Here's our summary of key economic events overnight that affect New Zealand, with news China is facing a very tough period trying to fix its broken pandemic response.
But first, new US jobless claims were little-changed last week at 248,000 with 1.6 mln people on these benefits out of a total workforce of 165 mln people.
The final Q3 GDP growth measure for the US came in at +3.2%, topping earlier estimates and topping analysts expectations. Driving this revision was more actual consumer spending activity that earlier estimated. You may recall that prior to the first estimate, there were fears Q3 would show a decrease, but the facts proved the pessimists wrong. Of course they have turned their pessimism to the future and ignore their prior error.
This strong data, along with the continuing strong labour market, means the US Fed is far from finished with its rate hikes and there is likely to be more monetary tightening. This conclusion has caused Wall Street to retreat rather sharply today. The Nasdaq is particularly hard hit.
After a historically low rate of change between 2020 and 2021, the American population increased by +0.4%, or 1,256,003, to 333,287,557 in 2022. Basically this is because they welcomed 1 mln immigrants this year. For reference, the New Zealand population is growing by +0.2%.
In Japan, the bond market has begun to price in the consequences of the Bank of Japan's decision to give interest rates more freedom. Yields on two-year Japanese government bonds -- the most sensitive part of the yield curve when it comes to monetary policy expectations -- moved into positive territory on Wednesday for the first time in seven years. On Thursday, they held at 0%.
While the bank's officials insists this week's policy decision is not a rate hike, many observers see the move as a step toward the end of Japan's negative interest rate era.
The market consequences for homeowners in Japan may come as a bit of a shock if they have a mortgage.
In China, a Shanghai hospital has told its staff to prepare for a "tragic battle" with COVID-19 as it expects half of the city's 25 mln people will get infected by the end of next week, while the virus sweeps through China largely unchecked.
China probably has 1 million Covid infections and 5,000 deaths every day. The current wave may see daily cases rise to 3.7 million in January. Even so, the country is said to be planning to cut quarantine requirements for overseas travelers. The situation is confusing everyone, including policymakers, and so much so, China's online censors don't know what to do.
Separately, prices for solar panels are now falling very fast. On Wednesday, the average prices of two key types of wafers each fell by -10% or more in the past week. Their prices were down -18% and -25% respectively from a month before.
Turkey left its official policy rate at 9%, even though inflation is now up to 84% and their currency has devalued -44% in 2022. There is no evidence yet that the Erdogan policy is anywhere near working.
In Australia, a Parliamentary review of their central bank's performance has been sharply critical of the way the RBA uses the 'blunt instrument' of interest rates. In a unanimous report, it said the RBA needed to better consider which households were driving demand-side inflation and whether raising interest rates would affect consumption in a way that curbs it. The parliamentarians don't want consumers facing intensifying cost-of-living pressures and challenging work and business conditions to be impacted by RBA policy decisions. They seem to not want any measures to fix those pressures to hurt anyone. They insist on solutions without pain or consequences. The whole thing is quite extraordinary.
Global shipping container freight rates were unchanged last week, interrupting a long string of retreats. However bulk cargo rates rose sharply at the same time.
In New Zealand as at the end of November, housing loans outstanding rose +$1.3 bln from October to $344 bln, a rise of +4.8% from the same month a year ago. That is the smallest year-on-year rise since January 2015.
Interestingly, loans to businesses rose +$1.4 bln from October, a rare time the banks business book has grown faster than their housing book.
At the same time, total bank deposits rose +$3.4 bln in November from October to a record $436 bln. Household deposits rose +$1.0 bln but were up $1.5 bln for term deposits after a fall in transaction and savings account balances. Household term deposits rose to more than $100 bln in November for the first time since July 2020. (Their record high was $104 bln in August 2019.)
The UST 10yr yield started today at 3.66%, and down -1 bp from this time yesterday. The UST 2-10 rate curve is little-changed at -56 bps. And their 1-5 curve is also little-changed at -87 bps, while their 30 day-10yr curve is still barely inverted, now at just -4 bps. The Australian ten year bond is up +9 bps at 3.82%. The China Govt ten year bond is little-changed at 2.89%. And the New Zealand Govt ten year will start today down -1 bp at 4.40%.
Wall Street has opened its Thursday session down a very sharp -2.9% and falling. It is on track to be -20% down for all of 2022. Overnight, European markets were down a bit more than -1% except London which was down about half that. Yesterday, Tokyo rose +0.5%. Hong Kong was up +2.7%. But Shanghai fell -0.5% in its Thursday session. The ASX200 ended up +0.5% and the NZX50 ended its Thursday session up +0.6% but on very low volume. The NZX50 is heading for a -10% retreat in 2022. The ASX200 retreat will be a bit less than -5% over the same period.
The price of gold will open today at US$1795/oz and down -US$23.
And oil prices start today marginally lower from this time yesterday at just under US$78/bbl in the US while the international Brent price is just over US$82/bbl.
The Kiwi dollar opened today at 62.5 USc and down another -¼c. Against the Australian dollar we are little-changed at 93.8 AUc. Against the euro we are lower at 59 euro cents. That all means our TWI-5 starts today at 71 and down another -20 bps.
The bitcoin price is now at US$16,636 and down -1.0% from this time yesterday. Volatility over the past 24 hours has again been low again at +/- 0.7%. In the US, the SEC is raising the scrutiny of the work audit firms do for cryptocurrency companies and warned investors to be wary of claims made by crypto companies.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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191 Comments
“China’s online censors, don’t know what to do.” Reminds me somehow of when not far off death W C Fields was asked why he was shuffling around reading a bible when he had parodied the church all his life, “I’m looking for loopholes.”
Maybe China should ask our censors how to do it properly.
Lots of good hints and tips coming out of the Twitter Files for example, but they'll have to do a bit of digging to find any mention of it. Most mainstream media outlets are diligently ignoring the news, choosing instead to focus on completing Elon Musk's transition from darling of the Western world to far-right Russian troll.
Lots of FBI and content control stuff in that dump
"We are your source of truth!" - Jacinda, Yeah, Right!.
