Here's our summary of key economic events overnight that affect New Zealand, with news markets are ending the year mired in uncertainty.
So markets are looking for signals, especially about inflation's track. Ahead this week, there will be more indications from the November PCE measures in the US, along with sentiment indicators from the Conference Board, and separately from the University of Michigan survey. Both will give updated indications of inflation expectations.
In the meantime, an economic slowdown is coming. The first of the December PMIs are now available, on a 'flash' basis, and the American factory sector is now at its lowest ebb in 31 months, and now contracting. Their giant services sector is actually shrinking at a faster pace. The demand retreat the Fed wants is here.
And there are signs inflation is easing too.
American petrol prices are falling noticeably now. From a year ago, this week's national average price is -3.8% lower. More importantly for consumers there it is -15% lower than just a month ago. On average, American pay NZ$1.328 per litre retail. (Yes, these are "pump prices" so they do include taxes, but sales taxes do vary widely between states and counties. So this the just an average.)
Import activity at some key US west coast ports are down sharply. There were steep declines in November and they are extending into December too. The US import engine is stuttering and many economies across the Pacific will feel the impact in an outsized way.
There were flash PMIs out for other countries too. In Japan, the Markit survey shows factory activity is now contracting at a similar rate to the US. But they still have an expanding services sector, and interestingly a faster expansion than in November. That may surprise a few analysts.
In the EU, everything is still contracting however. Their factory sector is shrinking at a lesser rate however, and their services sector is shrinking at a lesser rate too. These 'improvements' weren't expected. Germany provided the moderation here, a turnaround from November when it was France, but France is weakening faster now.
The German central bank sees a mild recession in 2023, and a moderate recovery after that. For them, it will be a soft landing, they say.
In Australia, private sector activity slowed amid higher interest rates in December. The service sector is still contracting and the wind has gone right out of the expanding factory sector, and that expansion has disappeared now.
In China, the week ahead will bring a central bank review of their loan prime rates.
Meanwhile, Beijing policymakers suggested that anti-pandemic restrictions could be loosened further as the government seeks to stabilise flagging growth. At their Central Economic Work Conference officials said they will "optimise and adjust" pandemic control policies. But cities are grappling with the consequences of very fast spread now. The streets of key cities are eerily quiet and people stay home, either to self-quarantine, or avoid infection. New supply chain chaos is coming. Foreign investors see a very tough 2023 ahead in China, especially American investors.
And that negative view is showing up in the Chinese government bond market. Foreign holdings of yuan-denominated bonds traded in China's interbank market declined further in November, marking the 10th consecutive month of outflows.
In Japan in the coming week, their central bank will review its policy positions. Now that inflation seems to be building there, these reviews have more interest. Japan will also release updated inflation data this coming week.
Locally, we will get November trade data (sure to be weak) and business confidence data for December, which may not be too flash either.
The UST 10yr yield started today at 3.49%, and up +1 bp from this time Saturday and re-building after the recent big drop. The UST 2-10 rate curve is little-changed at -69 bps. Their 1-5 curve is also stable at -100 bps, while their 30 day-10yr curve is marginally less inverted at -35 bps. The Australian ten year bond is up +1 bp at 3.47%. The China Govt ten year bond is unchanged at 2.92%. And the New Zealand Govt ten year will start today also unchanged at 4.33%.
The price of gold will open today at US$1793/oz and up +US$3 from Saturday.
And oil prices start today little-changed from this time Saturday at just under US$75/bbl in the US while the international Brent price is just over US$79/bbl.
The Kiwi dollar opened today at 63.8 USc and little-changed. A week ago it was at 64.1 USc. Against the Australian dollar we are holding up at 95.4 AUc. Against the euro we are at 60.3 euro cents and also folding firm. That all means our TWI-5 starts today at 72.6 and back to week-ago levels.
The bitcoin price is now at US$16,695 and down 0.7% from this time Saturday. Volatility over the past 24 hours has been low at just +/- 0.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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108 Comments
Feels like the media merger is dead next year so grant can reallocate that money to the lollie scramble jar.
Just plough it into the ailing state health service, thank you.
