Labour income dives -11%; US Fed calls for fiscal help; global PMIs hold; Japan, China to relax entry rules; huge Chinese grain imports; new Aussie bankruptcy rules; UST 10y at 0.68%; oil stable and gold dives; NZ$1 = 65.4 USc; TWI-5 = 69.1

Labour income dives -11%; US Fed calls for fiscal help; global PMIs hold; Japan, China to relax entry rules; huge Chinese grain imports; new Aussie bankruptcy rules; UST 10y at 0.68%; oil stable and gold dives; NZ$1 = 65.4 USc; TWI-5 = 69.1

Here's our summary of key economic events overnight that affect New Zealand, with news American investors have taken fright again.

A new report out overnight says that globally, labour income has fallen almost -11%, or US$3.5 tln, in the first three quarters of 2020, compared with the same period in 2019. But the figure excludes income support provided through government measures. Given the annual world GDP is US$80 tln the hard knock to worker incomes will take nearly -6% off that in 2020 and severely crimp demand.

And the clear resurgence of the pandemic in the US and Europe is telling markets we are a long way from beating the disease with current policies. Wall Street has taken fright again and is down sharply.

And US Fed officials testifying in Congress called for more fiscal support. They said the American economy is in need of more government spending to avoid a pandemic relapse in their economy. That support is unlikely to come from the Congress however.

However overnight there were a series of flash global PMIs released for September and they were generally positive. The US factory PMI expanded at a similar rate to August at 54. Their services PMI is expanding very similarly. But those surveyed aren't especially optimistic it will last.

In Japan, there was little change from August as well but that leaves the September results for both factory and services contracting. However they reported business sentiment appears to be improving.

In the EU, they report a stagnation, but at least it isn't a contraction.

The Australian PMI also reported a stagnation for services (undercut by Victoria) but a good expansion for manufacturing. But they also noted it is a burst that may "lack legs".

In Japan they are about to relax visitor entry rules from early October.

In China, they are also relaxing border rules and about to allow re-entry of people with valid residence visas. They have been excluded for six month as part of their pandemic restrictions.

The size of China's grain shortfall has been revealed in August Customs data released overnight. They brought in more than 1 mln tonnes of corn in the month, up +12% from the previous month and nearly five times higher than the volume recorded in the same month last year. Purchases at this level distort global food prices. And it is likely to extend for a long time yet.

In Australia, new budget rules are about to be unveiled allowing small businesses at risk of collapse to trade while insolvent, in a US style bankruptcy status, to help some of them recover.

In New York, the S&P500 is down more than -2.2% in early afternoon trade and another large retreat. They follow European markets that were generally higher by about +0.6%. Yesterday Shanghai ended its session up +0.2% and Hong Kong was up +0.1%. Tokyo was down just -0.1% which meant it missed the large falls of earlier in the week. The ASX200 ended up a strong +2.4%, and the NZX50 Capital Index ended up +0.8%.

The latest global compilation of COVID-19 data is here. The global tally is 31,714,000 and up +304,000 in one day. Global deaths now exceed 973,000.

Just under a quarter of all reported cases globally are in the US, which is up +54,000 overnight to 7,113,000. The number of active cases are stable at 2,540,000 so they have as many new cases as recoveries and making no progress. Their death total is now just over 206,000 and back rising at +1000 per day.

In Australia, there have now been 26,973 COVID-19 cases reported, and that is only +31 more cases from yesterday. Deaths are up slightly at 859 (+4). Their recovery rate is now just on 90%.

The UST 10yr yield is up +2 bp at 0.68%. Their 2-10 rate curve is up slightly at +55 bps, their 1-5 curve has steeped marginally to +15 bps, while their 3m-10 year curve is also steeper at just on +60 bps. The Australian Govt 10 year yield is down -4 bps at 0.86%. The China Govt 10 year yield is also lower at 3.11% and a small -1 bp dip. And the New Zealand Govt 10 year yield is also down a sharp -4 bp at 0.48% and if that holds will be a record low, beating the mid-May crash.

The price of gold will start today down sharply by a large -US$51 at US$1855/oz. Silver is down a massive -7% overnight.

Oil prices have inched up in a minor way and are now just under US$40/bbl in the US, while the international price is marginally firmer at just on US$42/bbl.

