Here's our summary of key economic events overnight that affect New Zealand with news financial markets seem to ignoring the risk of a Russian invasion of a key European neighbour.
But first, American retail sales in December came in much weaker than expected after a flat November. And it was the largest month-on-month fall in ten months, but on a year-on-year basis it is up almost +17%.
Compounding that, US industrial production unexpectedly slipped in December from the prior month following a good rise in November. On a year-on-year basis it is +3.8% higher. Compared with pre-pandemic December 2019, it is +0.5% higher.
Completing the downbeat tone of today's US data, the UofM sentiment survey sank to a decade low as attitudes to current life are battered by the surging Omicron pandemic and a rising fear of inflation's impact on them. Three-quarters of consumers in early January ranked inflation, compared with unemployment, as the more serious problem facing the country.
In American bond markets, funds are now flowing out in the expectation of Fed rate hikes in 2022. Holding bonds now risks capital losses. High-profile boss of JPMorgan Chase, Jamie Dimon, said overnight he expects six or seven Fed interest rate hikes in this cycle, based on the resilience of the US economy and American household balance sheets. But getting there will be turbulent for financial markets he warned.
China's trade balance swelled in December as export growth stayed elevated and rising +4.8% from November while import growth slowed, falling -2.8% from the prior month. Both were up about +20% year-on-year and took them to an overall 2021 surplus of +US$676 bln or about 2.8% of total world trade. The politically sensitive surplus with the US came it at +US$39 bln in December which in its historical context isn't that remarkable. It was +US$30 bln in November and +US$30 bln in December 2020. But clearly, American tariffs have had zero impact. (The US had an overall trade deficit with all-comers in 2021 of -US$850 bln or -3.6% of GDP; less than half was with China.) China ran a trade deficit of -US$4.5 bln in December with Australia; with New Zealand that deficit was -US$0.4 bln in the month.
The central bank of South Korea has made a rare back-to-back rate hike, adding another +25 bps to the policy rate and taking it to 1.25%. Inflation fears are driving these moves.
In the UK, a positive economic expansion in November has finally taken them back to pre-pandemic levels, one of the last major economies to get back to where they started.
Separate from economics, all eyes on an expected 'false flag' operation by Russia in Ukraine, one they will claim gives it the right to invade. Already, Ukraine is suffering cyber attacks to soften them up.
Australian home loans jumped +6.3% in November from October, mostly driven mostly by an improvement in owner occupier lending of +7.6%. But this probably won't be repeated for a set of reason, firstly the hit Omicron is taking, secondly the RBA's wind-back of its money printing, and thirdly rising mortgage interest rates ahead of an RBA change at some point.
In fact, labour shortages from Omicron stand-downs and scarcity of merchandise for sale are together likely to put plenty of pressure on Australian inflation levels and the RBA may well have to consider interest rate rises much earlier than they have previously signaled. Markets are starting to price that scenario in.
In NSW, there were 25,080 new community cases reported yesterday, a fall and a hope that they are topping out, now with 336,265 active locally-acquired cases (and undoubtedly an undercount), and 29 more deaths. Hospitals face serious staff shortages, and they have been told the number of COVID-positive people needing inpatient care could exceed 4500 within the month. They are now up to 2,525 having doubled in a week. Half of all NSW ICU patients are unvaccinated. 19,396 pandemic cases in Victoria were reported yesterday, also a reduction even if small. There are now 239,396 active cases in that state - and there were 18 deaths. Queensland is reporting 23,630 new cases (a record high) and 3 new deaths. In South Australia, new cases have held at 5,679 yesterday with 6 more deaths. The ACT has 1125 new cases and Tasmania 1201 new cases. Overall in Australia, 130,598 new cases were reported yesterday.
The UST 10yr yield opens today at 1.77% and up +5 bps. The UST 2-10 rate curve starts today flatter at +80 bps as short rates rose even faster. Their 1-5 curve is slightly steeper at +105 bps, while their 3m-10 year curve is also slightly steeper at +172 bps. The Australian Govt ten year benchmark rate is up +5 bps at 1.88%. The China Govt ten year bond is unchanged at 2.81%. The New Zealand Govt ten year is down -2 bps at 2.47%.
