What happened Tuesday

A review of things you need to know before you go home on Tuesday; housing policy, housing policy, housing policy, and little else, swaps slip, NZD falls, & more

23rd Mar 21, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
Nothing here today. See below.

TERM DEPOSIT RATE CHANGES
WBS cut some TD rates, except their 2 year rate which they raised by +5 bps. See next item.

THE ONLY THING THAT MATTERS TODAY
Only one thing happened today of any major importance for our 'economy'; the Government announced its reset of its housing policy. Here is more on how the tax changes announced today will affect investors. And here is more on the new commitment to housing infrastructure investment. However, most of today's measures are 'demand suppression' measures rather than 'supply enhancing'. True, there is some of both, but the supply-oriented measures probably won't move the needle sufficiently to make a lot of difference on that side. The best you can say is, its a start. But the demand-suppressing measures are very likely to have a major impact on investor enthusiasm for this asset class.

CREDIT CARD DEMAND EVER SOFTER
Billings on credit cards fell -4.0% in February from the same month a year ago, although after adjusting for the different number of days, the decline was -1.8%. Users are using the "credit" option less and less. Outstanding balances are down -14.6% in a year. And the proportion that incurs interest is now just 56.3%, the lowest January ever and almost the lowest ever.

RIP CURL DOMINATES
Kathmandu (KMD) has announced its half year results that include a +13% rise in revenues to January 31, 2021 to $410 mln and a $22 mln Net Profit After Tax. This is for the July-20200 to January-2021 period.

A NON-DEBT FUNDED EXPANSION
Oceania Healthcare (OCA) announced plans to raise approximately $100 mln to fund the acquisition of a premium retirement village, Waterford on Hobsonville Point, and in Franklin, both in Auckland. These two will cost OCA $77 mln, so there will be no additional debt funding.

BNZ TEAMS UP WITH PAYSAUCE
BNZ and employment services provider PaySauce say they have launched BNZ PayNow, which they describe as a no interest way for employees to access wages before payday as an alternative to payday loans. BNZ PayNow is a feature within the PaySauce mobile app. Meanwhile buckling the trend of bank branch closures, BNZ has opened a new branch at Westfield's Newmarket mall in Auckland.

GOLD RISES
Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1739 and up +US$4 from this time yesterday.

EQUITIES RISING AGAIN
The S&P500 ended up +0.7% on Wall Street in its Monday session. The Tokyo exchange has opened up +0.7% also, while the Hong Kong Exchange has opened up +0.4%. The Shanghai exchange has opened up +1.1%. The ASX200 is up +0.4% in early afternoon trade while the NZX50 Capital Index is up +0.6% in late trade.

SWAP & BONDS RATES MIXED
We don't have today's closing swap rates yet. If there are movements today, we will note them here later when we get the data. The 90 day bank bill rate is down -1 bp at 0.34%. The Australian Govt ten year benchmark rate is unchanged at 1.77%. The China Govt ten year bond is also unchanged at 3.26%. But the New Zealand Govt ten year is down another -6 bps at 1.71% and at the level of the earlier RBNZ fixing at 1.71% (-11 bps). The US Govt ten year is currently up +2 bps at 1.70% after having got as low as 1.66%.

NZD SLIPS AGAIN
The Kiwi dollar is now at 71.1 USc and nearly a -½c easing from this time yesterday. On the cross rates we are down a bit more to 92 AUc. Against the euro we soft at 59.6 euro cents. That all means our TWI-5 is now down at 73.1 after these across-the-board declines.

BITCOIN DECLINES AGAIN
Bitcoin has fallen to US$54,843 which is a fall of -3.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 4.3%.

This soil moisture chart is animated here.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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85 Comments

by youngdumbandbroke | 23rd Mar 21, 4:03pm 1616468611

Lost for words...
https://www.scoop.co.nz/stories/PO2103/S00181/hamilton-city-council-har…

by Burni | 23rd Mar 21, 5:08pm 1616472535

Well they're short on ideas on their own.

by blobbles | 23rd Mar 21, 5:16pm 1616472965

Are you f$%ing kidding me??? Giving talks to children in class and getting them to fill out formal submissions supporting your consultation??? When these people aren't old enough to be able to understand the issue or vote?? Jeez, if heads don't roll for that one, there is little hope for HCC.

by Yvil | 23rd Mar 21, 4:06pm 1616468795

BTW your headline on the main page says "What happened Monday"...

by Gummy Bear Hero | 23rd Mar 21, 9:47pm 1616489274

... maybe , Monday was so freaking fantastic David thought we'd do it again .... yeah ... who doesn't love Mondays ....

by JimboJones | 23rd Mar 21, 4:13pm 1616469228

Has the government said how much extra tax they will get from landlords? It must be massive right? Assume the average write off is 50% of the rent (probably on the low side), then the government should get an extra 33% of 50% of all the rent collected in NZ! Plus the brightline changes too. Sweet!

by Lapun | 23rd Mar 21, 4:18pm 1616469519

About $3000pa from my rental properties. But I've owned them about 15 years.

by Robt. | 23rd Mar 21, 8:24pm 1616484248

Much of this is just a big tax grab disguised as rental reforms and closing what the media is calling"loopholes".

by Burni | 23rd Mar 21, 5:10pm 1616472636

Pump the market, boost the revenue stream, change the tax rules to ream it?