The Kiwi dollar starts today lower again at 65.4 USc and another -1c slip retreat. We are now at a one month low. Against the Australian dollar we are softish at 92.4 AUc. Against the euro we are definitely softer at 56.1 euro cents. That means our TWI-5 has retreated to 69.1.

The bitcoin price is virtually unchanged today from this time yesterday, and at US$10,464. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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113 Comments

24
up

It was always known but now is been confirmed that only real economy in NZ is housing economy and the very existence of NZ economy depends on housing price rise. Ponzi has to be supported and continued for the very existence of NZ as a community - economically.

So anyone looking for any softness in housing market should give up hope as reserve bank and government only agenda is to keep the housing ponzi as that only equates to economy in NZ

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=123...

Last election many voted Labour for on housing issue but they U turned as now part of 2 million dollar house from 600000 house

SO

May be all those looking to buy house should vote Green Party for he very reason whether you like them or not.

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12367466

18
up

The Green plan is garbage. It targets all wealth, not just housing. Far more targeted options are available for hitting homes at a transaction level (stamp duties) and holding (land taxes). 'All wealth' will capture family homes as well as batches pensions, businesses, Kiwisaver, as well as boats and cars e.g. assets that are not necessarily held as investments, but that may also have inflated 'values' due to loose central monetary policy on an unrealised basis that you may actually have no intention of selling. If your net asset position goes over $1m, you get stung. I can't see that going down well with the Remuera Green voters. Fortunately, they'd have to win over 5% first, which is looking dubious.

11
up

If other major political parties are going in extreme to support and promote ponzi than why not go to another extreme by voting Green.

Two opposites may bring some balance.

Though Green Party is garbage or Labour is garbage or national - Agree with comment that all those looking / hoping for a house should try Green party - though still believe that bubble should burst and reserve bank statement yesterday confirms their worst fear which they are afraid to talk but actions give away.

12
up

Hate to say it but you are correct. NZ's absurd housing prices are primarily the result of monetary & taxation policies that penalise businesses & incomes while encouraging people to "invest" in housing fueling asset bubbles. A consequence of this is many young New-Zealanders are unable to buy a home unless they are willing to take on an unacceptably high mortgage. Act, National, Labour, NZ first all have policies that support this status quo. The Green party is the only party that has a policy platform that would alter it.

I'm a filthy capitalist but I am young. It is difficult seeing many of my friends struggle with the dilemma of whether to buy a home or start a family. As often you can't do both these days. Maybe they will get my vote.

Know quite a few business people who have turned devlopers, switched to buying a house than making additional house and selling.

Easy and fast money.

Hope the bubble never burst for many will lose everything.

If all young voters did that and ate into Labour's vote - it is likely the Greens would have the balance of power (i.e., be the kingmaker) in the same way NZ First did last election. Imagine that.

I doubt two opposite sides will bring balance. Green's tax increases are too broad to specifically affect housing, and their other polices will continue to crimp supply for housing.

10
up

So the Greens poll 6% and they just can’t contain themselves, out roll the envy tax accompanied by threats. This is a harbinger of just how presumptuous the Greens are going to be if Labour needs to be in coalition with them. Robertson has already irrevocably stated Labour’s announced policy will not change. Yet here are the Greens, pent up & rearing up ready to charge out of left field when the gate is opened and demand their own policies take priority. Labour cannot hope to govern like this, they know full well they will not be able to control the Greens, the government will be as chaotic as Bolger’s with NZF.

23
up

We voted labour last time because they said they would lower house prices - they lied - whats the point in voting, greens will probably do the same - all trust in the political system is gone. NZ is an elitist autocracy. True democracy no longer exists in NZ.

Apex
"labour . . . . said they would lower house prices - they lied"
Are you sure Labour promised to lower house prices - can you please reference that?

I know that Labour promised KiwiBuild but that is quite different to promising to lowering house prices - find it hard to believe that a political party would promise to legislate the market.

11
up

Labour did go for election in 2017 on housing crisis and CGT.

Created a committee for CGT and ultimately did U turn despite begging for votes on CGT and going against the committee formed.

FBB luckily was introduced initially otherwise would have done U turn on that as well just like CGT.