Wall Street is lower in Friday trade with the S&P500 down -0.9% and heading for a weekly dip of -0.8%. Overnight European markets fell about -0.9% as well on Friday. That meant that Frankfurt ended the week down -0.8%, Paris ended down -1.4% and London was up +0.8% for the week. Tokyo closed yesterday down -1.3% for a weekly retreat of -2.0%. Hong Kong closed on Friday down -0.2% but ended the week up +3.7%. Shanghai ended its Friday session down -1.0% to cap a -1.4% weekly loss. The ASX200 closed Friday down -1.1% for a weekly retreat of -0.8%. The NZX50 ended Friday down -0.3% for a weekly loss of -1.4%.
The price of gold starts today at US$1817/oz and down -US$2 since this time yesterday.
And oil prices start today firmer again, up +US$1 to just over US$83/bbl in the US, while the international Brent price is now just over US$85.50/bbl.
The Kiwi dollar opens today weaker at 68 USc and dropping -¾c overnight. Against the Australian dollar we are firmish at 94.4 AUc. Against the euro we are softish at 59.6 euro cents. That means our TWI-5 starts the today down at 72.2.
The bitcoin price is still moving sideways, down about -0.6% to US$42,908. Volatility over the past 24 hours has been modest at +/- 1.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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138 Comments
Wherever you see and whatever you see, one thing is clear that reserve banks have screwed and now are in catch 20 (typo -22) situation :
Interesting video : https://youtu.be/7oQdO0YfhrA
Action of likes of Orr's have come to fruition, now what - Stocks market is finally looking towards fundamental...many growth stocks are down 20% to 80% and now what if housing market too seems to finally follow fundamentals as even sligt fall in housing market will be a disaster for in any ponzi need to pass on the parcel on higher higher price to new investor with promise to find another new investor at much higher price in short term (Ponzi scheme is an investment that pays existing investors with funds collected from new investors, who is assured of the same and continues as long as the chain is not broken and in ponzi it is either boom or doom).
When investing, one should try and read the market, not predict.
Housing which is one of the basic necessity has been turned into ponzi by ......it is above bubble. Stock Market does not effect everyone but housing market does and check the defination of ponzi / pyramid scheme.
With an actual Ponzi usually money is handed over as an investment to be held/spent by the conductor of the Ponzi and isn't attached to a tangible asset.
It'd be applicable if people were buying property that didn't actually exist.
It's almost the reverse now, because there's a large amount of roadblocks for new "investors" (home owners) to enter.
The ponzi-like element of the NZ housing market stems from the banks allowing ever-larger loans leveraged against paper gains on exisiting housing stock. I've personally reached the conclusion that all other prognostications on the cause of house price inflation are essentially red herrings.
I'm an investor, as many on here are, in property and stocks. I've also worked as a broker.
Many property "investors" are not clued up investors. They are really speculators buying for capital gain. All of us here knows this. Importantly, many, many of them don't even know how to work out gross or net yield. This means they were prime targets for slick marketing and didn't research fundamentals. They saw the rental appraisals and thought, OK that stacks, rents always go up right?
A big risk I foresee is what Tony predicted... lots of investors starting to see the impact of having to stump up more tax. For now rents are holding but where there is massive supply coming, one has to ask... who will buy these??? If builders can't sell at a loss they'll have to rent them. Simple equation, once the nice new houses are rented (below market), how do the mom and pop "investors" rent their old dump houses? Answer they don't. Or they drop the rent so much they're sweating to top up the loan.
It becomes a massive race to the bottom with rents being lower and lower and the quality of tenants reflecting that. Those that have to sell will. Some sales will break even and those vendors will write off their "investing" experience to bad luck. Rather than poor research into the fundamentals and inability to ever calculate rental yield.