Whatever happened to that Ministry of Information that was attached to the Prime Minister’s office to search through communications & sites alike seeking disinformation for want of a better word. Bet the personnel numbers employed there have grown like topsy recently.
... that comment in itself sets you up to be a " troublemaker " in their eyes ... beware the background click noises in phone conversations , they've tapped in & are having a wee listen for anything anti-Ardern from Mr F !!!! ...
ahhhh Kill the President.... sorry gummy we are both tagged now
... truth be told , Ardern isn't clever enough to fix the potholes , or reactive enough to pick up the phone and order the fog cannons ... I very much doubt she's got the smarts to organize surveillance on us bunch of sh*t stirrers ...
Yes, well, no she cannot fix potholes, because
1) It's not her job
2) Most of them are the responsibility of councils
3) Dunno if she's thought of this herself, but maybe she could have stopped the rain, which, let's face it, has been the major cause of road surface issues, rain and the fact so much of our roads are built on swamp, or what once was.
Pity then for the PM that the rain only just started in the last five years. Drove the Sth Island open roads extensively in the 70/80s and nothing like the rundown and patched up state of today.For instance in 1978 SH1 was virtually washed out from Hilderthorpe to Washdyke but it was open again in days and damage repaired to being unnoticeable. And it’s not just the road surfaces either. Give way & compulsory stop signage is often obscured by foliage, their road markings haven’t been repainted for years. Hence numerous cross intersection collisions in Canterbury alone, with fatalities. It’s disgraceful & dangerous. But $millions on cycleways in the big cities will fix that, not!
There are only 3 things that kill a road. Weight, weight and more weight. Overladen trucks, agriculture implements, logging trucks, diary tankers, rain has nothing to do with a roads demise.
If it's in a valley or on a hill it can, I'm not even sure how you could argue that.
Funny you mention that, the last National government increased the size of the trucks on the roads in 2017. We reap what we sow.
https://www.beehive.govt.nz/release/new-rules-trucks-increase-productiv…
Where does all the fuel tax go. Lots of loony pet projects and ridiculous unachievable schemes through greens and genter. Heaps of costs were spent near us, doing road widening and installing side barriers where there is nothing to run into. Its taken 6 months with queues stretching to the horizon
The lions share goes on roads that people drive on, with a bit left for side projects for people to get upset about.
The go on under costed "Roads of National Significance".
They also increased the permit weights from 44 to 53 tonnes back in 2010.
https://www.nzherald.co.nz/nz/change-lifts-truck-load-limit-to-53-tonne…
If people think going from 44 to 46 tonnes is only 5%, but if I'm not mistaken the increase in axle weights are subject to Fourth Power law.
Don’t now ever think to transit thru Hong Kong let alone the mainland. Nasty old master at high school was fond of saying “my eye is on you, boy,” which obviously I have not forgotten.
Did he just have the one , then ?...
Wasn’t the worst, didn’t resort to caning much, but when he did was verging on violent. Got revenge in 6th form. Masters vs X1. Me a long lanky quite fast bowler for that age, short off a length, off a worm cast, off elbow, off chin onto stumps. Not forgotten that either. Had I been either mature enough or quick witted I might have thought to advise him to keep his eye on the ball, not the boy. Bugger, a bit to late to think that one up now.
Well cheaper solar panels are a good thing!
Be better if energy storage was way cheaper.
Bingo. We need more affordable solutions for energy storage at a domestic level, which is going to get more complicated if we want to keep building townhouses etc.
Yeah, I have an electrician mate who says half the power is lost in transmission (from south to north island obviously). More local generation and storage would eat into that loss.
... it's been told for decades that half the power is lost in transmission from the journey , deep south to far north ...
The first question is : Is this a fact , or just an urban legend ?
The second is : If so , what can we do to either reduce that loss , or to produce more electricity closer to Auckland ...
In New Zealand as at the end of November, housing loans outstanding rose +$1.3 bln from October to $344 bln
At the same time, total bank deposits rose +$3.4 bln in November from October to a record $436 bln.
I'd never have thought the country's savings exceeded its mortgage liabilities.
My understanding is that approx 40% of homeowners don't have a mortgage.
What % of NZers hold the bulk of savings though...
I thought it was 40% do have a mortgage...
You can be renting -ie not owning your own home but also have an investment property with a mortgage on it.
Yes, how many tenants indirectly have a mortgage? It would also make little sense for someone up until the recent tax changes to not have a mortgage over a rental property or some form of leverage.
A freehold rental will get you 2.5 equivalent properties if leveraged. i.e. $600k freehold property leveraged = $1.5m @ 60% LVR.
Tend to agree. This perspective is surprising. A pleasing bit is the apparent increase in business loans.
A common theory is our business environment is muted because of over investment in real estate.
Given the high savings rate, maybe the issue is more risk adversity of savers.
Banks have migrated away from lending to productive business enterprises because the risk weights can be as high as 150%. Thus around 60% of NZ bank lending is dedicated to residential property mortgages owed by one third of already wealthy households
Oh yeah, I realise the risk. But it's not just the banks, anyone can choose high return high risk investments to put their surplus cash into, but for obvious reasons most won't.
I don't know how you change that scenario.
Good stat thanks for sharing.
All those loans are an asset to someone, and all the deposits are a liability somewhere in the system. Back when I first looked at M3 compared to total overseas liabilities the two figures were almost the same. A zero sum game.
Mortgage debt has roughly doubled in ten years, more than doubled the ten years before that. For what exactly? What have we gained form this debt?
Kept up with inflation.
Built more houses.
Developed or improved existing properties.
Some people probably used some of the money to finance businesses and personal expenses.
some of us have done ok Scarfie.... I now have hop plants in the orchard.
Know when to walk away. And know when to run.
Which varieties? I have a couple myself, appears to be a booming industry at present if the large increase in farmland converted to hops across the tasman region is anything to go by over the last 5 years or so
Fuggles, Cascade and Hallatau - I love Fuggles love english bitters.