May be people for their self interest (if politicans can act for vested biased interest than why not citizen) vote for Green as they do not need much but slight boost by few % Will have them in a more powerful posistion though not a fan of Green Party but.....

Sturat

Labour did not do a U-Turn on a CGT. As part of the COL NZ first killed it - Jacinda stated her disappointment that she was unable to introduce a CGT on the basis of support as both NZF and National oppossed it.
That is not lying - that is political reality.

Labour introduced a FBB to cool the market. So they were doing what they could through legislation to influence the market. Moves on the OCR and LVR are the domain of RBNZ who by Act are independent of Government.
That is not lying.

Yes, KiwiBuild was a failure and embarrassment.
That was not lying.

10
up

"That is not lying - that is political reality."

She ruled it out forever when there was a high chance NZ First would disappear at some stage. That wasn't necessary. NZ First killed it in this term, but Ardern nuked it from orbit to be sure.

Gv
Well that is being honest!

copy and pasted from - https://thedailyblog.co.nz/2020/09/24/going-high-not-low-an-assessment-o...

That’s why one of the most effective political statements of the whole evening came in response to John Campbell’s challenge to the Prime Minister over the Capital Gains Tax. “At some point, John,” Jacinda explained, acknowledging Labour’s three failed attempts to sell a CGT to the electorate, “you have to accept that voters don’t agree with you.”

CGT as the lawyer would say, is now out of time. In reality the revenue would not start arriving in any significance 8 to 10 years, hardly likely then to smooth the current troubled waters.

Unless, unless....it's based on unrealised (rather than, as the usual chatter assumes, Realised) CG. And then we are in Consultant Heaven, as the current market value of every asset, however defined, has to be reassessed annually, to establish whether or not any CG (or CL...) has occurred, in order to define the current tax base. Lawyers, accountants, valuers, QS, et al would be in That deep trough like flies on poo.....

Aye and don’t forget the icing proposed courtesy the Greens. Vehicles, boats, artwork, family heirlooms all to be collated,recorded and audited annually on top of what cash is held. A dossier kept on everyone so as to enable accuracy and accountability of said assets. Which means right of entry for the asset police to look and see what might be under the bed. Orwellian architecture at its finest.

And massive evasion incentive: paintings and jewellery walled up in a void, just like the MSSA oiled up, tarped, and dropped down the offal hole....

Well I read Papillon so know where to hide the engagement ring. Cover sharp edges first though.

Houses get revalued every 3 years for RV, so use that valuation for the CGT, and then when its sold make a final smallish payment to make up the difference between the RV guesstimate and the actual realised capital gain. So every three years you get a new RV and the CGT on that increase becomes payable, in three annual amounts to get you to the next RV update. It avoids the lockin effect of 10years of unpaid CGT becoming due if you sell, at most you have 3 years plus the difference between RV and market value.

Of course, if you want CGT on other capital assets then all you said above comes true. Only thing easy to value are listed shares, the value updates itself second by second during trading hours for most.

Just do a land tax like rates. Paid quarterly and unavoidable. Good cashflow for NZ and forces productive activity in our largest area on non productivity....debt speculation on land.

True the mechanism is there but local government have exploited rates, as a wealth tax based on the improved value of the property, to the point of extortion. Are you though suggesting that a land tax would be on the land only, ie unimproved value?

Understand WP opposed but if still believe in it, this was the perfect opportunity to try in this election as Government also needed money but ........so is lying specially going against committee created for the purpose, if not interested than why was the committee created and if did a U turn under WP, what is stopping her now from bringing.

Not to hide under that have promised as everyone knows politicans of all breed keeps promise that suits them or do a U turn with an excuse.

If market was hot in last election, imagine how it must be now so more the reason to bring it back on table but false ego / vested interest will prevent.

Not a big fan of Green Party but to bring some balance will like to see Green in a better position after election and I think even Green has understood the need so are raising their pitch and rightly so.

Money has to come from somewhere, if you take off one person they have less to spend elsewhere, it's the productive sector of the economy that needs a leg up, house bubbles are inclined to self heal.