So maybe we'll see lots of older houses coming on the market later this year as TA predicts. I predict they'll drop in price a lot wherever there's reasonably supply of new.
It's hard to call it a law, but it's certainly a trend. Which stands to reason
Growing population and economy + ever increasing costs to produce a new unit of housing + less new land available where populations are = price pressure.
Then you get to throw in additional antagonists, monetary policy, immigration policy, tax policy, etc etc.
It's clearly a treadmill you stay off at your peril. Or just live somewhere less people want to live so you have less competitors pricing you out.
For sure.
But from here, I don't at all buy the prices double every 7 years narrative based on the past trend.
In the past we were moving from high interest rate to low interest rate environments, for a starter.
The starting position in terms of affordability (house price to income) is also vastly different.
The next 5-10 years are going to be interesting for sure, with so many influences.
The governments legislation in areas of property investment will kick in gradually over time.
Interest rates are showing signs of rising, but I feel that they'll drop again once all the post covid headwinds finally meet around the globe.
NZ will continue to attract an increasing amount of migrants, potentially in larger numbers as future governments look to use it to boost the economy short term and shore up our labour market shortfalls.
Ultimately if the demand stays, and the cost to produce a new unit of housing only keeps increasing (the latter is almost a give-in), prices will likely remain healthy over time.
I could be very wrong though.
When investing, one should try and read the market, not predict.
Agreed. So many people got burned when they tried to predict the market and made investments based on their predictions. To me, it's no different than gambling. The reason that it's extremely hard to make accurate predictions is there are so many factors affecting market. People don't have control over most factors.
The debate on the impotence of monetary policy is picking up nicely in the US: https://www.marketwatch.com/story/raising-interest-rates-would-do-nothi…
Shock and Orr
Separate from economics, all eyes on an expected 'false flag' operation by Russia in Ukraine, one they will claim gives it the right to invade. Already, Ukraine is suffering cyber attacks to soften them up.
A Ponzi scheme is based on fraud. The operators of the scheme deceive the participants, telling them that their money is being used to make real or financial investments that have a high return. Most transactions are not visible to participants. They rely on trust.
This housing bubble, although consisting of some fake housing estimates, with agents lying about house estimates on certain sites, did not depend on illegal fraud. This housing bubble and most of its development was there for everyone to see. With the principal problems out in the open and with the authorities not only ignoring those problems but contributing to their development. This complicity of the government actually makes this housing bubble much worse than a Ponzi scheme.
I want the housing market to crash because it is obscene, I want the economy to crash because I have seen these last couple of years that if the RBNZ and government have any semblance of an economy they will rig it to benefit the rich, but if the economy is in tatters they will lose control and the rich will get much poorer and the poor have nothing to lose anyhow. What rises from the ashes will be a level playing field where the poor will finally have a chance.
Printer 8 - are the Auckland Council wrong too?
A rating valuation is a three-yearly assessment of a property's value and is determined by house sale prices on a specific date. We use these valuations as a guide for setting your rates.
https://www.aucklandcouncil.govt.nz/property-rates-valuations/our-valua…
I am inexperienced and useless at most things and have no ego. I may in fact be wrong at everything I do. This, if true, however, does not make me a bad person. At this moment I am quite sure in my own mind that if the RV's go up in an area, which they do when prices rise, like they have, then the council uses this new set of increased RV's to raise the rates. If I am wrong then please educate me?
Gen X
Your comment "the council uses this new set of increased RV's to raise the rates" is wrong.
Increase in Council rate take does not come from rises in RV - rather increases come from rises in budgeted costs. RVs are just used to apportion some of costs to individual properties - other costs are fixed charges per property. Increases in RVs do not influence total council rate take - RVs are not considered until after any rise in total rate take has been determined.
Gen X
Correct. Any increase in total rate take comes from the budgeting process (ie planned expenditure) and once that process is complete rates for individual properties are based on fixed charges plus apportioned on the RV. It is quite possible that an individual property RV can increase but that actual rates for that property to decrease as has happened to me - such a situation can arise when total council rate increase is low and one’s % increase in RV is below the average.
