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
Unity Money raised rates today.
TERM DEPOSIT RATE CHANGES
ASB has raised term deposit rates today, shifting their offer to the top of what their rivals offer.
BELEAGUERED MARKET SHIFTS LOWER
Not a very merry Christmas for the real estate industry was revealed today in the REINZ data for November as sales sink to a 12 year low driven by a lack of demand that caused prices to tumble and inventory soar. The declines are intensifying with the median price now down -$112,000 or -12% over the past year. In Auckland the decline average -18% across the whole city, a fall in the median price by -$235,000. QV data suggests prices are falling at the rate of $1260/week.
FOOD PRICES HIT 14 YEAR HIGH
Food prices rose by +10.7% over the past year to November, the highest year-on-year rise since the +10.9% rise in September 2008. Prior to that, this is the highest since April 1990 which was 32 years ago. Along with rent, food prices make up about 30% of CPI inflation.
YOU USE ESST? YOU ARE IN BIG TROUBLE
The IRD has issued a new Revenue Alert warning of severe consequences for anyone who has or uses Electronic Suppression Software Tools (ESST) to try to evade tax. They say ESS tools pose a "significant threat to the integrity of the tax system". They will want to make an example of someone. ESS tools are software programs, devices, or other tools that systematically alter point of-sale data collected by a business. The software provides a means to understate or completely conceal revenues, which facilitates tax evasion. In Australia, their crackdown involves police raids. Other jurisdictions are raising the alarm too, including the US and Canada.
MOOLA COLLAPSE UPDATE
The first liquidator's report on the collapse of high-cost lender Moola and NZ Fintech is out. While it doesn't disclose much yet, it is clear that creditors will likely lose substantially. All up, ten group companies are being liquidated. The liquidators are looking to sell the Moola and Zooma loan books. Liquidator sales (and at Christmas) are often at steep discounts.
INSURANCE STRESS RISES QUICKLY
The rising cost of house insurance is concerning many New Zealanders. A recent survey by Consumer NZ found half of respondents were worried about the cost of insuring their homes. Alarmingly, 7% of people without house insurance either cancelled or didn’t renew their policy because of cost. For those without contents insurance, 17% didn’t renew their policy for that same reason.
ANOTHER SELL-DOWN
Fonterra and Nestlé today agreed the sale of their Dairy Partners Americas (DPA) Brazil joint venture to French dairy company Lactalis for about $210 mln. The deal is expected to be completed by mid-2023, subject to regulatory authority approvals. Fonterra owned 51%, Nestlé 49%. Fonterra didn't provide details about how this will affect their financials, although Fonterra's CEO said the money will used to pay down debt, and "given the asset has been held for sale since 2020 there will be little cash impact on Fonterra’s earnings."
TEN PERCENT TO RETIRE
Six of the Government’s 64 MPs will retire at the 2023 election. Ministers Poto Williams (Conservation & Disability), Aupito William Sio (Courts) and David Clark (Commerce) will retire, along with MPs Jamie Strange, Marja Lubeck and Paul Eagle. All will stay in parliament until the election.
MIGRATION SETTINGS EASED AGAIN
The Government has expanded its 'green list' for work-to-residency visas to include nurses, construction workers and teachers. And it has expanded its straight-to-residency visa list to include midwives and auditors.
WESTPAC ESCHEWS THE INTERNAL CANDIDATE
Westpac has appointed Kelly Eckhold as its new Chief Economist in New Zealand. Eckhold had a long career at the RBNZ (interrupted by a stint at the Bank of England), and for the past 11 years has been at the IMF in Washington DC. He replaces Michael Gordon who has been holding the role on an 'acting-' basis since Dominick Stephens departed for a Deputy Secretary role at Treasury.
UP & RUNNING
MUFG Bank said it now has its first client for the bank’s Green Deposits product in New Zealand. With tenors that range from 1 to 12 months, the Green Deposits product is the first of its kind available in Australian Dollar, New Zealand Dollar and US Dollar for the New Zealand market. The new product has been designed to assist MUFG’s commercial and corporate clients in meeting their environmental objectives. Green Deposits allow customers to place term deposits with the Bank, which are in turn used to fund qualifying Green Loans for key projects in clean transportation, green buildings, energy efficiency and sustainable water/wastewater management projects, and notably, the New Zealand forestry and power renewable energy generation sectors.