Socialists, such as the Green Party here, would say take it off one person and give it to someone else to spend, that way it is still spent. In a similar vein an experience some time ago with an American couple waiting at the airport. One was a judge the other a tax attorney. They gave their interpretation of socialism as simply taking money from them that they had earned, paid taxes on and saved and giving it to someone who had done none of those things. At the time I was taken back by the over simplification and self righteousness they portrayed. Now though, with what the Greens here have been uttering of late, I see their point.

23
up

It would be great if the younger generation would look at TOP policies. They seem to be the only party that has provided evidence-based policies to address a plethora of issues, housing and inequality being their primary focus.

Even politicians from other parties are starting to acknowledge the potential in TOP's policies

16
up

TOP has the best policy around housing in my opinion. Worth a look if you haven't already.

Got to agree... Anyone houseless or in the younger voting bracket would be crazy not to look at TOP and their policies. Some great stuff.

I voted TOP last time because of their housing policies but it just seems like a wasted vote now.

But why they don't get the vote of every single renter in the country escapes me.

A wasted vote is the incumbent main parties as they are not doing what we voted for.
TOP needs some momentum, they are gaining amongst the younger voters, perhaps not showing in the polls, but they are building.

10
up

Honestly, if you are young, tell all your friends. I have been telling many young people about TOP. Most of them thought voting was pointless, now some at least will vote for change.

People all over this site are complaining how neither Labour or National do anything and how the status quo is stuffed. Yet when a party who wants to upend the status quo and actually change things for the better comes along, they don't vote for it. It's tribalism at it's worst. A vote for TOP in many ways a protest vote against the major parties continuing their destructive policies.

I actually joined TOP when it was first established because it's economic policy was a breath of fresh air but didn't look at their other policies. When I later found out their kow towing to the Maoris I resigned.

'the Maori'?

What were they kow towing to the Maori about?

...with an attitude like that, good.

I hardly think that promoting a policy that would establish a single constitutional document which would recognise/incorporate the three articles of the Treaty of Waitangi (alongside other legislation, such as the NZ Bill of Rights Act) is kow towing to Māori. Doing that is just reflecting/honouring the fact of our history as a nation.

I don't think TOP is going to solve anything. With there UBI policy they want to give $13,000 to everyone to all kiwi's. With 5 million New-Zealanders this will cost 65 billion dollars per year. Our GDP is a little over 210 billion. So essentially a third of our national income should be spent on this "welfare for everyone" programme??

Your numbers are incorrect - you calculated the $65 billion in NZD and factored the $210 billion size of the economy in USD.

FYI we currently spend $35 billion in direct welfare schemes plus another 10s of billions on subsidising expenses for low income households.
I am not convinced on UBI but is worth looking at if we can save the taxes wasted on administering numerous welfare schemes.

I stand corrected with regards to the nominal gdp figure.

More than offset by dumping the enormous cost of running msd and all their handouts, let alone the savings at IR. Have an in-depth read of the policy, you will change your mind.

Agree. We could just automate the UBI payments once any citizen turns 18. Just provide your designated account number online and prove it's your account.

Look up their policy again. $40 pw per child (there are 1.1m children in NZ), $250 per adult which comes in around $53b. Currently we spend at least $34b on welfare which this would replace and simplify. They will also spread the tax base much wider to capture housing. It also sounds like they want to reform the way the RB works, so they can buy bonds directly from Treasury and cancel their own debt (very MMT like). Hopefully that would drive inflation and start seeing to the household debt problem. Currently the RB will buy bank bonds, basically a massive bank subsidy which we will all pay for - bank bail ins. They are currently looking at spending $100b doing this, which will inevitably rise. That's enough money to give the recently identified 160k children in material hardship $600k each. But instead, it's going to banks.

Really you have to look at all their policy changes as a whole, not just one.

10
up

How does the Ponzi continue post mid-way through next year when interest rates cannot reduce further, QE is exhausted, and incomes are stagnant? I think a rude awakening is coming in the next couple of years - NZ doesn't produce enough goods & services to maintain the unsustainable lifestyle that people have become accustomed to.

the WHOLE world doesnt produce enough for the lifestyle they have been accustomed to...
hence the reason for a Debt leverage ponzi to keep consumption growing

We are now massively expanding wealth claims / money based on a diminishing pie
There can only be one outcome

Someone here some time ago, commented that society can longer afford itself. That does resonate somewhat.