Gen X
"I may be wrong' - most likely yes.
If you have any knowledge or experience of local body politics and elections you will know that rate increases are the most commonly contentious and usually the most common issue. Out of self interest rate payers do not like rate increases and out of self interest for re-election councilors try to limit increases. Goff needing to promise limits to rate increases is a good illustration of that.
But you stick to your fallacious postings.
A quick look on google brings up many councils looking to raise rates higher than normal but seeing as you mentioned Auckland and Goff. Please forgive me if this is old news now. https://www.nzherald.co.nz/nz/auckland-council-meeting-to-confirm-big-r…
Gen X
Your commentates continue to show a high degree of ignorance.
I did not say that councils do not increase rates - there are considerable needs for improved infrastructure at increasing costs and therefore a need for increases in budgeted rates.
Council (councillors) need to justify those increases and increase in house prices is not a rationale as your original fallacious comment asserted.
If you knew anything about council budgeting process you would know that council are faced with a range of options and costings and debate tends to be about limiting those. Rather than councillors not in the position of arguing “let’s increase rates as house prices have increased” as you assert they will be looking to cut some items. It will mean that there is likely to be a rate increase and councillors are very aware of the negative implications of the article you refer to.
Increase in rate levels are a contentious issue for ratepayer/ electors and Goff in particular has had to limit rate increases due to this.
Both of your simplistic statements in which you assert that rates go up because RVs go up, and that councils increase rates because house prices have risen iaee both fallaceous and naive.
Your continued tirade of usually baseless and fallacious comments as confirmed in these exchanges leaves the impression that you actually both know little and are inexperienced. No doubt you will disagree but you need to think about that to give your comments some credibility.
An increase (or decrease) will depend on whether your RV goes up more proportionally than the average increase. Word is many of the lower houses in our area jumped proportionally more than the high end... that could sting.
Sitting on the budgeting side is the general trend of councils to do more, the wave of renewals costs that come up as aging infrastructure needs replacing and propensity of central government/people to expect higher and higher standards. Two examples at the moment being earthquake strenthening and Asia deciding they dont want our recycling.
Councils are subject to all the usual inflations and particularly vulnerable to constructure inflation. The way construction inflation went in last 2 years I'd expect some tough times at the decision making table when the next budgets are set.
You are not quite right.
https://www.stuff.co.nz/national/126022593/explainer-how-are-rates-calc…
Whatever it is, all of those stats & headlines currently in Australia, will give cause to NZ’s government to continue with the current border closure status, indefinitely. NZ has no weaponry in the fight against omicron beyond that of Australia’s. The government here will not entertain for a moment the prospect of the same outcomes.
You think they are going to try zero (not delta) covid again?
They either are just in a panic without a plan or are hoping it slips though MIQ and they can avoid some responsibility. We just started the last mandateable mRNA vaccine round (it will will last for 2-3 months tops). They can maybe offer one or two more Pfizers (regardless of omicron rework). The time is now or very soon if they want to secure RAT tests first. Continuing to down the boarders after the omicron wave in Aus is over will not poll well.
No, think they accept omicron will get into the community but keeping the border closed will somewhat restrict the intensity & speed of that. They are terrified of the lesson Delta handed out when they were pressured to open up with Australia last year & Auckland had to bear again, a protracted lockdown. Yes vaccination is now largely achieved here but the same applies in Australia. There is a selection of approved academics here, laying the publicity, the groundwork in the media, that omicron will roar through here with the same devastating affect that is being highly publicised. Think that they would see politically, continuing with border closure as the lesser evil. Therefore the delaying action will continue. Be that as it may, Omicron will inevitably arrive nationwide en force, and the real danger now is this will coincide with NZ’s winter.
The wave will be mostly over six weeks after its starts unless it spreads poorly in NZ, which I think there is evidence for and would be good. Then, about a month after that there will be no need for any restrictions. The electorate will rebel against continued lock-downs for a cold. We are talking a 1 to 5% mortality risk of delta.