Noticed what seems to be more than usual real estate listings going up the week of Christmas. Suprisingly alot of auction campaigns too running over Christmas/New Year period...
The usual holiday spot listings have increased again in December, eg Marlborough sounds.
Observation was Auckland - in particular Northshore...
It's good Intel if you are trying to spot a soft seller
Things look brighter for your North Shore agency in 2023 Nifty?
What agency is that HouseMouse, please enlighten me...
You are always talking about the North Shore market, you seem *very* interested in the market, more so than someone who simply owns one owner occupied property in that area.
If not a RE agent, do you have a portfolio of property on the shore?
Lol and you seem overally interested in house construction, the NZ Herald, Tony Alexander and blowing your own horn on your predictions... what does that make you... an Independent Economist?
Hahaha
Well I work in and around the development sector as one of ‘day jobs’ so that largely explains my interest in, and knowledge of, the housing market.
It’s just curious that you have an intense interest in one sub-market. But each to their own
Bad Santa Rally HW2!
Nasdaq down 400 points at the moment!
That's because positive data = more rate hikes. The markets want to see a pullback
haha good earnings punishing the market!!!!
Up one day and down the next
I did place a question mark ? asking whether others thought it was a Santa rally. From this point, I favour optimism and recovery over depression and crash for 2023. 2022 brought a lot of bad news already, it can get 'gooder' for 2023. I am very surprised by the daily net arrivals, nearly 8000 over last 4 days. 50,000 last month
Why these expats are returning to New Zealand in 2023 | Stuff.co.nz
https://i.stuff.co.nz/national/300769892/why-these-expats-are-returning…
You are sounding a bit desperate mate.
No I won't feed you, don't feed the troll.
Just a tiny mint, It's only wafer-thin!
The trolls are hungry at this time of the year HW2
Yes its "interesting" the holidays have hardly started and they're already bored
That’s really funny coming from the two of you!!!
Given the xmas spend up by the locals they also dont believe that 2023 will be bad for them
It is a problem when Govts operate with lots of spin - it becomes difficult to separate truth from BS so it all gets ignored
and after 3 years of shite 2023 is going to be outrageously good
..hyenas on a carcass. Feeding up while the meal is there. Tomorrow is another day....
Lol
Good news ITG the dow and nasdaq ended with a recovery well off their lows. Still down mind you.
You could say that the smart buyers got in early while the numpties just look at the close, finding reasons not to buy. That sounds familiar
What the hell have the PM, Robertson and Orr been up to now?
I've noticed the number this week, but as far as I'm concerned, if it isn't priced, it's not for sale.
I'd be interested in people's opinion of John Gascoigne, an economic commentator in NZ. The Herald is running an opinion piece from him which resonates with me. Clearly a critic of the "free market" neo-liberal economics and a vision to improving NZs wealth which is not popular with our politicians.
I have no idea.
what I do have an idea on is that nothing meaningful will ever change in NZ in terms of economic policy. The Labour government had a mandate for meaningful change but blew it.
Better that people accept this and gear their lives around it.
Sad really HM. I suspect you may be correct, but in the meantime our politicians are driving us into being a third world economy!
It is sad indeed. But true.
More constructive to put hope in to other causes.
We are a primary production agri economy, trying to transition into a hi-tech value add economy.
Labour hate both, it's no wonder they don't support anything innovative.
Private sector wealth goes against dependency on the state.
... it's that age old debate : which is better , to cut the pie into tiny equal sized bits and distribute via a bureaucracy to the proletariat ... or ...
To grow the pie , and let those to add the most value take bigger slices of it ...
That's going to be the case with any government.
Crumbs will be thrown for those in desperate need, but anyone wanting a decent income and wealth creation is going to be putting in the lions share of effort.
murray86,
Glad you asked. In he past he has written about the limitations of GDP and the how the UK and Norway acted very differently to the North Sea oil boom. However, this time round I found the article vacuous.
He states that we need to become an export powerhouse to achieve rich nation status and writes this; "That will require a massive expansion of our productive sector based on the development of entirely new areas of dynamic comparative advantage."
In mentioning comparative advantage, he is no doubt referring to the work of David Ricardo , but that apart, it's meaningless. There is not even the faintest hint as to what he thinks these 'entirely new areas' might be. Without his magical solution he is, I believe, quite wrong on the retirement age issue.
If this were presented as an essay by a first year student, it would be a big Fail.
thanks for that. i agree to the "vacuous". He offers little substance to support his opinion, even if I tend to agree with those opinions. I did wonder if he he had put some substance into any of his suggested solutions in the past. i think I can see a way for some of what he talks about, but as others have indicated there are some serious ideological blockages amongst our politicians.
With a dominant reliance on food production, not to mention over reliance on China as a trading partner, i feel we are too vulnerable. Various politicians have made the call in the past to diversify away from those issues, but they have never had the weight in government to enact the changes required to achieve them. Pity really.
Norway Population 1980 4 Million
UK Population 1980 56 Million
That's the difference right there.
NZ Population
1952 - 2m
1973 - 3m
2002 - 4m (and I arrived with family)
2019 - 5m
2022 - 5.19m
Norway Population
1952 - 3.4m
2022 - 5.4m
over 70 years our population has grown by 160% and Norway's by 59%.
Similar story for all of Europe, no?
Norway has Statoil and has taken oil and gas profits and put them into a $trillion + wealth fund. Norway has used it's oil wealth to go the EV route. The UK wasted it's oil and gas revenues. NZ had Petrocorp then sold it for peanuts then stopped oil and gas exploration. NZ is barely on the EV route.
Maybe Vikings are just smarter than Anglo-Saxons.
The picture of the placard in that article made me laugh. How is "decolonizing" in South Africa working out?
A few years ago I read a bit of history of South Africa and the Boers. i was interested to learn that the Boers chose what we know as South Africa today because there was no one else there. All the tribes were further north, so they believed they would not have to contest the land with others. Build a successful working economy based on farming (Boer is Dutch for farmer), and others come for a piece of the pie and are useful to provide labour. Oh yes don't forget the discovery of diamonds too. Then the politics start........