Maybe we will soon see a policy update Govt to buy overpriced homes as state homes to keep bubble going nothing suprises me now.

I t might be best if some of you take note of what goes on in New Zealand outside of Auckland. The vast majority of our exports and stuff that actually makes our country it's money is all generated out of Auckland. It's only involvement is clipping the tickets of all those involved.

19
up

Mugabe destroyed his countries financial position by rewarding his rich friends and ruining the poor, isn't that correct Mr Orr?

11
up

Yes. But Robert understood what he was doing....

USA is doing the same. The base are two dumb to realize it. Trump and co are taking advantage of the already corrupt system.

Forget MAGA, Trump and his master Kushner are all about MIGA, making sure a certain little country in the middle east is great always its a total deception of his voters

I have a Zimbabwe one hundred trillion dollar note that I bought on Trade Me at the time of his greatest incompetence.

Ironically it cost me NZ$20.

Timmyboy
Relist it for $NZ40 - Zimbabwe dollar could prove to be better than Bitcoin.

Here is the health & economics of where we are now, and the terrible comparison we are to Australia (excluding Dan - Jobs for mates scheme).

Health wise, cases & mortality we are same or poorer, say same as Oz.
Economically we are a disaster.
Oz spending 9.3% GDP on covid
NZ spending 16.3% GDP on covid

Oz GDP declined Mar -0.3%, June -7.0%
NZ GDP declined Mar -1.6%, June -12.2%
https://youtu.be/qsqYJhDR9nU
Menzies Research & Oliver Hartwich.

Running through the detail.
OH makes point no cost benefit done, no determination of what was safe.

It shows COL in terrible administrative, governance light.
The summary
https://youtu.be/4Ld86BHML5s

Henry
Getting a bit desperate there if you are relying on Nick Cater and the "Menzies Research Centre" for your information.

Of the numbers, what one/s do you have a problem with. Would suggest some other numbers?

Henry
Its not that the selective numbers are necessary wrong - its just that the arguments are based on numbers that are selective.

There are 4 numbers.
Cases/ m
Mortality/ m
Covid spend as % GDP
GDP %decline (Mar quater and June quarter).

What numbers would you exclude or include?

Just think about it:

"Ignore Victoria because the government screwed up"
"Let's look at how the NZ government screwed up"

Even a simpleton should be able to see that an analysis which completely ignores the worst part of one thing, while taking all of another is not comparing the same thing. Any numbers based of such ludicrous "analysis" should not be believed, nor should this persons conclusions be taken seriously. If I didn't know better I would think this is satire.

The Victorian Government has screwed up.
Not QLD not NSW, not SA not WA not TAS, not ACT, not NT.

The comparison is effect Govt administration of an elimination policy. Comparison of health outcomes and economic cost. (No one is debating the merit of elimination - yet).

Everyone knows that mal administration of border controls impacts health outcomes and $ cost.

And the comparison is interesting, for, for the same health outcomes (exclude VIC) as the competent Aust State Govt, we, NZ is spending 7% more GDP. In dollars cost expense.
And lost more - 1.3% GDP Mar and lost more - 5.0% GDP June.
For equivalent health outcomes.

That is one hell of a set of overheads.
What do I think of GR, - we can't afford him.

You need your head read if you are believing this stuff Henry, I am all for making sure we are doing the right thing regarding COVID control, but listening to this sort of outlandish commentary is preposterous. Let's just conveniently exclude the worst hit area when using numbers. Fine. Then exclude Auckland in the NZ figures and get back to me with your results.

Can't be stuffed? Then you aren't comparing the same thing. You may as well compare the price of ostriches in Uganda with the price of lamb in NZ and base conclusions on the differences between them. It's not useful nor logical to do so.

Here Sky News
NZ biggest contraction of GDP ever

https://youtu.be/LJYZnW2wdmw
Discuss unemployment rate, and how Govt job support bans redundancy
Also the tardiness of Govt GDP numbers really slow.

https://www.rnz.co.nz/news/national/426777/hospitality-sector-braces-for...

Uncertainty, job losses, and business closures are being anticipated for restaurants, bars and cafes with the wage subsidy winding down.