CROOKED BUSINESSES CAN'T BE SHUT DOWN
Casinos are magnets for illegal behaviour, and in some cases a permitting agency for it. But despite egregious infringement, no government ever finds standards breached that would cause its license to operate be withdrawn. In Australia, the Queensland Government levied a $100 mln penalty for some amazingly serious breaches by the Star Casino company. But their facilities will remain open. And ASIC is suing 11 senior present or past directors and managers alleging they approved the expansion of Star’s relationship with certain individuals with reported criminal links, rather than addressing money laundering risk by inquiring into whether Star should be dealing with them. Recall, SkyCity has also been sanctioned at their Adelaide casino. Crown and Star have been levied huge fines in Sydney, Victoria and Perth. None have ever lost their license.
GOING SOFT
In Australia, their auction clearance rates are falling too, although at 58%, our markets would regard that as still high. For them it is their lowest in five months after a record 2667 homes were taken to auction. It comes as Aussie house prices are falling, although not as fast as they are here
SWAP RATES FIRMER
Wholesale swap rates were likely firmer again today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.51%. The Australian 10 year bond yield is now at 3.41% and up +3 bps from this time yesterday. The China 10 year bond rate is at 2.94% and up +1 bp. The NZ Government 10 year bond rate is now at 4.18%, and up another +3 bps and still well above the earlier RBNZ fix for the NZGB 10 year which was up +2 bps to 4.11%. The UST 10 year is now at 3.60% and up +1 bp from this time yesterday.
EQUITIES TURN POSITIVE
Wall Street came home with full sails. The S&P500 ended its Monday session up +1.4% with a late surge. Tokyo has opened up +0.5%. Hong Kong has opened little-changed as has Shanghai. The ASX200 is up +0.4% in early afternoon trade. The NZX50 is up +0.5% in late trade.
GOLD SLIPS
In early Asian trade, gold is at US$1783/oz and down another -US$8 from this time yesterday.
NZD FIRM
The Kiwi dollar is marginally firmer from this time yesterday, now at 64 USc. Against the AUD we are also firm at 94.6 AUc. Against the euro we dipped slightly to 60.6 euro cents. That all means our TWI-5 is now up fractionally at 72.5.
BITCOIN FIRMS
The bitcoin prices is up +1.3% to US$17,162. Volatility over the past 24 hours has been modest at +/- 1.1%. And the boss of collapsed FTX has now been arrested by US authorities.
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86 Comments
What a day in the news...... Even after the REINZ price collapse, the food inflation my highlight of the day is still Jacinda and the hot mic,
Such an arrogant prick.
The pressure is getting to her.
I also forgot Aussie Police make no mistake - Real Tough on Crime.
It wasn't very kind of her was it. Does this mean that the kindness project is over? I quite liked the idea of measuring Wellbeing before GDP and kindness rather than aggressive politics. It is a shame that power has corrupted Ardern's ideals. It is probably time for her to move on.
Can’t really move on though can she because she loudly scolded all and sundry about the wasteful cost of by elections. So that definitely means she stays at least, until 3 months out from the next election. Alternatively, if she stands for Mt Albert but Labour lose power, on the same premise, she will be in opposition for three years. Unless of course she moves to the list but that might then signal she is not all confident of winning the election. Interesting times indeed.
I think Jacinda has done some amazing things in her time and has raised the profile of NZ internationally, however the shine has come off now. I am not sure she will even win her Mt Albert seat. She didn't visit her electorate during the almost 4-month Auckland lockdown and was bullied into a visit following the sad stabbing of the dairy owner.
That's about the same level of intellect as the troglodytes who say "so much for the tolerant left" when people rightfully rejoice revolts against white supremacists. A new low for you, really. You often have clever things to say but that last one is frankly embarrassing.
Seems the cop killers were down the conspiracy rabbit hole...this sh*t is getting scary.
https://www.dailymail.co.uk/news/article-11531307/Wieambilla-shooting-G…
Possible in this day of relabeling and calling a thing something it isn't.
SAS are army, and the theory goes you can't use an army against their own citizens. Oh wait, we just did that with Covid......