Yes the MoH headquarters in Wellington and attendant consultants, are still a bit short.
... there are nightly bottlenecks of traffic either side of the old bridge at Tinwald , Ashburton ... queues stretching many km ...
Any chance some of the RNZ/TVNZ money could go to a new bridge there .... state highway 1 .... trucks & cars stuck for hours , idling their engines ...
We are still waiting for our bridges up north,join the queue..
But Transport Minister Simon Bridges reaffirmed his 2015 "10 Bridges" commitment to Northland and promised the bridges would be built - with one exception.
Lets do this...
but "We Done That"
New Testament paraphrase, sermon from the mount (podium) for the election then, “what is about to be done to us is what we have done unto others.”
That sermon analogy is quite apt given Mr Luxon is a member of the Upper Room Church which started in the US in the 30's.
I guess he was always destined to be attracted to a ministry with the title "Upper Room" lol
David Clark's Pressbutton background will become totally irrelevant next year. Hhhmmm. So will Jacinda's Mormon background, probably. And Mr Luxon's church started in 1992. And upper room probably refers to the upper room where the Last Supper was held. I suspect their faith is based on having small house congregations, which meet as small groups in the equivalent of the original "upper room". Also apparently the origin of 13 being unlucky. 13 people gather for a meal. The first one to stand up dies a horrible death the next day. It has expanded from that, so I hear.
Back in the day did Jacinda make him minister of health because he had " Doctor " in front of his name ? ... maybe she forgot to ask , doctor of what ... Theology ! ... he was eminently qualified to pray for the sick , and to pray he didnt get caught breaking lockdown curfews on his mountain bike ...
If you can’t preach it, then pedal it?
Not long after David Clark picked up the commerce and consumer affairs portfolio, NZ sunk into a cost-of-living crisis. Not being superstitious but crisis seems to follow the man around.
Let's just hope Cindy doesn't hand him the Defence portfolio in next year's Cabinet reshuffle.
Except Grant can't claw back the $9000 a week times the number of consultants already hired. Which reminds me, he has been very quiet lately. Is he busy rounding up his support for the takeover as the recession hits next year?
There seems to be as many rumours around that Luxon will be rolled by Willis...funny old game politics.
... tell us more ... where are these rumours about the Gnats leadership ... I've heard nothing ...
It was all the talk on Tova's breakfast Xmas special last week...various pollys including Luxon and commentators were there for the 'party'
Probably as accurate as your upper room timeline, Vman.
Tova ... she's still got a gig somewhere ? ... gushing girlfriend of Jacinda ... Tova is actually an independent journo now ???
The dial on your wireless is probably stuck on NewstalkZBoomer,Sometimes it's worth listening to other perspectives...and if you listened you would hear her getting into the govt as well,just not the same one eyed jaundiced view that Hosk espouses...a bit more balance I would suggest.If you get all your news from one source...rabbit holes and all that.
... listening to Lloyd Burr now ... sounds like a good foodie ... running through the list of unvegetarian Christmas dinners ....
Yes,I like him too...
"... gushing girlfriend of Jacinda"...reminds me of a while ago listening to Hosking,he had John Key on for comment...JK's greeting was "Gidday Mikey..."...
She must be getting sick of tidying up his foot in mouth gaffs...be easier to cut out the middleman and just take over...
https://www.rnz.co.nz/news/political/480698/national-party-deputy-leade…
Willis told RNZ's Morning Report on Wednesday Luxon "did not disrespect anyone with his comments in the way that's being read into it".
"What he was referring to was a specific conversation he'd had with a community worker, who had talked about their experience with why some young people they had worked with had been attracted by the idea of joining a gang.
Wall Street needs inflation (increases asset prices for their Ponzi), western world governments need inflation (to pay back their debt), it is the deflationary spiral coming that will be their undoing. Banks will not lend to the speculators and FHB at higher interest rates, as happened in the USA in 2008. Who has the cash to buy all the distressed assets? Hedge funds and banks. Another transfer of wealth. You will own nothing and you will be happy.
I'll be buying, but thanks for your concern. Can't see a deflationary spiral in the not too distant. Maybe once all the boomers realise all their assets are becoming a burden and sell up, few years away for that yet.