You have my vote, I think the border should be open now. But the pre-signalling from the usual approved academics (Baker, Davis for instance) & now ED clinicians too boot, is not running that way. They are adamant opening the border will be disastrous and accordingly the government is not indicating any retreat from its long-standing “canutish” policy. As well, opening up and then having to slam things shut once again at short or any notice, would be a train wreck politically and they know it. There will simply be repetition of “you can all see what’s happening in Australia and we need to protect you all from that etc etc. Appreciate poor old Canute’s actual purpose is readily misquoted, but unlike him, the government will not give up the ship they have been on for nigh on two years, ie hold covid back at all costs. But it would be highly pleasing to be proven wrong.
muzled,
You seem to be implying that Covid is hitting the vaccinated and the unvaccinated equally. If so, that would in turn imply that there is no point in getting vaccinated.
However, there is a large flaw in that proposition. Under 10 of the population is unvaccinated, yet 50% of the ICU patients are unvaccinated. I will leave you to work this out for yourself.
High-profile boss of JPMorgan Chase, Jamie Dimon, said overnight he expects six or seven Fed interest rate hikes in this cycle, based on the resilience of the US economy and American household balance sheets
I am sure Dimon is not in possession of a comprehensive understanding of the intricacies of financial market fundamentals, just as my former bosses at Chemical Bank London were not. Nonetheless, they undertook the takeover of Chase Manhattan Bank and then JP Morgan by purchasing shares (securities) in the market place and crediting the sellers' bank accounts with nothing more than a record of what Chemical Bank owed them.
Whenever the interest rate are raised or fed does tapering, market is going to react adversely, so early the better they realize to remove ventilator, which as it is should be in emergency only and that too for short term unlike fed who became comfortable for two years as was easy thing to do and had support from their political master, who too were thinking short term.
Now what ???? This situation is doing of reserve bank and politicians as anything in extreme is fatal be it medecine.
Commerce minister David Clark orders inquiry into falling lending levels
That was quick, how long will CCCFA last in its current form? The first signs of mortgage lending slow down and they governments all over it...
https://i.stuff.co.nz/business/127508329/commerce-minister-david-clark-…
It's the general public complaining about it. So many that think they're entitled to debt. Check the comments in this article...
Dramatic drop in mortgage demand 'threatens house prices
https://i.stuff.co.nz/business/money/127500750/dramatic-drop-in-mortgag…
It's odd, that so many are getting upset about this but haven't been as upset about the last two years of record house price increases and unaffordability... Can they not connect the dots?
The changes basically pull the ladder up from low- to middle-earners who are propertyless and shut out from owning their own golden goose. I am not surprised they are furious. They could have seriously tightened credit in other areas instead - e.g. second homes, rentals etc..
Jfoe how was the ladder not already pulled up from low to middle class earners? Average house price $1,000,000? The actions from the RBNZ (QE, removal of LVR etc) and the inaction from Govt destroyed housing affordability. The market is so distorted it needs to come back...
I think the banks are deliberately being ridiculous to prove that needless regulation can cause adverse reactions. It’s not a good look for the government when your bank noses through your day to day life so much. I’m surprised so many commentators here think this is a good thing, they probably want the government to wipe their bum too.
I'm constantly surprised by how fast the world is aging and every time I check the trend seems to have accelerated: https://www.ft.com/content/7a558711-c1b8-4a41-8e72-8470cbd117e5
We should declare a demographic emergency across the OECD.
Are you serious? The planet is hopelessly overpopulated with rapacious primates. We need us oldies to die off and get our population/ consumption down ASAP.
Those articles are often written by a particularly deranged group called economists who believe in the madness of eternal economic growth in a finite biosphere.
I just happened upon a quote from the book of Genesis, seems we've followed instructions pretty well:
And God said unto them,
Be fruitful, and multiply, and replenish the earth,
and subdue it: and have dominion
over the fish of the sea, and over the fowl of the air,
and over every living thing that moveth upon the earth.