SAS have anti terrorism as part of their role, so all the pollies would have to do is label someone a terrorist and away you go right? But hang on, terrorist is still an external threat, not internal. Probably won't stop the rhetoric though, nothing has since Chch anyway.
Next thing it will be collecting your own water, or killing your own animals for food will be terrorist actions. Once you start down a path there isn't really much to stop the ridiculousness.
Btw Police have the Special Tactics Group (STG), a bunch of wannabe SAS lads. Although probably a few ex SAS in the ranks.
The irony is of course PM Ardern didn’t even attempt to answer the actual question, at least while she was standing that is. It wasn’t until she sat down that any truth of thought escaped her which was neither a ladylike nor statesmanlike, utterance. God knows how hot the wires would be running now if Seymour, or anybody else for that matter, had ever been overheard with a retort in the same vogue for instance silly little (guess the rest.)
But this is not school, it is NZ elected government...
by arie | 13th Dec 22, 5:14pm
She's totally right, no reason to apologize. Seymour never grew out of his student years and engages his mouth without engaging his brain.
There are Principals and Morals and Ethics of how we are meant to speak to elected members. Perhaps the left does not care about such things, they didn't give a damn about entrenchment after all......
Your comment shows no respect and less class.
There are areas in the USA, for instance earthquake’s California, floods& hurricanes Florida, where you just cannot get an insurance policy to cover your home. So numbers of New Zealanders are assuming the same risk, but more out of financial hardship. The potential is socially alarming because that hardship is nothing compared to completely losing your home, your possessions in a fire and in the event of an earthquake, not even EQC cover. The insurers have long warned of this development and the reality of it now is a distinct notice of the ever gathering distance between the haves and the have nots in NZ.
Insurance - just another scam. If me house falls down, I rebuild. Insurers will warn of any calamity to line their pockets. Claims are good, premiums go up, the FIRE sector prevails, if not government will bail them out. No, the 'have not's', do not need insurance. (me don't)
Not a very merry Christmas for the real estate industry was revealed today in the REINZ data for November as sales sink to a 12 year low driven by a lack of demand that caused prices to tumble and inventory soar.
Wait till the summer BBQ effect kicks in. Everyone will be talking about falling prices which will reinforce the drop. These things are about sentiment as much as fundamentals sometimes
It's incredible how long it takes for word to get out. This has been predicted by a fair few over the last few years, seen as a potential outcome since around this time last year, and fairly obvious by Feb/March of this year. Of course nobody can predict the future, but all points of interest throughout 2022 have been worse worse worse, then November we get the headline "It's gonna be bad.". Don't get it.
Watching all this play out is a little like a cup race. Speculators had blinkers put on, ran the race, and now the blinkers are off and we'll see who comes up lame.
We had low supply, people would pay what they can afford, and with very low interest rates they could afford to pay a lot. On top of that investors could see capital gains and so they were pilling in too.
Now we don't have as much of a supply issue (in Auckland at least) and we have much higher interest rates. If rates stay high it has to get really nasty, I think a 50% drop is possible.
At the peak it wouldn't have mattered if we'd had 1,000 people to 100,000 houses, prices would still have been going up. That's supply and demand, sure, but it's supply and demand for speculative assets, not houses. Fundamentals like income streams or cost of ownership didn't even factor into it. It was all about capital gains.
Now that those capital gains have disappeared, we're going back to fundamentals. Based on those, I think a drop of 50% (or more) is entirely possible.
Talking about falling prices certainly and undoubtedly, worrying deeply too because likely in the same conversation(s) will be included the hardship of mortgage rates going the other way. John Key today is confident mortgage rates being offered by the banks will soon start at 7%. That advice obviously under the hat of ANZ Bank but usually politically, the government quickly scurries out to debunk any opinion he ventures. Not this time though it seems.