If house prices drop, and we have inflation, nobody builds. Rents rise, as there is a shortage, and returns on the lower values are the same as the previous return on the higher price.
Some people with cash will do good in coming years, but the rest are going to find things even tougherer than before.
Apparently markets don't expand and contract anymore, they "spirial".
It's a melodramatic world we live in these days.
Indeed...everything is a 'crisis' now...
... all the time
If being miserable 24/7, being offended on behalf of others, and going out of ones way to fabricate reasons to get angry about anything politics related is the measure of a successful first world society, then well done folks we've made it.
We have deliberately made the system more fragile via vast amounts of QE. Failure, evolution and new innovation make the system stronger over time. We chose to kick the can, fund zombie companies and promote poor investment practice to give us short-term stability over long-term adaptability.
When the fragile breaks, expect a mess.
Farmers are going to have to face the music one way or the other.....
https://i.stuff.co.nz/business/farming/130784599/tescos-warning-to-new-…
NZ farmers are very well placed to play that game, considering our inherently low carbon footprint and that the amount of woody vegetation on sheep and beef farms makes them close to carbon neutral already ... note British farmers are able to count carbon credits for their hedgerows - a NZ farmer can have 100 hectares of regenerating native forest and not be able to count it.
Yes aligning the rules need to be done fast. And to not push the boat out like the NZ greenies want to do.
JA and Damien go to Europe and spout off about tax on farmers, like the farmers are the baddies. They don't say anything positive about nz farming. They don't count the trees and they don't highlight we are grass fed. She needs sacking. I thought this woman is the toast of the world, a superstar when offshore. Can't even negotiate a decent EU trade deal
There is actually no solution. My observations show that as a solution to Carbon, Climate, Fossil fuel issues is found, then the goalposts shift. Always. The goal is no animal food, and no personal transport. One step at a time. And democracy is not allowed to be involved. Otherwise it all falls apart.
Interesting, sounds plausible
Jacinda Ardern champions carbon neutral NZ beef on the late show with Stephan Colbert
https://www.facebook.com/nzbeeflamb/videos/jacinda-ardern-talks-sustain…
There was an uptick in Google searches immediately following. By all accounts no lasting impact, do that many follow Colbert ?
Generally the low carbon grass fed cattle and dairy is not mentioned. The emphasis is 'we are reducing carbon and taxing the dirty farmers.'
The same Colbert that championed Pfizer's experiment?
Also, UK farmers can be paid for their soil carbon.
"Aimed primarily at arable farmers, Soil Capital’s scheme paid out just under €1m (£869,000) to its first 100 farmers earlier this summer for verified carbon improvements"
https://www.fwi.co.uk/business/business-management/agricultural-transit…
Like the above posters have said, yes we are way behind the ball at measuring and accounting for all carbon emissions and sinks in NZ farming. But that's a lot to do with the farmer lobby also dragging their feet on all aspects of the accounting side. We either get on board and treat it as an oppourtunity or get left behind.
Exactly,burying your head in the sand could lead to some surprises...didn't the EU bring in some taxes last week for imports from countries with no climate change policies?
On steel, fertilizer, aluminium, concrete.
Tiwai Point might get a premium price for its low carbon aluminium, charge them more for the electricity.
Low carbon premium is a marketing myth. Else low carbon products like wood would beat the pants off concrete and steel. We just destroy out low carbon industry here and move production to China. The ETS is so perverse in this country that mature pruned forests are being locked up for "carbon" while steel framing is imported from China.
It is the government burying it's head in the sand by using outdated methane models - the anti farming lobby and carbon bludgers play dumb.
"Even more strikingly, if an individual herd’s methane emissions are falling by one third of one percent per year (that’s 7/2100, so the two terms cancel out) – which the farmers I met seemed confident could be achieved with a combination of good husbandry, feed additives and perhaps vaccines in the longer term – then that herd is no longer adding to global warming. Yet if methane were included in a European-style Emission Trading System (ETS), the owner of the herd would have to pay just as if it was.
