely for the aspirationally wealthy and capital gain braggarts.
There's definitely differences in acumen amoung investors, it's likely that assumption that anyone can do and it's just timing that ironically attracts the unskilled and incompetent.
Most of what property investors call "acumen" or "skill" has really just been blind luck.
A rising tide lifts all boats.
Funny that you'd make such sweeping judgements about the posters on Property Talk, when it is clear that you are unfamiliar with the forum.
Funny that Yvil tries to dismiss my [obvious] logic with ad hominem, and then you dismiss the vast collective knowledge contained with Property Talk with a sweeping, blind, generalization.
Now't so blind as those who won't see.
It's not really about being a "believer". Fiat money's just the most convenient, most common medium of trade.
As soon as it's magic beans, silver coins or something else people want to use, whatever.
Expending energy in what you think the best form of money is, is only distracting you from generating actual value, no matter how you're counting it.
If I had 50 grand, I'd be putting that to work, not shuffling it from one measure of store to another. Some people get rich that way, but in the way some people get rich being youtubers.
It's not really about being a "believer". Fiat money's just the most convenient, most common medium of trade.
This is true. Fiat is a useful means of exchange and good for credit creation for productive purposes.
BTW, NZDRUB (that's the Russian ruble cross), is down 28% in the past 12 months.
Any idea why that is?
Way less people are exporting things to Russia, but their main exports are a highly tradeable global commodity?
Something about a war, people are cross at Russia, etc.
What you reckon their long term prospects are, compared to NZ? That's likely a far more beneficial thing to try to determine, than today's or this year's movements.
Many spiritual teachings suggest this is the biggest issue of our materialistic and egoic human world. When we've become owned by our possessions and the neverending quest for more is an illusion of happiness.
If course I'm wary when it's the WEF directing the agenda, much like their forebears did when distorting teachings of the Tao to create laissez-faire economics.
That is actually true in that there's a level of comfort you can hit, and everything above that is bullshit and jellybeans. The new Merc becomes an old Merc after only a few months, and a new 75" TV still has bugger all content of value worth watching on it, over a 42".
That said, it's something people need to work out themselves. I really can't see the future being much more than a bleak existence for most on some sort of UBI and government services.
Yep and it's a tricky one. There's many now who have worked hard and accumulated wealth for their retirement but due to ailing health are living a bleak existence now. There are many youth disillusioned and overwhelmed but are told just getting a job will somehow solve this.
And there are many stories of people on their deathbed realising that working harder, saving more, having more baubles and trinkets and bigger houses didn't make them happier or improve their quality of living. Plus the studies that suggest over a certain level of income doesn't improve happiness.
I think there is an issue though with many being unable to discover this themselves. An education system that I liken to an industrial factory churning out workers etc. An economic narrative and imaging bombarding impressionable youth with a story of "success" and monetary wealth. A system that demands more and that enoughness level of income doesn't provide a home or quality family time.
I think there's many that see the hypocrisy, the contradictions, the power imbalances the inequities and inequality, and don't want to be a part of it and are unable to find another way. It would explain a lot of the mental health issues.
I see the boomers as a generation who worked hard for their retirement. The retirement was the finish line, you can do whatever you want, bliss. Only they get there and they've got a rotten prostate and lack the desire to do too much.
The time is very precious, so it becomes a striking balance between earning a decent enough surplus to enjoy yourself with today with a little for the future, and not throwing cash at fancy baubles.
You're right about the education system, it's core foundation was to turn rural types into workers for the new industrial age. Turn up at this time, lunch at 12, etc.
I think there's an answer there, but it should be led by us, rather than us waiting for the system to provide it (because the system will never be able to do that). I don't rate the chances though sadly.
I reckon the potential outcomes for the next generation are good. They have had an era of access to knowledge and sport and adventure and wealth and freedom that the world has known before. And possibly never will again.
Whether they and their parents used that wisely or just lost in devices and greed and social media and drugs will be the key differentiator in how the kids turn out.
Yvil, my parents were nearly the same, but did'nt buy first house until there late 40's, then divorce, not enough of it paid off for either to get into another house of there own, and now in there 70's and its just struggle street. Long term view always needs to be the case with your own house, the family house, get it paid off before 55, then you have options for later in life. I paid 9.5% mortgage rate over my mortgage lifetime, seen houses sell for 15% under GV, and I have also had mortgage for 2.65% and houses sell for well over GV, but I'm still well on the right side of the ledger.
NZ Bankers' Association figures show that as of June only a little over 1% of those with a mortgage were behind with their payments
We're in mid October folks, how slow can we be at collecting and publishing data? It's pathetically out of date get the data released the month after. Same with GDP and CPI.
This is a good point. Much key top line data is slow to be released in New Zealand. But some is released fast. The Insolvency Service has released its September bankruptcy and NAP data. That is still showing record low levels, even on a population-adjusted basis. So it is likely that the NZBA June data when it is updated to September won't show much difference. Credit stress is remarkably low, and will probably stay that way while our jobless rate stays under 4%.
Aussie wage growth subdued at 2.5-3% pa (courtesy of Macquarie via the wonderful Chris Joye). That kind of wage growth is not much difference from the post-GFC to pre-Covid period.
https://twitter.com/cjoye/status/1580387241725427712/photo/3
Under the caption “Resilient” it evidences that a healthy percentage of NZ’rs are managing their mortgages quite ably. On the other hand, in recent times at least, previous governments have all decried the poor savings record of NZ’rs in general, with RBNZ executive echoing the same message. Does that in turn mean the latter characteristic is no longer considered, by the current powers that be, to be of significance. Hence the fast on the draw decision to reduce the OCR to zilch plus a little, with the purpose to spur NZ’rs to borrow to spend to “save” the economy. Oh & whilst at it, strap house prices to a rocket. Is that then the simple outcome? Yep you are greatly more in debt, but if you have a house, that should cover it well enough? Just wondering and/or kidding.
Now banks expects 24% fall in house prices - Think earlier prediction was 12% to 14% ( Not sure)
https://i.stuff.co.nz/life-style/homed/real-estate/300710958/asb-econom…
I would love to be a fly on the wall at the economists 'forecasting' meetings.
The whole thing is so complex at the moment they have very little chance of accuracy.
i suspect it comes down to saying stuff that sounds about right given the current situ.
If next week putin does a deql with ukraine, xi leaves or Truss has another blonde moment its all change again.
Food price rises stayed at a 13-year high in September at 8.3% with soaring fruit and vegetable prices a key contributor to an overall food price inflation figure that's come in much higher than economists expected. Food prices make up 19% of the CPI data so today's update is likely to keep next week's CPI data release also higher than expected.
The only thing that might prove more permanent than inflation is team transitory telling us that this is just a phase.
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