CLUELESS.

by lowercase capitalist | 23rd Mar 21, 7:01pm 1616479303

About 600m a year.

by Robt. | 23rd Mar 21, 8:28pm 1616484504

The only truely universal law of nature: Taxes can only increase.

by custard | 23rd Mar 21, 4:14pm 1616469295

Finally the Govt appears to have awoken from its unfathomable stupor of the last 4 years and has started to deliver some meaningful action.

Just imagine if this level of gumption and resolve could be applied to our immigration/population policy when the borders start to reopen – my God, what a difference it could make.

by Lapun | 23rd Mar 21, 4:23pm 1616469813

If house prices roughly half then our brain drain will go into reverse. I have 3 adult children with no hope of buying at today's Auckland prices - at their age and in an equivalent mid-range job I had bought a house in London about a decade earlier.

by powerdownkiwi | 23rd Mar 21, 4:32pm 1616470344

How many people on the planet then, Lapun? 4 billion, guessing at your age. Maybe a tad less.

That's half, and the resource draw-down in the interim has been exponentially growing, from never-bigger then.

You cannot compare the two.

by Lapun | 23rd Mar 21, 6:26pm 1616477178

1st house in the mid-seventies and it cost roughly tiple my annual earnings. It was the same for my grandfather buy his 1st house in the twenties at roughly 3 times his earnings as a railway guard. Population of the world then about a quarter of what it is now. So why no change between 1920s and 1970s but a crazy house price increase since the 1970s?
I fully accept the world is being destroyed by our waste and resources are finite however that is not the direct cause of house prices being too high for the 'average' worker. The problem lies with the distribution of our wealth - we are rapidly returning to the time of 1% aristocrats with money to burn and 99% peasants serving them. The middles ages or maybe the dark ages.

by Rosenstein | 23rd Mar 21, 7:13pm 1616480001

Ah so Nixon came off the good standard in the 70s thus allowing for unfettered credit creation which has concentrated wealth in the hands of those most in proximity to the spigot of fiat. Wage earners be damned.

by dollar_bill | 23rd Mar 21, 7:24pm 1616480669

the curve was still bending up steeper in the 70's as it was in the 20's but now it's bending shallower aka the rate of acceleration was increasing but now the rate of acceleration is decreasing

by Burni | 23rd Mar 21, 5:11pm 1616472713

Once travel to Australia opens, how many young people and homeless kiwis will jump the ditch for a more affordable life?

by Becnz | 23rd Mar 21, 5:19pm 1616473142

Australia may have to cap how many Kiwis they let in.

by powerdownkiwi | 23rd Mar 21, 6:52pm 1616478750

It'll be median fire-proof boat prices there.....

by Wilco | 23rd Mar 21, 4:20pm 1616469637

Hopefully today could be enough of an economic shock to shake our exchange rate loose. It's currently teetering on the bottom of it's range for the past three months.

by Lapun | 23rd Mar 21, 4:29pm 1616470174

https://www.tvnz.co.nz/one-news/new-zealand/new-zealand-says-there-clea…
Brave call. I'm proud of our govt. [bet you can't find that sentence amongst my previous comments]. If the Chinese disagree then let them give independant reporters free access. It is sad to realise that suppression of Uighurs is probably popular in China; that why a free press is so essential.

by Fritz | 23rd Mar 21, 5:00pm 1616472027

It's taken far too long, we are followers rather than leaders.
But better late than never, I guess.

by Audaxes | 23rd Mar 21, 5:20pm 1616473244

Look closer to home:
New Zealand ranked one of the worst places to be a child in 'woeful' new UNICEF report

by Fritz | 23rd Mar 21, 5:28pm 1616473684

Awful comparison.
But a very valid concern. Atrocious.

by Lapun | 23rd Mar 21, 6:34pm 1616477673

'He who s perfect should throw the 1st stone'. Woeful in this context means health not as good as most developed countries still it a quantum leap to compare our failures with the problems Uighurs are experiencing. Wait until our govt sends public servants to live with our poorest families and have them boast about the good they are doing re-educating them.

by Audaxes | 23rd Mar 21, 6:58pm 1616479081

Stop defending the indefensible - you are disgusting. My point is people in glass houses should stop throwing stones. Nobody is innocent.