...Academics can quibble (it’s what we do best) about the exact factors, but the fact that this formula is vastly more accurate than the traditional accounting rule is indisputable."
https://www.newsroom.co.nz/ideasroom/a-climate-neutral-nz-yes-its-possi…
You think carbon is the only factor at play? wow.
"Our inherently low carbon footprint" won't be that low after the produce is shipped half way around the world I imagine.
That's incorrect. Shipping represents 1 - 4% of the total footprint.
https://beeflambnz.com/sites/default/files/levies/files/BLNZ_review_rep…
Unfortunately Jimbo, there are far too many voters out there imagining things/playing dumb. In carbon bludging and politics there is a lot of money to be made, and votes to be had, by playing dumb and catering to the Jimbo's of the world.
"The calculation using GWP* for the period 1998 to 2018 showed that when taking into account sequestration -- trees and other vegetation on farms absorbing emissions -- New Zealand’s sheepmeat is arguably “climate neutral” and New Zealand beef is also well on the way towards that.
That means over the last 20 years, New Zealand sheepmeat has not added any additional warming. Absolute greenhouse emissions from New Zealand sheep and beef farming have decreased by 30 per cent since 1990.
...The researchers, which compared New Zealand’s on-farm emissions to a range of countries’ footprints across the globe, concluded that when New Zealand beef or sheepmeat is exported, the total carbon footprint is lower or very similar to domestically-produced red meat in those nations.
This is because New Zealand is so efficient at the farm level, which represents about 90-95% of the total carbon footprint. New Zealand’s on-farm footprint was about half the average of the other countries compared in the study."
https://www.sciencedirect.com/science/article/pii/S0195925522002128?fbc…
You're all arguing trivia. the crucial fact is that NZ contributes less than 1% to the total GHGs produced. So even if we become carbon negative, it'd make not one jot of difference.
You are drinking the cool-aid. Carbon credits are another financial scam to rob from the productive agriculture sector.
NZ farmer's do not need Tesco and their environmentally friendly gigantic box stores, where all food is wrapped in environmentally friendly plastic and customer's drive miles to shop in their environmentally friendly SUV's. All my lamb is now sold privately to local consumers at a lot cheaper price than any Tesco. That is how you face the music and me lambs are still happy little burpers.
We would need a lot of meat / milk / wool consumers to live near farms for that to scale...
Japan is to double its defence budget/spend along with a reset that will install military capacity well beyond just defence. A policy accompanied by the overt encouragement of the USA & allies. Likely that will now include, in a similar fashion to Australia, nuclear powered submarines. Regionally, if that should proceed, it would certainly put a rat amongst the chickens. Anyone for dominoes?
Necessary i think. The Japanese have a well developed defence industry, but the pressure they face regionally is huge. The post WW2 defensive stance has hampered their military. Between Russia, North Korea and China they need to ensure they can reach out if required.
Agreed. Probably even overdue but you could pick the new direction starting a while back, when they started converting their carriers from helicopters to jets.
Old wounds cut pretty deep so if things kick off in that region Japan is public enemy #1.
Maybe, maybe not. Current generations of Japanese are far removed from the generations that led to the invasion of China and the attack on Pearl Harbour. But there is a militarist clique in Japan that raises it's ugly head from time to time, just as in any other society. I do agree that the legacies of WW2 will haunt them to a degree though.
It's not how the Japanese see themselves, it's how they are viewed by others. WWII dramas are still huge on Chinese TV. Imagine if the French producers were still fixated with the German invasion in WWII
By the same token the rest of the Continent could be fixated a bit earlier on the activities of Napoleon’s France. What lies below the surface can be resurrected fairly easily & quickly. At dinner in Germany in the 80s a group of perfect civilised behaviour erupted to a virtual scuffle between two Germans, but one with a Danish father, when somehow Schleswig Holstein became a topic.
Hopefully, not this type.
The Japanese are already flying F35s. Have been for a while. They'll be learning from it just as they learned from the F16, even though they never bought any. Their Mitsubishi F2 out performed the F16 in many areas and was optimised for maritime strike. Would have been a good strike aircraft for the RNZAF.
That crash is interesting though; pilot error or some failure in the engine control system?