More than 400,000 jobs were being supported by the government's support scheme at the beginning of July.

Now, a month and a half on, that figure has nearly halved, and for one of the most vulnerable sectors - hospitality - there are questions over what's going to happen next.

Still spouting nonsense from this misleading ignoramus.

"If I ignore all the bad bits from Australia and only look at the good bits, then look at all of NZ, look how much worse off NZ is!"

Comparing apples and oranges is utterly hopeless. If you listen to idiots without engaging your brain, you will quickly become one.

20
up

The young will be leaving NZ in droves soon. The RBNZ has shown them total contempt. Good luck with house prices when the whole bottom tier of the house of cards has gone.

... and with zero real return on TDs the retirees are downsizing or selling "investment" properties to fund their retirement.

They sure are!
I know 2 who used to pay their rates and insurance out of their TD returns. No longer.
Now they HAVE to sell because they can no longer pay for the utility costs that before were an annoyance, now they are a financial and mental burden. But the principal will last a while longer until its extinguished, giving them some breathing space I guess.

Tom Joad
Due to low TD rates, retirees are "selling investment properties to fund their retirements".
What's your source of information or basis for this assertion?

News for you sunshine - just wishful thinking on your part. Some retirees are cashed up and getting back into property - far better yields.

Swing this 180 - what evidence do you have that this is not happening....... just saying.

I was on the phone to my boomer parents last night BR, they're thinking of buying another house as their investments have dropped 10% and they think at least they'll get something out of a rental each week and end up with a house even if it all turns to custard.

BadRobert
My wife got out of TD last year and into a rental (I posted last year), I made a number of posts over the past three months about being cashed up watching and waiting and posted a week or so ago that I have gone into a rental in shares with my son.
Tony Alexander indicates that this is one likely current driver - and he will have a wide source of anecdotal information to base that comment.
I can't offer supporting verification but . . . .
Out of interest I keep an eye on what is happening in the property market. I meet with a group of investor friends for monthly coffee - all long term investors and retired - and they are holding and now looking to further purchase properties.
I was also recently speaking to a valuer friend and this was his view.

The rationale supports retirees holding their investment properties - what are they to do with the money when cashed up?
As for the suggestion that retirees are selling investment properties to fund their retirement . . . . why would they when in property the yield is far greater?
Tom Joad's comment is simply a wild, baseless and illogical assertion.

...fair enough if you have cash and don't need to gear up. But if you have to borrow, then a completely different risk factor.
Sheep always feel better when they are in a flock heading the same way, they feel safer but can't see the cliff.

rastus
You are correct if a retiree wants strong cash flow - which they do need - then they need high equity.
Interestingly, a younger investor (45 is younger) I was talking to was saying how his figures meant that he was leveraging off the mortgage. The mortgage was under 3% and his gross yield was just over 3.5% - making gross 1.5% on the bank's money and over the next year that is likely to get better. He is however also a listener - he is also being prudent and paying down debt.

By the way - I did comment last year when the wife bought her property that she wasn't taking advantage of the low - and now even lower - interest rates. Did consider a couple of properties but wanted that good cash flow.

I'm not a boomer but do have cash in TDs. I am looking for rentals as the return on term investments is pitiful and I would rather be owning tangible assets when this house of cards collapses. At the open homes (which are crazy ATM) I go to, I would say 50% of the punters are grey hairs. Pretty sure they aren't looking to live in them.

Cheers Ptolemy
Agreed that rental yields are not great and rentals require more work, however the returns are currently better than term deposits.
Couple of key factors in rentals
- be prudent (read too many instances in Property Investor magazines where "five properties in two years" as they later crashed)
- forget short term fluctuations in the house market as it is long term and rent income is consistent.
I won't mention the long term tax-free capital gains as that will upset too many posters.

..the massive media campaign is clearly working on you. ....... go for it!

rastus
RBNZ HC31 data shows over 25,000 mortgages to buyers in July alone.
Maybe you are seeing the cart before the horse.