"i was interested to learn that the Boers chose what we know as South Africa today because there was no one else there"
That's a story perpetuated by the very early European settlers, including the Brits to say there was no one in the hinterland. As they moved inland and up the coast they found numerous African inhabitants.
They were Khoisans, basically foragers and gatherers, that still exist today. The tribes that actually assimilated into the European settlements and suffered from apartheid came from the North, from above the Orange River from memory.
What do you think would have happened if some European settlers travelled north and tried to assimilate with African tribes? Would there be apartheid?
Not Orange river, too far North. Kei river North of East London was an approx boundary between the African tribes and an "empty" area.
"What do you think would have happened if some European settlers travelled north and tried to assimilate with African tribes?" No different from Australia, USA, Canada and other countries that were settled by Europeans. Essentially no assimilation. Preferred to say with their own culture The odd settler would have gone "native".
" Would there be apartheid" Apartheid was a legalised form of what was already in existence.
Yes you'd be right, the Great Kei river. In my hypothetical role swap, I'd suggest that the Dutch settlers had they tried to assimilate would have been at the bottom of the tribal hierarchy best case scenario.
I'd say colonization is not all bad, it's just a convenient scapegoat for people want something for nothing and apply present day moral values to events 200+ years ago to try justify it.
It's not all bad but often it favours the colonisers to the detriment of the locals.
Specially if they got the land for almost free.
To become Maori I have to join a Marai, right?
Will solar ever be cheap enough to cover the cost of it's backup? Germanyhas just spent $700 Billion on intermittent, rather than nuclear, energy and is now burning record amounts of coal.
"The continent has invested in wind and solar energy while closing dozens of coal-fired power plants over the past decade. When it is cloudy or the wind is low, and demand is high, Europe doesn’t have the capacity to maintain electricity supplies from clean sources.
At that point, power prices rise to encourage utilities to fire up fossil-fuel plants. Gas mostly filled the gap in recent years. But coal has taken the lead of late—partly because Germany and other countries brought plants back online, and partly because gas is so expensive that it is more profitable for utilities to burn coal."
https://www.wsj.com/articles/coal-no-longer-shunned-keeps-europes-light…
"Coal markets have been shaken severely in 2022, with traditional trade flows disrupted, prices soaring and demand set to grow by 1.2%, reaching an all-time high and surpassing 8 billion tonnes for the first time."
profile,
I think that's a very good question. I don't know what the EROI of solar arrays or wind turbines is currently, but I doubt that they are close to the EROI of oil, even though that has been declining for decades. In order to build the renewables, we must use fossil fuels. I was intrigued by some figures Science and technology in January this year.
To replace the energy output of a single 100 megawatt natural gas turbine-producing enough power for 75,000 homes, would require 20 wind turbines each some 500 ft. tall and collectively requiring some 30,000 tons of iron ore, 50,000 tons of concrete, 900 tons of nonrecyclable plastics for the blades and 1000 tons of specialty metals and minerals such as copper, chromium zinc etc. In contrast, the gas turbine requires only about 300 tons of iron ore, 2,000 tone of concrete and 100 tons of specialty metals and minerals.
You would be interested in the Guyana oil story.
I conducted an experiment on the Wellington housing market, which cost me a bit of money, so I hope you all appreciate it. I listed my Wellington rental property (excellent condition, tightly-held, sought-after suburb, above Healthy Homes standard) for sale for a short time, just to get a feel of the market. The tenants were moving out so I wasn't causing them any inconvenience.
Traffic through open homes was very good, with private viewings also held. The agent was surprised just how much interest there was. We ended up with two offers, which is almost unheard of right now, especially for such a short run.
I expected the offers to be low, but I was surprised just how low they were: 37.5% and 42% below 2021 RV. In fact, both were below 2018 RV. At this valuation I still get more in rent than I would from a term deposit.
The first offer was from a young couple, who were throwing everything they could at it, with a little help from parents. I suspect the second is a cashed up investor fishing for desperate sales. There's no mortgage on the property so I don't need to sell and have strong interest to rent it, but I found this a fascinating insight into current market sentiment.
Survey of one disclaimers apply, of course, but if this property is getting such offers then I don't hold out much hope for the outer suburbs and satellite cities.
I suspect you didn't list the property 'just to get a feel for the market'... if on the off chance you did, what a waste of time for everyone involved...
I'm ok if you doubt my intentions. As I said, the tenants were already moving out so were happy to assist, the agent was a good friend we've used for years and was also happy. He was paid, cleaners/gardeners were paid, no one's time was wasted. Not everyone lives their life in crisis mode.
no one's time was wasted
How about the people viewing your property - does their time matter or nah? Hopefully none of them spent money on due diligence... doesn't matter though right.
He got two offers, maybe the feet where not the best or put forward correctly?
Seriously? I didn't force them to visit the property under duress nor require them to solve a series of increasingly fiendish tests to receive an invite to an unknown event.
If they were born any time in the last 50-odd years they would have viewed the property online first, made a conscious decision as to whether or not they felt they should view the property first-hand, and chosen to undertake that journey. If the process had unearthed someone who offered what I considered a reasonable price I would have actually sold it, but I set that limit at about 15% below RV, and no one approached it, so no sale.
So if you got invested in buying a property and found out the vendor was actually just testing the market & running an experiment...you wouldn't think you wasted your time?
It's like going to a store to buy something on display and then get told buy the shop owner it's not actually for sale.
No. It's as much a test for buyers as it is for sellers. i know of others who have done the same. Put it on the market but not desperate to sell unless a good price comes along.
Can be a catch 22 though. In six months those offers may be more than 50% lower, and as house values drop, the potential for rents to drop increases. It all comes down to what the intent/need of the owner/seller is.
You're either missing it, or I'm not explaining it properly. It seems you're hung up on the word "experiment."
I'm 50/50 as to whether or not to hold the property, it really doesn't matter either way to me. I'm also what I thought was realistic about where the market sits, but have since discovered through this process that the market is in far worse shape than that. Had my (incorrect) low expectations been met, there would have been a happy new home owner, but that's not how it worked out.