Question, If Xi passes, do you think that China could become a more moderate global player under a new leader, or is the CCP poisoned beyond repair. Is Xi just a figurehead of the new communist dogma?
Hey plays a lot more like an autocrat and less like a party man, if he consolidates his power like is promoted, the successor will be more like him than less.
I guess it depends, as always, on how he leaves power. If natural death etc, then yes very likely another quite radical communist. So interesting given how they seek international capitalist money flows.
Capitalism with Communist Characteristics.
More moderate I reckon. He's shaping things in a way that gives him indefinite power.
Really good question IT. I think china has a few convulsions to go through yet. They may find their population is no too willing if they generate a meat grinder like Putin has. But their internal propaganda will be feeding them a bias that will let them get away with a lot before the CCP will collapse. I doubt it will be Xi, or even his successor. Further away i think.
Perhaps but China has a vast military, primarily a land manoeuvres army for obvious reasons, that has long been all dressed up with nowhere to go. An annexation, with Russia hopelessly occupied elsewhere, of say Mongolia would be a walk in the park, completed before the people scarcely knew about it. Too isolated & remote for any Western intervention. The territory was lost to China not much more than a hundred years ago when China was weak, the aftermath of the opium wars and reclamation would be entirely suitable for propaganda and a test of international reaction. Just generalising & speculating as usual.
Keep on speculating - it leads to interesting discussions.
Why would China want Mongolia? It used to be a threat Ghengis and his successors. But not any more. Are the mineral resources Mongolia has worth justifying an invasion? Or is keeping Mongolia as a buffer between them and Russia of greater value?
It may well be that China sees Mongolia as so weak, that it is not concerned as they are susceptible to political pressure. I think Vietnam would be more attractive, with a much longer lived enmity between the two. Taking over Vietnam would remove some of the opposition to their ambitions in the South China Sea. China certainly seems interested in India?
My speculation is the China has not had any history in land expansion or military conquest outside it's borders. Or shown any interest in that.
But it has sought to dominate many places "commercially" and seems to have a successful formula for that.
Too riven by internal strife to look outside it's borders? The Chinese have a history of dominating countries they go in to "help". It's one reason the North Vietnamese turned to Russia rather than the Chinese.
Commercial or economic domination would be easier to achieve and less likely to be openly challenged, especially if they ensured the living standards of the other country didn't suffer. Certainly less costly. Would be useful politically too.
It seems to me that China is too focused trying to establisb a Petroyuan, or trying to set up an alternative settlement system in localised FX vs USD. I cannot see the Saudis wanting to hold Yuan based bonds long term so I think gold may see a bid.
I don't think the Chinese will succeed. Any international "reserve" currency must have broad acceptance for it to be successful. The original attempt to set up the "Bancor" was rejected by signatories to the Bretton Woods agreement in 1971. In part I suspect, due to the fact it wouldn't really be backed by any thing of substance other than by mutual agreement, which may have wavered over time. Tat'd be why they want the US$ as the "reserve" currency. It would have been seen as being backed by all the economic assets of the world's largest economy and therefore be more secure and more stable. It is important that that economy is in a country which is nominally democratic. Those assumptions more or less remain true today, despite politics.
World's largest economy through debt creation and deficit government spending, not productivity. Take away the reserve currency status and 'boom', nighty, night US dollar.
I think you are confused; it is the USA that have a history of dominating countries they go in to help. Just a few since WW2. China, Korea, Guatemala, Indonesia, Cuba, Peru, Laos, Vietnam, Cambodia, Lebanon, Granada, Libya, El Salvador, Nicaragua, Iran, Panama, Iraq, Kuwait, Somalia, Bosnia, Sudan. The USA is here to help, spreading their democracy and freedom agenda, with violence.
There is quite a bit of Chinese “cultural” influence building in Mongolia. Enough for the government there to seriously acknowledge the activity. The territory has been disputed. History often overlooks Stalin valued it sufficiently to send in Zhukov and give the Japanese a real bad hiding in 1939. No resources and industry wouldn’t be the objective. It would be a show of look what we can do and look what you can’t do about it. Purely a political gambit and exploratory of how severely the rest of the world reacts and gauge of impact from that with a view to what next might be possible.
