What happened Monday

A review of things you need to know before you go home on Monday; no rate changes, housing shortage spreads, Green Fund open, swaps lower, NZD soft, & more

23rd Sep 19, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
None to report today.

TERM DEPOSIT RATE CHANGES
None here either.

HOUSING SHORTAGE SPREADS
The under supply of housing may be far worse in many provincial centres than it is in Auckland, according to the latest census figures released by Statistics NZ. The figures show that between the 2013 and 2018 censuses this country's usually resident population increased by 10.8%, while the total number of dwellings (occupied and unoccupied) increased by just 6.2%.

WHERE THE VACANT HOUSES ARE & AREN'T
The same release suggests that "unoccupied dwellings" are about 10% of all dwellings, or about 185,000 houses. Some will be developments built awaiting owners to shift in, some rented properties between tenants, but most will be holiday houses. In fact, the largest proportions are for vacation regions: Great Barrier Island = 51%, Waiheke Island = 33%, Taupo = 32%, Ruapehu = 33%, Kaikoura = 32%, Mckenzie District = 42%, Queenstown-Lakes = 28%. In the main urban centres, the levels are relatively low with Auckland 7.3%, Hamilton 5.3%, Tauranga 8.8%, Napier 5.7%, Wellington 6.1%, Christchurch 8.5% and Dunedin 7.4%. The place with the lowest vacancy rate is Mt Roskill/ThreeKings in Auckland with a vacancy rate of 4.2%.

GREEN INVESTMENT FINANCE OPEN FOR BUSINESS
New Zealand Green Investment Finance, a $100 mln government initiative aimed at reducing greenhouse gas emissions, is now up and running and seeking projects for commercial investment. This follows the appointment of a leadership team and its formal establishment.

RBNZ LOSING SUPPORT FROM HEAVY HITTERS
The NZIER has a Shadow Board to make its assessment of what the RBNZ will do to the OCR on Wednesday. They are divided on that. They thought the RBNZ should keep the OCR on hold, although some saw a higher OCR as appropriate. However, "many Shadow Board members were sceptical about whether a further lowering of interest rates would boost activity and headline inflation".

RISKS ABATED
In Australia, their financial regulators are now saying "the potential for risks to financial stability from falling housing prices in Sydney and Melbourne has abated".

EQUITY MARKET UPDATE
Although Tokyo markets are closed today for a public holiday, Shanghai and Hong Kong are open, although they probably wish they weren't. Shanghai is down -1.2% in early trade and Hong Kong is gown -0.7%. The ASX200 is up +0.4% and the NZX50 is up +0.3% in afternoon trade.

SWAP RATES LOWER
Wholesale swap rates are down -2 bps across the whole curve today. The 90-day bank bill rate is -1 bps lower at 1.13%. Australian swap rates are unchanged but the Aussie Govt 10yr is down -7 bps at 0.99%. The China Govt 10yr is down -3 bps at 3.10%, while the NZ Govt 10 yr is down another -3 bps to 1.16%. The UST 10yr yield is unchanged since this morning at 1.72%.

NZ DOLLAR LOWER
The Kiwi dollar is down further at just on 62.7 USc. Against the Aussie we are soft at 92.6 AU cents. Against the euro we are unchanged at 56.9 euro cents. That puts the TWI-5 down to just on 68.

BITCOIN SOFT
Bitcoin is marginally higher that where we found it this morning, now at US$9,983 but down -2% from this time on Friday. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

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24 Comments

by youngdumbandbroke | 23rd Sep 19, 4:14pm 1569212089

"unoccupied dwellings" are about 10% of all dwellings, or about 185,000 houses. Some will be developments built awaiting owners to shift in, some rented properties between tenants, but most will be holiday houses. In fact, the largest proportions are for vacation regions: Great Barrier Island = 51%, Waiheke Island = 33%, Taupo = 32%, Ruapehu = 33%, Kaikoura = 32%, Mckenzie District = 42%, Queenstown-Lakes = 28%

ahh.. the kiwi dream aye

by CJ099 | 23rd Sep 19, 7:00pm 1569222038

Looking at the latest census data we really, really need an Empty Homes Tax. Take Auckland for example where most wage earners can't afford a home. We're now up to at least 40,000 unoccupied private dwellings! That's just insane. Vancouver only has officially 8,500 unoccupied private dwellings and yet they brought in an Empty Homes tax which so far is collecting huge amounts of revenue for them, up to $38 million in their first year! Which is used to build new affordable homes.
NZ Census link: http://statsnz.maps.arcgis.com/apps/MapSeries/index.html?appid=97e2e97c…

by loveyourwork | 23rd Sep 19, 8:33pm 1569227616

I really like the closed-loop tax initiatives. Appears similar average house price in Auckland and Vancouver. Applying the same tax would roughly collect ~$175m for new builds - that's like 3 Kiwibuilds!

by Dgm | 23rd Sep 19, 4:23pm 1569212614

"The under supply of housing may be far worse in many provincial centres than it is in Auckland, according to the latest census figures released by Statistics NZ. The figures show that between the 2013 and 2018 censuses this country's usually resident population increased by 10.8%, while the total number of dwellings (occupied and unoccupied) increased by just 6.2%."

The above is stated in a more sensible manner.. the provincial centres are having a worse shortage than auckland is actually facing... all along it was proclaimed that Auckland was having a severe shortage.. based on the census data, its not the case...

by JimboJones | 23rd Sep 19, 4:42pm 1569213724

What are the barriers to building more houses in the provincial centres? Shouldn't land be cheap?

by Dgm | 23rd Sep 19, 4:46pm 1569214005

hopefully they now catch up..