When the FED moves nobody really knows how much the market will react but its so twitchy anything can happen.
https://smallcaps.com.au/is-the-taper-tantrum-starting-weekly-review/
High-profile boss of JPMorgan Chase, Jamie Dimon, expects six or seven Fed interest rate hikes in this cycle.
If this does happen, and I think it is a quite likely scenario, the repercussions to fixed international rates and ultimately to the cost of funding of NZ mortgages will be very significant.
I see interest rates in NZ going up more than predicted, with significant risks to the NZ housing Ponzi. It will be a rude awakening for many mortgage holders, especially the more delusional ones who, against all evidence and contrary to what current swap rates are strongly indicating, still hope that interest rates will go down in the future.
OK, fair enough, your view.
If the OCR keeps rising and rising over the next year and a half, to say 2.5%, what will that do to the economy?
Answer: It will totally sink it, along with the housing market.
Do you seriously think the RBNZ / Government will allow that to happen?
I don't.
I think much of this talk is just that - talk, with the intention of changing market perceptions and behaviour.
I guess we will see within a year who is right.
It's not about whether RBNZ / government allowing it happens or not. They simply don‘t have choice on this. Same as other banks. Even our OCR stays, the cost of borrowing will still go up as US tightening up their monetary policy. Housing Market or the reputation of our currency? I think RBNZ and government will always choose the second one. I respect your different view. But I think your wish of OCR coming down blinds you from seeing the reality of what's happening around the world right now. I'm not saying it will never come down, but it will likely stay high for quite a bit time before it comes down. Economy has its cycle. Once we moved into one part of the cycle, it will take a while to move out of it.
My view is that the fed will relent on rate rises almost as soon as they start, which will allow little places like NZ to do same. I think they will relent as growth and inflation (and employment) head south this year. A quick reversal and resultant panic and over reaction.
Lots of assumptions but with no solid facts or numbers to back them up. The facts are, US inflation is sitting at 7% and will continue to go up, unemployment rate is low, the vows to battle inflation and will ensure inflation doesn't take root. I suggest you to do a bit research how Fed tackled last inflation when it was at 7%, it might help you to understand current situation a bit more! Good luck with your guessing!
Record high inflation rate in U.S. indicates economy is "overheated," economist says - YouTube
The key difference from the last times rates went up (by volker) is that debt is much higher compared to GDP. They cant afford to raise and sustain anywhere near as much. But they will try for a while to given Biden a drop in inflation this year before the midterm elections.
A lot of it depends on what happens to values. It's been quite a while since people could get 100% finance, and over the last few years deposit rates have increased as has compliance requirements. So we'd need to see decent double digit falls in value to have a significant number of mortgage holders upside down.
Chaos in the Bond Market with Greg Foss & Lawrence Lepard
10 Year Treasury note Monster Spike.
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
I'm sure someone here will know the answer to this question...
What is the minimum floor area for a room to be advertised as a bedroom?
For example, does a room that is 2.2m wide by 3.2m long, plus a small wardrobe over and above that, count as a bedroom? Assuming it has a window. This can fairly easily fit a single bed plus a few small bits of furniture, I recall this being about the size of my younger brother's bedroom when I was growing up.
The Housing Improvement Regulations say a bedroom must have at least 6 sq. m of floor area and be at least 1.8m wide.
https://www.legislation.govt.nz/regulation/public/1947/0200/latest/whol…
Is this the standard that is used to determine whether a room can be counted as a bedroom for the purpose of valuation and real estate advertising?
Informed views very appreciated.
Found this:
https://brentsellsnelson.co.nz/real-estate-blog/minimum-bedroom-size/
Also other requirements around area of window, ceiling heights etc.
Conversion of part of a living room.
Our 3 bedroom townhouse is 104 square metres - 52 each level (3 bedrooms and 2 bathrooms upstairs). One option is to wall off part of the L shaped living room area on the ground floor, into a small bedroom / study.