I figured this could be useful intel for those looking to buy in the current market, to let them know where things sit (again, with a survey of one), as well as intel for those looking to sell as to what the could expect. I'm sorry if this intention has offended you.
Keep posting general, many of us here are well aware just how bad things are, but the spruikers don't want to hear real stories of low offers, perhaps because they and their kids are long at the top... or they are agents who are going hungry this xmas.
It should be pretty obvious to most there's a general market downturn in residential real estate.
On the flipside, the case studies often being used, often by yourself even, are outliers. "Check out this 'high end' property that needs a million or so of work", etc. Good for a bit of dramatic effect, but also wickedly anecdotal.
That is exactly why General Comments , comment, was so important Pa1nter
His property does not need "millions" spent on it but look at the level of offers he is getting.
Of an older FHB or investor property they chucked in the market to gauge interest.
I got places selling around me going for below, at, or above CV pricing. Nothing's going for less than about 5% less. Will that turn into 40? Maybe. I can say there's more listings and they're taking longer to sell, but then again there'd been half as many houses on the market for the last 2 years.
Nothing's going for less than about 5% less.
What town / suburb you in , i will give you some data to reconsider...
Do it pa1nter, lets see where it goes, if you don't want to disclose, I understand
Not super interested in doxxing myself. My view is tainted somewhat though by my region having one of the smallest price decreases in the country and your spreadsheet would likely confirm that. I'm aware it'll go further, because the regions usually trail the cities.
You'll know that an efficient property investment is supposed to make more net income than the equivalent cost of buying the same house, buy a significant factor - for all the risk factors involved that you'll be aware of.
If we don't get a rerun of the UK situation of the early 90s, when I could have mortgaged my spare home at 6% - **or so I thought! (NB: Like you, I didn't have a mortgage on it), yet rental income was a gross +12%, I'll be surprised.
(** I did actually go to my bank to seek a mortgage for tax’ sake - 50% LVR, as I recall - and got rebuffed, as "We are cutting back on lending to the investment property market at the moment". That, too, is in the offing here as 'things' deteriorate)
Why would anyone pay the RV when it's totally not realistic? The income of people don't match the prices of land and houses in the country. It's such a disconnected market and everyone is to blame for it.
Every one involved in real estate including the governments of past 15 years are to blame for it. Everyone is clipping their ticket with no one really worried about who is going to pay in the end.
Totally a system which is like a cancer killing the body its feeding on and then getting killed itself once the body dies.
The cancer is called GREED
Goes to show the confidence anyone has in the wellington housing market, and why it is slowly draining of residents over time, which I feel will continue until housing is more affordable there for the average joe. Mos buying to live there understand there will be substantial rate hikes to fund the infrastructure such as the dilapidated pipelines through the city, the tip is nearing capacity and then there's the sweage. Although I love Wellington for the access to the sea, the views and the vibrancy, it is a slow decline I'll not stay to see. Thank you for sharing your experience with us all :-)
You're welcome. We too loved Wellington as a young professional couple, but once we had children and my wife stayed home to look after them the joy rapidly vanished. I haven't been down there for a couple of years now but it does feel like the soul has been sucked out of the place.
Plenty soul left in Wellington mate. Lots of lovely people having a good time.
Thanks for sharing that - passed on to a friend who is trying to get back on to the property ladder after a separation (Wellington, northern suburbs).
General Comment thanks for sharing. Just wondering did you list it with a price?
No price, just deadline.
Veteran hedge funder David Tepper is betting against the stock market as he expects global Central Banks to press on with unprecedented monetary tightening to rein in inflation. “I think the upside/downside just doesn’t make sense to me when I have so many Central Banks telling me what they are going to do,” Tepper said. “Sometimes they tell you what they are going to do, and you have to believe them.”
Another major CO2 shortage on the way
There is a Kapuni outage and will run out within 7-10 days
Since Marsden point has closed Kapuni is the only local producer
Update:
Critical issue at Kapuni
Hospitals given supply priority, next in line are School's and primary industries are third on the list.
Do not think beer making will make the list
I wonder how many votes more expensive beer and chicken will bring in?
Also used in the Dairy manufacturing industry so affects productivity in that sector
If I ever needed a good excuse to stock up on beer, this is it.
Thanks private industry!
Not having been pushed by BS legislation at any time of course...
Would that be the legislation that prevented new gas exploration permits to be issued?
Makes me so glad I brew my own as a passion. Did a 30L batch for the family for xmas and new year, and shortly doing another for the grand opening of my brothers new shed. 0 Tax, 0 worries, good times a plenty
How do you pump it out of the kegs if not with CO2?
Maybe he is bottling
Can you confirm that timeframe? And when the site is likely to be running again?
Not sure of timeframe, it is developing event.
They trying to source more from overseas, but this will take weeks.
And the 2022 " Car Crash of the Year " award goes to Julie-Anne Genter ... at long last , NZTA/Waka Kohatu & the NZ police admit that her 2020 " Road to Zero " campaign is unachievable ...
.... forget the multi $ millions which have been wasted already on this nonsensical policy ... just promise us more centre lane barriers will be erected , and more lives saved ...
... finally , the triumph of realism over ideological burps ...
Is there time for a Beach to Zero drowning campaign before Nov 21
These lefties are such dumb arses.... actually what we need is a
Stop beating your kids to death campaign!!!!!
You'll need to clear up the punctuation in that , or it'll have a reserve effect ... was it ...
Stop , beat your kids to death .... or ...
Stop beating your kids to death ... ? ...
fixed thanks not enough beans
.. meself , I'd go with a " Hands are for hugs , not for hits " campaign ... gotta take care of the little ones ...
Haven't things turned around. When I was a kid it was "A little violence never hurt anybody".
Is that IT as in information technology or it as in gender-neutral?
I'm always disappointed at the political & public sector cognitive dissonance displayed by the many millions spent on reducing the road toll vs tackling the approx 50% more people who die by their own hand - eg the active failure to support Mike Kings program.