All along AUCKLAND was the only focus.. regions were ignored..

by JimboJones | 23rd Sep 19, 7:09pm 1569222598

But why weren’t builders building houses in the regions? I can see plenty of reasons in Auckland such as lack of land, restrictive planning, shortage of labour, etc. but do these issues exist in the regions (and should they)?

by waymad | 23rd Sep 19, 8:31pm 1569227469

Well, just consider The 'Naki - No Mo' O&G so local economy tanks. Or West Coast (SI) - No Mo' Touching conservation land (85-90% of the show). Neither is gonna make builders say - oh, let's drop $200K on a speccie and Hope....' Then expand that to any province primarily dependent on Farming, and join the dots.....

by Dgm | 23rd Sep 19, 8:54pm 1569228869

For the last 9 years, the regions were left to survive on their own... National only focused on Auckland.. john key went so far to call Wellington a dead city, whereas today it's booming..

The net migration loss from Auckland were mainly people selling up and buying in the regions... under national, they let the market dictate terms and hence builders were drip feeding properties to the market.. hopefully if the government can drive KB in the regions, you will notice that consents will start to jump..

As per recent article, 10 prefab KB are being built in Napier.. this is fantastic and will drive competition..

Recent job ads show growth in regions ..hopefully this will drive overall activity up..

by Wrong John | 23rd Sep 19, 5:03pm 1569214990

The US$/NZ$ graph looks ominous. What odds something starting with a 5 sometime soon?

by Audaxes | 23rd Sep 19, 5:25pm 1569216309

Quite ominous given there is reported demand for NZD from foreign sources to settle just less than half of the Treasury's new $2.0 billion note issue this Wednesday.

by positivelywallstreet | 23rd Sep 19, 6:17pm 1569219426

The climate change overview released today looks ominous, we need to triple our emissions commitments and close coal by 2030.
https://www.bbc.com/news/science-environment-49773869
Carless days...electrify NI rail...rolling blackouts...

by Kezza R | 23rd Sep 19, 7:06pm 1569222412

Shut down the Beehive for a year.

by Audaxes | 23rd Sep 19, 5:58pm 1569218328

Trump’s Next Trade Feud Has Parcels From China in Its Sights

Next week, White House trade adviser Peter Navarro will lead a delegation to Geneva to try to reform the 145-year-old global system of coordinating postal policies, a method he says treats American companies unfairly.

And if his reform push fails? The U.S. is ready to ditch the Universal Postal Union as soon as Oct. 17, which could throw into chaos how packages are sent to and from the U.S., and would likely add costly bureaucratic hurdles.

by bw | 23rd Sep 19, 6:26pm 1569219985

I've noticed most of our small package items from China have recently been mailed in Germany. I guess they ship a container load of packages into Hamburg and drop the lot into the local mailbox, so to speak.... I'm not surprised that the US is having a good look at the current system.

by profile | 23rd Sep 19, 7:45pm 1569224745

Listen to the NPR money podcast on this. It is just another trade subsidy that screws small US/NZ business.

by DIYman | 23rd Sep 19, 6:19pm 1569219571

32% in Kaikoura, sounds high, must include all the baches along SH1, north and south of the town. No wonder the new 30 M Sudina hotel is being prefabricated somewhere else, staff cant get anywhere to live. Are the numbers available for the main Kaikoura town on its own?

by Fritz | 23rd Sep 19, 6:21pm 1569219672

Glad to see the Green Fund finally open. I have a potential business proposition.

by youngdumbandbroke | 25th Sep 19, 9:20am 1569360051

I might start a rent-a-protest mob business - for all your outrage culture needs! See rent-a-mob!

by CJ099 | 23rd Sep 19, 6:36pm 1569220600

BBC news: Thomas Cook has collapsed after last-minute negotiations aimed at saving the 178-year-old holiday firm failed. The UK Civil Aviation Authority (CAA) said the tour operator had "ceased trading with immediate effect". The tour operator's failure puts 22,000 jobs at risk worldwide, including 9,000 in the UK.
While an estimated 150,000 Britons are affected by Thomas Cook's collapse, the company has around 600,000 customers abroad.
What went wrong? Thomas Cook had secured a £900m rescue deal led by its largest shareholder Chinese firm Fosun in August, but a recent demand from its lending banks to raise a further £200m in contingency funding had put the deal in doubt. https://www.bbc.com/news/business-49791249

by Kezza R | 23rd Sep 19, 7:02pm 1569222171

200 - 300 more Kiwi build housrs for Wanaka then.

by Audaxes | 23rd Sep 19, 8:03pm 1569225798

Janus Enters Eye of the Repo Storm With a $35 Million Yen Wager

The firm’s $1.1 billion Janus Short Duration Income exchange-traded fund, which trades under the ticker VNLA, entered into $35 million worth of dollar-yen forward contracts this week that expire on Oct. 1, according to the ETF’s latest holdings data. Lending out dollars to hold yen cash for one week is currently on offer at a yield of 3.7% for greenback-based holders, according to Bloomberg data.

To capitalize on the crunch, a dollar-based investor would sell the U.S. currency in the spot market and buy yen, while agreeing to sell the Japanese currency in the forward market at a fixed price. As of Sept. 19, more than 3% of VNLA’s holdings are in dollar-yen forward contracts to do exactly that.

by Fritz | 23rd Sep 19, 8:28pm 1569227310

David, is there a press release on Green Investment Finance? Their website isn't updated, their latest website news dates back to May.

by Fritz | 23rd Sep 19, 8:50pm 1569228641

ah it seems to be updated now