Talked over a beer to the partner of an ex-workmate who has development properties north of Christchurch. Price range for house+plot $395-459K. Main demand is from investors, as the rental returns pencil out in the 5-7% bracket. As Scott Adams notes in 'Loserthink' - if it's legal and profitable, you'll see a Lot of it....

waymad
Not surprising
Latest RBNZ mortgage data HC31 (unfortunately currently only up to July) is showing investors - although low in numbers - are now starting to get back into the market post Covid;
April 1403 mortgages to investors, July 4324 mortgages.
Posted at the height of Covid downturn that renewed/increasing investor interest would be an indicator of market upswing. Investors tend to know the market better, are purely in it for financial reasons, and are prepared to back up their view with money.

Where do you think they will go?
Go to Australia? Buy a house and pay Stamp Duty and Land Tax
Genius
Stamp duty on $1m house = $40,000

18
up

1 million dollar house??? Houses are 50% cheaper in most of Oz and are built for human habitation. So much better value plus more well paid job opportunities. People higher up the ponzi need to start worrying (and caring).

24
up

$450K Australian 20 minutes from the Sunshine Coast gets you what $1.5m+ gets you at Hobsonville Point, which ends up being over an hour from the CBD in rush hour, with higher wages and lower living costs to boot, as well as more flexible education/upskilling options. Were it not for family, I'd have been gone years ago. It's terrifying what we've managed to normalise on the basis of 'young people are lazy' and other greatest hits of talkback.

WTF are you going to do 20 minutes drive from the Sunny though??? There are no jobs, wages are low, schools hahahaha I think I'll go to Med school, wait....

20
up

Correct.

Overall the NZ housing market is more expensive, and of shitter quality.

The problem is that there is no perfect country. The best thing young people can do is vote in the upcoming election.

Has any party said anything about the RBNZ's mandate? Suggested any changes to the Policy Targets Agreement? What good is voting going to do? Best thing young people can do is leave this basket case of a country, vote with your feet.

On important issues, David Runciman makes an important point: governments will first sleepwalk then tightrope walk through them for as long as possible, before action is forced.

The force either comes from time running out (e.g. Muldoon leading NZ to one day from default) or through energy from people - protests, marches, disruption or worse. Young people just voting for TOP is not going to be enough. They may have to get far more angry and energetic to force governments and technocrats to approach things more equitably rather than continuing their wealth transfers from young to old.

Hi, Shore, Rick, I wholeheartedly agree. The RBNZ does have an influence, and there has to be some questioning regarding the decisions that they make. However, there is no harm in young people (I'm an older millennial btw) in voting for a party they think best suits them, and the future generations, because as we had seen when Labour introduced the FFB, there was a notable drop in house prices. To ask people to leave their country of residency or birthplace, or comparing apples with oranges like Mr Andy is doing so below is defeatist and would not solve much.

Could be.
The breather valve to Australa may contract.
Remember non citizens pay more capital gains than Oz citizens.
Many recent immigrants (last 30 years) may go to the countries of their parents passport.

If you're talking about Europe, the region has a long overdue financial crisis approaching and the recent money laundering revelations aren't going to make things any easier while the EU member states battle out over joint fiscal funding.

You're confusing citizens with tax residency status.

If a NZer moves to Australia and makes a profit on the disposal of an asset they will be treated the same as an Australian from a tax perspective.

Unless it's an NZ asset, in which case the NZer is better off than their Australian counterparts.

Covid has made leaving relatively difficult for now. Once that passes I suspect the govt will happily make up the shortfall with immigration.

10
up

HOUSING...............The only game in town.

The only upside I can see from skyrocketing house prices is a construction boom bringing us out of recession. There has been a record number take up in construction trades and sign-ups for apprenticeships in July.

If all parties have been voicing their clear intentions over fixing RMA for as long as I can remember, what's the hold up?

https://www.stuff.co.nz/national/politics/300099144/coronavirus-exodus-f...
https://www.stuff.co.nz/business/122852866/the-construction-industry-is-...

That's one of the few things i can compliment Labour on is apprenticeship support. Could have cut the first year university subsidy and ploughed it into trades training. Those who advocate for construction push to save the economy need to define construction more clearly. If its for residential housing dream on with the trades shortage. Here in NP you more or less have to plead to get someone and don't ask for their rate. You'll scare them off. They prefer people who ask to get a job done and sign the "cheque" when presented with the invoice. That's likely to be most people. Indicate that you only require something done in the next one to two months and they forget about you. TOO MUCH WORK.