If Xi or the CCP feel the need to exercise their muscle, they might try that. How much influence/power does the military have in the CCP these days/ Does anyone know?
The end of globalisation and the US a world policeman (and guarantor of all global transport links) is upon us. Japan knows this and is preparing.
The turmoil will erupt when the first cargo ships/tankers are struck/ taken - the security of trade anywhere any time without the need for a convoy of destroyers will be over. Prices will rocket.
Yeah, merc marines will soon be a lucrative business.
That time a continental energy system was based on the ranting of a high school dropout - and as a bonus funded the russian military.
"Europe’s $1 Trillion Energy Bill Only Marks Start of the Crisis
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High prices could last years and aid is becoming unaffordable
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Relief on global gas markets isn’t expected until 2026
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Government fiscal capacity is already stretched. About half of European Union member states have debt exceeding the bloc’s limit of 60% of gross domestic product. "
https://www.bloomberg.com/news/articles/2022-12-18/europe-s-1-trillion-…
The giant American economy slows, and inflation does too..
Michael Hudson: The Federal Reserve winner recently for America’s Federal Reserve Bank and the former President of Harvard have all said, “Interest rates have to be held high enough so that nobody will – so few people will invest and so few people can buy homes, that there will be a depression. The depression will lower employment and wages will fall. The solution to any problem is lower wages.” That’s the IMF’s principle. That’s the basic principle of a bank-run economy, no matter what the question you ask, I have the solution: lower wages, lower living standards.
The theory is that that will increase our profit. So, the interest rates will be kept high enough until they’ve wiped out the pension funds, made it impossible for people to – new home buyers to take out a mortgage to buy a home and outbid the absentee owners that are turning America from an owner-occupied society into an absentee-owned society.
That’s part of the aim of higher interest rates, is to create an absentee-owned society where you have private capital coming in and saying, and buying out masses of housing at pennies, just as they did under Obama.
This is the Obama strategy of essentially, ending home ownership, especially for the ethnic and racial minorities. It’s basically the anti-black policy that it was under Obama, to prevent the low income ethnic and racial minorities from becoming homeowners and forcing them into rent dependency on private capitalist absentee landlords. Link
You will own nothing, and you will be happy.
Markets were sure the economy was going down, FOMC couldn't figure out why. In just six weeks, FOMC did exactly what the inverted curves had predicted. Rate *cuts* then outright recession; NOT more inflation and hikes. Fed ALWAYS gets it wrong. https://youtube.com/watch?v=xjBYh Link
My prediction is that things will turn on a dime and head negative fast. Remember when we were supposed to gradually ease out of low rates over a year or two? Things turned on a dime. Inflation expectations are going to look very different by late summer and we will be in a full retreat by March. The RBNZ will get it wrong in Feb and will go for one more hike before they start to rapidly backpedal.
It will be hard to know what to do when re-fixing a mortgage in the first half of next year...
There's nothing wrong with floating for 1-3 months if the mood is quickly changing.
Rates are not going down anytime soon. To get on top of inflation the OCR needs to be higher than inflation so the refusal by the RBNZ to do that means it will have to stay elevated for longer in the wait for it to fall again. Could be 2024 before rates fall again to the historic norm of about 6%.
Along with 70% of the rest of NZ mortgages.
I thought the last hike should have been 50 leaving 25 for Feb. Then a long hold.
He has certainly got our attention, he has been convincing people all year that higher rates are coming, hence we have seen people accepting lower property prices all year. The Rhetoric around the need to force NZ into recession was probably just that, Rhetoric.
There was always going to be a recession associated with the largest upward move in OCR in history. I think sometimes it just has to be spelled out to the sheeple, and what better way to do it than just before the family Xmas BBQ.
Such a rapid reversal of interest rates will signal a HARD landing. They will not cut until it's obvious the economy is in serious trouble. Prepare accordingly.
probably was just that, rhetoric... Such a rapid reversal of interest rates
Thats a full on U-turn, flip-flop of your own right there. I can't remember any comment of yours that matches this 'reversal' of opinion. Maybe a touch of rhetoric from ITGuy also.