While I'm not sure Mike King has the answer, this is a very real problem. 3 families we know are having a Xmas with one less kid this year, all females (traditionally not an at risk demo), all took their own lives.
Ultimately these tragedies are a result of wider issues in our society that appear to be widening. We are progressing aimlessly, away from our true nature. The Polar Bears go crazy in a zoo, are we much different.
That's shocking, having kids myself I can't imagine how any parent could cope with that.
I don't know that Mike King has the answer, as you say it's a multifactor society problem. However it was an example & I don't see much else being done to improve the situation (earlier this year it's quoted 9+months waiting lists for psych services support, no additional mental health beds despite millions spent etc).
I agree, I think the chasm between what's been spent and what's needed is fairly large.
That's the entire health system though.
centre lane barriers are a core part of road to zero. The 2017 govt massively increased funding for highway safety improvement (and restored the maintenance funding too for that matter)
Implying Labour are the road safety saviour since 2017 does not fit with the fact that a few months ago NZTA admitted that they’d run down road maintenance for the previous 10 years to save money & were now planning to cause major disruption to NZ travel by doing a catchup lot of work this summer.
Reminds me of John Key's "Predator Free NZ" campaign.
".....Separately, prices for solar panels are now falling very fast. On Wednesday, the average prices of two key types of wafers each fell by -10% or more in the past week. Their prices were down -18% and -25% respectively from a month before....."
The economics of battery are poor. So load up on panels. When they give you the quote say. "Let's have more panels than that"
Currently the power company owe me $60-70 each month.
who is your power company? how many KW panels do you have and what city you in? a mate has 10kw on waiheke, amazing in summer
Octopus. 17c. Pay per unit we send. Sent out 296 units and bought in 21 units last month.
Central Otago. Low user very insulated house. High solar gain here. But not an unusual house.
20 panels. 6.2kw at peak. Very small battery, the only reason to have it it keeps the system going if the grid fails.
Will whack on more panels when we get the EVs.
What was the temperature around midday yesterday KH, Dunedin was 11 degrees after midday
Incident solar irradiance was still high yesterday afternoon falling from around 900 wm^2 at 1 to around 400wm^2 at 6.
https://www.physics.otago.ac.nz/eman/weather_station/weather_data/graph…
This solar is in Central Otago.
Do they let you offset your sent power against the line charges?
Yes. All lumped in the same single bill. Each month they owe us money.
The sheer cost of solar panels in NZ is criminal. In Australia you will pay half the cost of the same panels n NZ on average, and storage systems are far cheaper over there also. Shame it's such an expensive stretch of water to ship from AU, but if you had enough people willing to chip in you could surely save a heck of a lot
still a sensible business investment as we can use 100% of what we generate so no batteries required - payback period circa 5 years
That's our current thinking too. Since we'd be adding to an existing property (rural Hawkes Bay) and we have plenty of roof space we're considering loading up on panels for now, and looking at storage once the in-laws decide to move on their old Nissan Leaf because its range is no longer working for them.
> Currently the power company owe me $60-70 each month.
you know Octopus are never going to pay you out right?
you need to size your array so your account is not in surplus, otherwise you are just giving it away. (or are you building up a buffer you expect to consume in winter?)
1. Octopus will not pay out in cash. Correct.
2. A $ buffer is good. Conditions vary.
3. I have two other power bills. I will in time those bring those. See how it works out.
4. You think I need to downsize the system. A. I am not actually horrified at giving away $3 a day if that is how it works out. B. There are days when the conditions don't allow much production. So the big system still produces enough. Bringing in power when it doesn't gets costly rapidly when it doesn't.
C. Sizing the system as you suggest means throwing some existing panels away. Seems dumb. Are you an accountant by any chance?
E. I did ecom101. I can work it out. But there are intangibles such as security and not least making a contribution to distributed generation, which is our future.
In Australia, a Parliamentary review of their central bank's performance has been sharply critical of the way the RBA uses the 'blunt instrument' of interest rates. In a unanimous report, it said the RBA needed to better consider which households were driving demand-side inflation and whether raising interest rates would affect consumption in a way that curbs it. The parliamentarians don't want consumers facing intensifying cost-of-living pressures and challenging work and business conditions to be impacted by RBA policy decisions. They seem to not want any measures to fix those pressures to hurt anyone. They insist on solutions without pain or consequences. The whole thing is quite extraordinary.
Michael Hudson: Corruption. Your central – when I was down in Australia, Karl took me to your very nicely-designed capital of Canberra and I met with the central bankers there. And they said, “We’re a very lucky country. We live in the – we’re a neighbour of China and we can balance our payments and really get by just through exports. We don’t need any industry and quite frankly, we don’t need people.” So, this is – the corruption is just the bank-centred world view that Australia should be run for the benefit of the mining interests, the iron mining interests that created the wealthiest lady, I’m told, in Australia. Link
There is no evidence yet that the Erdogan policy is anywhere near working.
That really depends on what 'working' looks like. If your objective is to stop overseas traders sucking capital out of your country, tackle inequalities, reduce your reliance on and exposure to the US dollar, and ensure that your domestic businesses can invest in new productive capacity, I'd say Erdogan is doing pretty well.
5000 Covud deaths a day in China sounds like a very big number but adjusted for population is the equivalent to 18 deaths a day in NZ. Still not good but it puts it in perspective
Shhh... China Bad!
It has only just started for them
This strong data, along with the continuing strong labour market, means the US Fed is far from finished with its rate hikes and there is likely to be more monetary tightening.
Those with the capacity to influence prices seem not to agree.
5-Year Breakeven Inflation Rate
With the increases in sin tax's in January,the removal of the fuel and RU subsidies,the increases in electricity transmission charges,a lower dollar sustaining a high current account deficit,loss of carry trade from Japan,most of the Governments new debt issue will have a 5 handle .
The number of auckland houses for sale is dropping faster than normal for this time of year
I wonder when we will get out of the "over 32,000" for national figures
When’s the market going to ‘take off’ again HW2? I’d like an opinion I can hold you too.
Market will be rising again before the election...