Bit of a conflict of interest I would have thought with the Chairman of the ANZ bank commenting on his son Max's Property development company facebook video...the way he talks you'd have to say he thinks Labour are doing ok... nothing to see here,all good:
https://www.nzherald.co.nz/nz/what-it-would-take-to-really-crack-nzs-ho…
Sir John Key says two big things will have to happen for the New Zealand housing market to really crash - interest rates need to skyrocket and the job market completely fall apart.The former prime minister and ANZ NZ chairman was speaking in a Facebook video for his son Max Key’s property development company.New Zealand is currently facing high inflation, skyrocketing cost of living and falling house prices.The annual inflation rate sits at 7.2 per cent in the September quarter, which is well above the Reserve Bank of New Zealand’s 1 to 3 per cent target. As a result, the RBNZ has been steadily increasing the Official Cash Rate which is currently at 4.25 per cent.According to the latest figures from the Real Estate Institute of NZ (REINZ), inflation and rising mortgage costs have led to house prices dropping 7.5 per cent annually.Median house prices across the country fell from $892,000 in October 2021 to $825,000 in the same month this year, and the decline has caused concern for homeowners - some of whom are facing the possibility of negative equity.But Key believes the housing market was unlikely to crash despite what was happening in the property market. He said for people to roll over, the need for further aggressive increases could be mitigated.“One thing that’s really interesting at ANZ, of our customers who borrowed for a home loan up until about a few weeks ago, 57 per cent of them still had a mortgage that either had a two in front of it or three in front of it,” Sir John said.“So they’re going to have to roll off very soon in the next six months and when they roll off they’re going to roll off onto something with a six in front of it, maybe even higher. So you can’t tell me that isn’t going to have a dramatic impact on people’s capacity to go out and buy everything from pizzas to a new frock.”He said even if New Zealand goes into recession, which could happen in 2023, the property market was unlikely to crash.“When we look at recessions we look at property at ANZ and there are only two things we worry about, do people have a job and how much are they paying for the money?“At the moment unemployment’s down at 3 per cent. Well, when I came in as Prime Minister in 2008, the first thing Treasury told me was they expected unemployment to peak at over 10 per cent, that’s over three times, four times what you see today. Now I don’t think you will see anything like that in New Zealand going forward.“I think maybe (unemployment) rises a bit, maybe it goes to 3.5 or 3.7, maybe a few people get laid off, but I don’t think it’s anything like that.”Key said for it to “really, really, really get the property market to really crack, you’d have to have interest rates going through the roof from here and you’d have to have labour markets going through the floor”.“We do all of that stress testing of our balance sheet at ANZ and even then we see property prices down obviously from where they are and pretty significantly down but that’s Armageddon,” Key added.
Looks like TDs are going to close out the year with a flat 1-5 (curve) on 5.25%. 5 and 10 year swaps adjusting up again after maybe over-correcting down last week. Still strong inflationary issues in NZ. Next year will be interesting starting 2nd quarter. Kiwi and Rabo may have one final tweak upwards on TDs to get back above the big 4 with their slightly lower credit ratings.
BELEAGUERED MARKET SHIFTS LOWER
I just had a knock on the door from a B&T sales guy handing out brochures on a place for sale on our street and asking if we want to estimate what it is worth (closest gets a bottle of champagne). Interesting approach to drumming up interest and asking the odd question to gauge if we are a buyer - have not seen this before. Suffice it to say I don't think I'll be a target for further marketing outreach.
My sweet Grandma used to bring Cold Duck to the Xmas dinner table every year. I preferred Dads Tui.
Bet you that agent has got a dose of reality from the street, but if any of them where to sell they would also cling to last years price expectations.
The reason the properties are not selling in Auckland is vendor expectations, agents need to eat too. I expect a serious expectation adjustment over the holiday period and lower price prints in Feb / March.
These "bank economists" and their ever changing predictions...
https://www.stuff.co.nz/life-style/homed/real-estate/300764255/asb-expe…
Should have just listened to The Prophet to start with.
Be patient. In October Asb predicted a 24% fall
https://i.stuff.co.nz/life-style/homed/real-estate/300710958/asb-econom…
Any bets what they will think in 2 more months.. if they work linearly then it will be a 56% drop :)
What's the intentions for what bank economists say... clearly they're never right, is it deliberate? There's no repercussions for getting it so wrong either... you'd think some of these economists would be losing their jobs by now if the banks had really been working off the same forecasting released to the public...
So it turns out they can create inflation through stupidly low interest rates and giving away money. If only they had done this 14 years ago, we could have got back up to normal rates again much quicker instead of having 14 years of stupidly low interest rates and stupidly high house price gains.
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