You will need a proper financial 'hedge' if the OCR goes the other way. Something that covers your arse like bonds or property will be the thing.
What this @Bloomberg article doesn't say is that Italy's @GiorgiaMeloni is trying to wrest control of major company's back for Italy, rather than have them owned by outside globalist forces in France, etc. Link
Aussie Property auction Clearance rates fall to five-month low on final weekend of 2022
Auction clearance rates have been trending lower since the last week of November, coinciding with the re-acceleration in the pace of price falls across Sydney and Melbourne according to CoreLogic.
Auction clearance rates fell to their lowest levels since early July, ending the year on a weaker footing, as multiple interest rate rises and the climbing cost of living weighed on buyer sentiment, data from CoreLogic shows.
Vendors were also feeling less confident about selling under the hammer in a weaker market with auction volumes falling sharply from the previous week and plummeting by about half nationwide compared to the same time last year.
“It’s partly seasonal for auction volumes to reduce this time of the year, but vendors are also becoming less willing to sell via auction and leaning more towards private treaty or expressions of interest methods,” said Tim Lawless, CoreLogic research director.
“Last year, we saw 47 per cent of all listings were sold via auction, whereas this year it was 39 per cent. So we’re definitely seeing vendors reassessing the best way to sell as clearance rates and the number of bidders remain low.”
Auction volumes fell by 16.8 per cent to 1020 over the week in Melbourne and they were down by 17.1 per cent to 799 in Sydney. Nationwide, auction numbers slumped by 15.1 per cent to 2717.
Weaker demand pushed the preliminary clearances down by 2.2 percentage points to 58.8 per cent nationwide, with Brisbane and Canberra posting the sharpest decline of more than 7 percentage points to 34 per cent and 50.7 per cent respectively.
Sydney slipped by 0.9 percentage points to 57.6 per cent, while Melbourne fell by 1.6 percentage points to 57.8 per cent.
House prices have dropped by 1.5 per cent in the four weeks ended December 18, while Melbourne values were down by 1.3 per cent. Over the previous four weeks, prices fell by a smaller 1.1 per cent in Sydney and by 0.4 per cent in Melbourne.
People really struggle to get that housing is a side show of the credit bubble. It is all about the supply of credit, the world runs in it.
This hike cycle is different to those of the last 40 years, a structural change. These rate rises have not been stimulated by demand.
Yet I see on here everyone thinks in a few months we'll get back to normal. No we can't get back to normal, governments and reserve banks are finally backed into a corner. If they print again, and interest rates go down, then gold goes through the roof as the markets realise there is no way out of the trap. Alternative is interest rates rise until things break. You can't sit on these interest rates and everything be fine, debt servicing was already at the limit before these rate rises. If they don't cut rates again something breaks, and when it breaks there still won't be any credit demand no matter how low rates go.
If you view this as a slowing of credit growth, a demand driven event, rather than interest rate rises causing a lack of demand, it takes on a completely different look. People don't want to do this though.
scarfie
"These rate rises have not been stimulated by demand". Low interest rates did generate some demand, housing being the most obvious example.
I think Europe is a better example of your position. That economy has only survived with interest rates in a very stimulatory range for years now.
If you read the links that Audaxes posts to Fekete you will see that low interest rates are not stimulatory, they are evidence of a struggling economy. No one wants money, no one is borrowing. That is your tightness. Well no one is borrowing productively. The only borrowing goes into no productive assets, which just blows bubbles as the asset isn't connected to the economy other than sharing the credit stream.
Normally rising interest rates are a sign of business expansion. This time they are a sign of government interference in the economy by expanding debt to pay for Covid. We've got inflation without an increase in production, paid people to do nothing. Central banks are being force to try and brake prices, whereas normally they'd try to brake an overheated economy. UK tried to borrow even more and the bond market said "no you don't". Exchange rate was hammered also.
Covid was a great excuse to balloon government debt. I am not so sure it killed anyone, but it sure as hell enriched Big Pharma at our expense.
What's happened Barfoot & Thompsons results from last week?
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