The ground floor living would then go from about 48 sq. m net, to 41 sq. m . Which is pretty compact, but not at all terrible.
I guess the question is how much value we would gain by going from 3 to 4 bedrooms, on the downside the living room size decreases which I imagine would have some counteracting effect in terms of valuation.
But one of the larger upstairs bedrooms could be used as a TV room, or study / home office for someone who only needed 3 bedrooms. With more remote working there must be value in having more rooms?
We wouldn't do it now, but looking ahead a couple of years if we potentially look at selling.
Despite the living room shrinking, my gut feel would be there would be significant up-valuation. Possibly from a valuation of circa 950K to 1,050,000.
Interested in views.
As I understand it, the floor area you've described is allowable for a child's bedroom up to the age of 10 years old. I'm not joking.
As far as windows, you need a min of 10% of the room floor area of light. 5% of the room floor area must be an openable window or door to meet air change requirements.
You need to check the district plan rules on houses for the region you're looking at re bedroom min sizes.
Ashley Church: Are Kiwis hard-wired to hate property investors?
https://www.oneroof.co.nz/news/40743
Will investors ever be able to understand the damage they have done?
Yes I read this article. He’s clearly rattled. I was curious as to why he’d gone quiet for a while.
I’ve actually warmed to TA lately, his opinions seem way more balanced and i actually have learnt a couple of things from his most recent articles. This guy on the other hand… bottom of the barrel stuff with a smirk that makes you want to vomit.
Yeah I've warmed to TA too, he's got good logic and a pretty good track record.
I think that, rather than his bullishness on house prices, it was his offensive talk on FHBs and avocados that really put me off him. In fact, I left the BNZ at the time because of it.
Like is usually the case, he's totally off the mark.
Many FHBs are bitter about investors, I know I was. Because the popularity of investing / speculating in housing has undoubtedly affected the prospects of FHBs, no matter what Mr Church thinks.
Despite being bitter about investors, I was never bitter about successful business people who made success in productive enterprise that create value for the economy and jobs.
Totally different thing, which Church is conflating.
In fact, one of our closest family friends who passed a way a few years back was a 'Rich Lister'. Lovely, humble guy who had worked hard from nothing and created very successful businesses that added lots of value to the economy and lots of jobs.
I’m curious to see wether we will see a trend in NZ towards entrepreneurship now that property investment is quickly becoming a low yield endeavour? I know that’s a broad question but there might be a silver lining that comes out of the RE gig being in the too hard basket for most. People can be really creative and brilliant once the easy path to money becomes rocky
Some things to consider about this subject:
- sourcing funds for business purposes is a lot harder and more expensive than for a property.
- home equity is a fairly common means of financing a business startup
- if someone was weighing up buying a property over starting a business, the statistics against a new business failing says you'd be better working a second job to buy a house.
With such speculation....this year will be very volatile as market is pricing in interest rate rise x 3 in 2022.
https://finance.yahoo.com/news/jp-morgan-ceo-projects-up-to-seven-rate-…
First home buyer says he ‘lived like a hermit’ to get approval under new mortgage lending rules
LOL another great article... I'm not sure if this is satire or not? So much pain being felt over a 3 month period - this is not fair!!!:
21-year-old aircraft engineer apprentice prepared three months of bank statement and payslips to present to banks to satisfy new Credit Contracts and Consumer Finance Act (CCCFA) requirements, his Netflix and Disney+ Plus had to go, and meals and drinks out became a thing of the past.
“It is pretty hard being 21 and saying to your mates: ‘Hey look, do you mind going for a walk instead?
https://i.stuff.co.nz/business/300493764/first-home-buyer-says-he-lived…
It was pretty tough 40 years ago trying to get a mortgage if I recall. It won't kill us if it get's tough once again. The cycles of life can be challenging. That's what life is about. Overcoming difficulties. We'll survive. Well, most will survive. The current leaderships take on running a small nation is a little naive, but they're young & prone to mistakes. We all were. They'll grow up eventually. I hope. We had to.
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