Is that you Ashley Church?
Optimists are few and far between here, but yes if supply and demand is a factor, and people are pouring into the country at about 1000+ per day currently, then prices will have bottomed before the election...
Yes seasonal decline in listings, but Auckland has gone from 13500 to 12100 pretty fast. Dont get too hung up about it.
I can probably assume a lot of vendors who have been trying to sell for weeks/months have taken their homes off the market as they are tired of the process. Some will in due course wish they had taken the offer they got in 2022. The OCR has more lifts coming. As a nation Christmas spending has lifted. The RB will not be impressed after asking us to slow down spending wise.
Exactly what heppened in the 87 crash, people refused to meet the market, they languished for months and months paying interest on their mortgage till eventually, extremely stressed, sold for what they could have gotten back at the outset, some even less.
There were so many lifestyle blocks with partially finished on 10 acres, people's dream homes turning into nightmares
Vendors removing them to relist with a different agent late Jan, early Feb perhaps?
A few where I live and drive past on the way to work have done exactly that. Sat around and have been relisted with another agent.
Also seen a few rentals listed that were sold just 6-12 months ago.
Basically this is because they welcomed 1 mln immigrants (0.4%) this year. For reference, the New Zealand population is growing by +0.2%.
Did we not welcome more like 2.0% ?
https://www.macrotrends.net/countries/NZL/new-zealand/population-growth…
- The current population of New Zealand in 2022 is 5,185,288, a 1.08% increase from 2021.
- The population of New Zealand in 2021 was 5,129,727, a 1.36% increase from 2020.
- The population of New Zealand in 2020 was 5,061,133, a 2.06% increase from 2019.
- The population of New Zealand in 2019 was 4,959,034, a 2.49% increase from 2018.
Growth dropping because of Covid.
ICYMI: Mass mortgage rate increases across ALL the banks today https://www.interest.co.nz/borrowing
Ho ho ho.
Some boys and girls will be missing out on boxing day sales.
And just like that, the sea of mortgage rate increases across all banks has disappeared - assuming now that was an error of some sort at interest.co.nz
Chris Joye's last for 2022. Time to face the music people. The game is up.
After decades of disinflation, ultra-low rates, and never-ending money printing (aka quantitative easing), we finally, belatedly, welcomed the inflation crisis that was the predictable consequence of myopic politicians and policymakers hedonistically pouring cash on every problem that ever presented itself. After all, if cash is costless, you can spend unlimited amounts.
When inflation was never a binding constraint, you could cut interest rates to zero (or even negative levels), run massive budget deficits that were very cheap to fund, and then have your central bank print hundreds of billions – if not trillions – of dollars of fresh moolah to bid up the value of all asset classes by slashing discount rates to record lows.
Remember the low-rates-for-longer paradigm? It’s gone the way of the dodo.
https://www.afr.com/wealth/personal-finance/the-great-regime-change-202…
The world does not know of the pain to come, prepare, stack cash and if you must gold.
Pretty sure the world does know of the pain.
Unless you're thinking the next few years will top the great depression and both world wars. In which case cash and gold aren't going to do you much good.
Gold yes. Silver too. Performing well:
Past Year / 3&6 Months - Approx 12%
But if you bought pre-Covid (up to Q1 2020), you're looking at 60%+.
Like the ol' rat poision, you can't afford not to have exposure.
You are telling porkies again JC, gold has gone nowhere in 10 years. 12% gains have been made in the same extent if you had a uSD account with money in it. The last time anyone made big on gold was 1970 to 1980 and then again if you bought in 2000. You basically have to buy at the right time and hold for 10 years, people have made more on houses.
The problem with this point of view is it usually ignores the pandemic. Without that, you'd have had a market cycle at some point, but unlikely with such high, inflation countering rate rises, because the central banks wouldn't be fighting the same sort of inflationary issues.
Remember the low-rates-for-longer paradigm? It’s gone the way of the dodo.
This is generally tied to 2% inflation targets. AFAIK, no central banks have abandoned these sorts of targets.
This is generally tied to 2% inflation targets. AFAIK, no central banks have abandoned these sorts of targets.
I think you missed Chris' point. If you think that central banks will continue to suppress the price of money for ever and a day, you might be in for a rude shock. i'm sure they would love to - to be popular - but it will achieve little in the way of stability.
They may do, or they may not, but Chris is wanting to call this point in time as the end.
You can debate how sustainable or wise QE is for sure, but it's pretty bold to declare this as the pivot point.
BoJ declare a pivot from QE to QT what part of this do you not understand?
Its over Moby, no one listen's to techno.....
Two trades that set you up for life, the start of QE and the start of QT,
Japan is the world’s top creditor with $3.6 trillion (£3 trillion) of net assets overseas. It is the marginal buyer of British, eurozone, and American debt, and a central pillar of the international bond market.
In good times, the constant flow of investment via the yen "carry trade" is like a global ATM machine for needy debtors. When the flows reverse and the Japanese repatriate their money – as they did in late 2007 and 2008 – it can lead very quickly to a systemic credit crunch and a financial chain-reaction.
“Ultra-easy monetary policy in Japan has been holding down yields in the rest of the world, but the tectonic plates are now moving,” said Mark Dowding from BlueBay Asset Management.
Western bonds markets suffered instant contagion this week after the Bank of Japan (BoJ) lifted its cap on 10-year yields from 25 to 50 basis points, setting off convulsions in the country’s domestic bond market. This may be the first taste of what may become a wholesale Japanese retreat from the world markets.
The Japanese stopped buying western bonds months ago. NatWest Markets estimates that they sold €33bn of debt from the eurozone’s big four since April, and have sold $136bn of US debt since late last year. Liz Truss chose a bad moment to test market appetite for fiscal hooliganism.
The Japanese still own fat chunks of 9pc of the West’s sovereign debt markets: notably France at 9pc ($237bn), the UK 7pc ($138bn), the US 6pc ($1,320bn), and Germany 5pc ($98bn), among others.