I'm not surprised by the falls in share prices this month. At the end of August markets where 3SD from the long-term trend growth rate, exceed market levels of the .COM bubble. There is still a long way down from here to regress to trend.

Squishy
Interesting the three common measures of the US market - NASDAQ, Dow Jones and S&P500 - have all shown falls of between 8% and 11% over the past month from their post-Covid highs.
We now head into October which has traditionally been a nervous time for many superstitious investors.

Donald will not be happy.

Just two design rules (of many) I would use in designing a house. Passive solar and natural light from two sides of every room. Passive solar has two key parameters, face the sun with your collector, and thermal mass to store it. 20m2 of collector would be adequate for most of the North Island to provide 100% heating, and cooling in summer if done the right way. Target is to hit the comfort zone of 20-25°C and humidity of 50-70%.

Light has a physiological response. If we don't get good natural light from multiple directions the space is not desireable to habitate. That is to live or work.

We've got the most expensive housing the world but some of the most poorly designed. They are damp in the winter and too hot in the summer, they are simply not fit for the climate.

And Eaves....

And eaves, yes. Lol. Probably best not rely on council to ensure your home is built to a reasonable standard either :-P Or timber companies to appropriately grade the timber used. Or ... I'd better stop.

Better to go for certified Passive House over passive solar. This gives a guaranteed outcome of temperatures between 20-25 degrees, managed humidity, minimal overheating and low energy use and extremely low heating load. The modelling will give you all of these values upfront.

Just to put this into perspective. The young kiwis can pay 600k and live in this persons garden in a tent at the mount? (Almost as far from the mount as you can get) https://www.trademe.co.nz/a/property/residential/sections-for-sale/bay-o...

ORR they can get this in one of the nicest spots in North Wales with a guaranteed income. This country is sick. We are destroying our young for greed.

https://www.rightmove.co.uk/property-for-sale/property-89317763.html

ORR this and have 100k left over. Disgraceful.

https://www.rightmove.co.uk/property-for-sale/property-88595825.html

Some sucker will payup for the tentsite and create a new record price for the street to keep ponzi going a little longer.

Only a fool would buy an over priced House in New Zealand.

And most of them did.

Nuf said....on the subject of Houses...they are not worth the money printed...to buy em.

Don't worry Ego, we have a class of bureaucrats in charge, only differentiated from your council bureaucrats by two pay scales , so what the hell could go wrong with them in charge of monetary policy?

I live in New Zealand for the lifestyle...not the Life Sentence.
I Labour to understand, what and why anyone would vote for stupidity on a National scale....and may Act accordingly....
Vote with my feet if this gets any worse.

What a silly comment, there will always be something 'better'.

The boomer irony. Complains that NZ isnt what it used to be.....sells back yard for half a million.

Nasdaq down appox 12% from all time high.

Is it a healthy correction or something bigger ?
October is suppose to be bad month for stock market so if it fall further down from here, it may trigger a bigger fall specially panick selling by robinhood traders who for the first time will witness a crash and just like they were pumping when market was going up will run away when see the fall.

Fed and RBBZ signalling new drastic measures and more printing is by itself a bad sign for the economy and in such a situation need one catalyst for the market to fall from the cliff.

With so much of euphoria many forget that we are still in a situation where anything is possible and world is shut down with economy going for a toss and only supported by free and easy supply of money.

Also are forgetting under euphoria that earlier also was predecting that worse will be when wage subsidy and stimulus ends by the end of the year or early next year so still one has to be very cautious as still not out if the woods and many are of the view that worst is yet to come as till now it has been easy ride with wage subsidy and other stimulus for many who may feel the pain, once it ends.

Do you remember when the saying "I shall be eternally in your debt" meant somewhat different in actual terms.

Flogging both you and your wife to a life of servitude to appease a Bwanker and a low life politician, is not my idea of eternal gratitude.

Gold takes a huge drive in the race for liquidity. Another big stockmarket crash is coming.

Everyone has seen DR B finally talk about CT in regards PCR testing.

Here is need to know context.
https://youtu.be/HSsTCjbNPF0
Peak Prosperity

And our own Dr Sam.
https://youtu.be/kcONxyAJ8S4