NatWest's Giles Gale and Joann Spadigan say Japan’s fixed-income investors can now eke out a better return at home than they can from buying gilts, US Treasuries, Bunds, or French and Australian bonds, when adjusted for currency hedge costs. The logic of the carry trade is that it will now go into reverse.
“With clearly better yields at home Japanese may start to sell foreign holdings more aggressively,” they said. Furthermore, Europeans and Americans may switch to buying Japanese debt.
The financial world was caught off guard by the Bank of Japan’s bombshell. It should not have been. Japanese inflation reached a 40-year high of 3.6pc in October. The BoJ’s policy of yield curve control has pushed its bond portfolio to untenable levels near 120pc of GDP. The bank had been under pressure from the Kishida government to stabilise the yen and to restore normality to the bond market (be careful what you wish for).
“We could see it coming, but it was a nice Christmas present,” said Mr Dowding. BlueBay had large short positions on Japanese bonds.
“They couldn’t announce it in advance because that would have been an invitation to speculators. It is a bit like running a fixed exchange regime,” he said.
Markets are already testing the new 0.5pc cap, with swap contracts now pricing in 0.8pc. The Bank of Japan has gone from a bad but stable equilibrium to an unstable equilibrium. “The genie is out of the bottle,” said Mr Dowding.
It was not a pure policy “pivot”. Governor Haruhiko Kuroda said the move was intended chiefly to repair a broken bond market and should not be misread as tightening. Markets have drawn their own conclusion.
“Every big central bank is now withdrawing liquidity at the same time. It is going to make it much more difficult for Europe as it faces really big refinancing demands next year,” said Marc Ostwald, a bond veteran at ADM.
“Germany is borrowing almost half a trillion euros next year and this is going to crowd out the lending market. I am worried about a wave of corporate defaults,” he said.
Britain is on fiscal probation and squarely in the firing line. Yields on 10-year gilts jumped 13 basis points in the two trading days after the Japanese shock.
The events of the last week vindicate the Sunak-Hunt strategy of fiscal retrenchment. Procyclical austerity into the teeth of recession is not to my macroeconomic taste, but there are moments when it is too dangerous to defy creditors.
Europe too is in the firing line, with the added complication of a dysfunctional monetary union. NatWest Markets says the eurozone must finance over €1.3 trillion of sovereign debt in 2023 as energy bail-outs drag on and Germany’s deficit balloons to 4.5pc of GDP. That is €340bn more than last year.
The events of the last week vindicate the Sunak-Hunt strategy of fiscal retrenchment CREDIT: Jessica Taylor/UK Parliament
The AAA stalwarts such as Germany or The Netherlands will have no trouble borrowing – yields may fall as recession bites harder – but it is a different story for Club Med debtors. The surge in bond issuance hits just as the ECB launches quantitative tightening and adds another €15bn a month to bond supply.
Worse yet, the ECB has turned ferociously hawkish, signalling a “terminal” interest rate of 3.5pc. This implies a rise in Italian bond yields to circa 6pc, which is courting fate for a country with a public debt ratio near 150pc of GDP.
A southern European bond crisis is the dog that has not barked in this tightening cycle. Markets may have been lulled into a false sense of security, firstly because the ECB has skewed its bond redemptions away from Bunds and into Italian bonds (now played out), and secondly because the ECB has conjured a backstop of sorts with its “anti-spread” tool (TPI).
The TPI is a mirage. It cannot be used unless the eurozone is under extreme stress, otherwise it would be a fiscal rescue in violation of the Maastricht Treaty. The legal details have to be resolved, and the tool appears incompatible with past rulings by the German constitutional court.
Christine Lagarde, the ECB’s president, implicitly admitted this last week that there is a problem when she urged Italy to ratify the EU’s normal rescue fund (ESM), an entirely different animal. Not a single euro of this fund can be lent without the assent of the German Bundestag and under strict conditions. It amounts to a “Greek” fiscal occupation by EU commissars and that is why it has been rejected furiously by the Italian political Right.
Citigroup said France too could suffer from this week’s fall-out, given the scale of Japanese debt holdings and the country’s chronic fiscal deficit.
The Japanese gorged on a quarter trillion euros of French public debt before the pandemic because it offered core eurozone status with 25 basis points of extra yield over Bunds. It was a reasonable calculus. France has always been the beating heart of the Europe project.
However, the risk spread has since widened to 52 points. French political control over the ECB policy-making machinery is slipping away. In October, President Emmanuel Macron rebuked unnamed monetary hawks on the governing council for responding to an imported inflation shock by throttling internal demand. The ECB ignored him.
France’s total public and private debt has risen by 70 percentage points to 351pc of GDP over the last decade (BIS data), compared to 276pc for Italy, and 271pc for the UK.
S&P Global put the country on negative watch this month, warning of “rising risks to France’s public finances” and lack of structural reform. It said the debt ratio will still be 111pc of GDP in 2025.
For whatever reason, the Japanese have been running down their French bond portfolio at a rapid clip. The pace of liquidation is now likely to accelerate.
France has great strategic depth and will muddle through whatever happens but the real cost of fiscal insouciance is rising fast.
The UK has already learned the hard way that there is no margin for political and economic error when the global credit spigot dries up. The eurozone will have its lesson in 2023.
3.6% is their highest inflation in 40 years and it pretty clearly wasn't the result of their QE.
Not really much of a trader, I make most of my money the hard way (slow and over time).
You think trading is easy Pa1nter? as if using your hands on tools is somehow more ethical then trading houses, FX, options bonds etc........... what do real estate agents do>
https://www.bbc.com/news/business-64072866
Japan's core consumer price inflation edged up to 3.7% in November, the highest it has been since 1981.
That was when a Middle East crisis disrupted oil production and caused energy prices to soar.
I was just quoting the figures in the article you referenced.
And to your edit:
You think trading is easy Pa1nter?
No, I don't. I think it's high risk and a lot more down to luck.
I'm only good at lower margin stuff, producing a volume of goods paid by weight, square meters, that sort of thing. Hopefully for more than it costs me to generate. Is that more ethical? Not for me to say, and not an argument I was making.
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