by Fritz | 23rd Mar 21, 7:20pm 1616480449

Extremely disingenuous.

by Snow | 24th Mar 21, 6:43am 1616521411

"Stop defending the indefensible - you are disgusting." That's some serious irony there Stephen. You may be happy to bend over and bury your head but expecting everyone else to is pretty weak.

by Fritz | 23rd Mar 21, 7:15pm 1616480133

Exactly. China's human rights crimes are systematic and state led.

by Comyn | 23rd Mar 21, 10:02pm 1616490127

Nonsense, come live in S east Asia. Over 200,000 stateless children here. No access to schools, hospitals, not to mention getting work when they are older. Commonly exploited and abused. This is not talked about because western media / organisations are cowards. The narative is, only bad Western countries, the others countries live in utopia. Well for one I'm super thankfull my children have NZ citizenship! Oh BTW their is no social welfare here. ..

by Audaxes | 23rd Mar 21, 5:12pm 1616472731

New Zealand says there is 'clear evidence' of severe human rights abuses against Uyghurs in China
China-Russia ties deepen while US and allies flail: Global Times editorial

To be honest, no country in the region can stand alone against either China or Russia, let alone fight against the two powers at the same time. It would be disastrous for any country which tends to confront China and Russia through forging an alliance with the US.

NZ has been warned.

#China foreign minister will visit Tehran on Friday & Saturday (March 26 & 27) to meet #Iran FM @JZarif & president @HassanRouhani, said Iranian Foreign Ministry spokesman, adding “strategic partnership of Iran & China” as well as regional & international issues will be discussed Link

A formidable triad alliance in the process of being formed.

by brisket | 23rd Mar 21, 5:23pm 1616473432

So what, should NZ press avoid reporting on facts that are embarrassing to the Chinese government? Should the government stop them doing so for the sake of diplomacy?

by Fritz | 23rd Mar 21, 5:28pm 1616473733

Audaxes seems like a bit of a CCP sympathizer.

by Audaxes | 23rd Mar 21, 5:55pm 1616475336

I want my country and my child to survive.

U.S. Regime Has Killed 20-30 Million People Since World War II

Russia by itself will never allow this to be repeated again near it's borders.
Peacemaker

by Fritz | 23rd Mar 21, 5:54pm 1616475289

Oh come on.
So by that view anything that China does should be tolerated?
And what danger do you think China poses? Do you really think China will start a war based on criticism from the west?

by Audaxes | 23rd Mar 21, 6:23pm 1616477032

I was nearly called up for military service in Vietnam. Saved, a day before the ballot by a change of government - the US is the global aggressor. Nobody is sailing miltitary surface ships near US territorial waters. Why would Australia, or NZ for that matter, wish to do so in the South China Sea?

by powerdownkiwi | 23rd Mar 21, 6:53pm 1616478834

Agreed.

Not the usually peddled narrative, but spot-on correct.

by Fritz | 23rd Mar 21, 7:17pm 1616480279

So let's get this straight- you think we shouldn't criticize systematic and state-led humans rights abuses?
At what point *IS* criticism justified? Gas chambers? Or even not then?

by Audaxes | 23rd Mar 21, 8:19pm 1616483947

Alaska talks to be remembered in history as a landmark: Global Times editorial

The world's sense of right and wrong is not in Washington's hands. Changing Washington's thinking on China is not a simple matter and is destined to happen gradually, but talks in Alaska are likely to be regarded as a milestone in this process by history.

by Fritz | 23rd Mar 21, 8:47pm 1616485640

CCP propaganda.

by Audaxes | 23rd Mar 21, 8:50pm 1616485845

That's all any of us have - military adventurism is off the table when China and Russia are in alliance.

by Fritz | 23rd Mar 21, 8:58pm 1616486339

Thry are in alliance sure, but I don't think they are as close as you make out.

by Audaxes | 23rd Mar 21, 9:18pm 1616487494

Does the US have the capacity to find out? Not at all.
When I Say Delusion--I Mean It.

by Noncents | 23rd Mar 21, 8:36pm 1616484980

I don't disagree but I would ask the question...

If China had the same military capabilities of the USA, and we told them no nuclear ships in our waters - what response would you expect?

by Audaxes | 23rd Mar 21, 8:52pm 1616485973

Do they (China) have nuclear ships in our waters?
Furthermore, China has the military capacity of Russia at it's side, which at a push may make NZ an example some might wish to avoid - including me.

by Noncents | 23rd Mar 21, 9:21pm 1616487666

It was a hypothetical. To the best of my knowledge the USA complied (albeit with a few ripples). Do you think China would have done the same in the same position?

"China has the military capacity of Russia at it's side" is an interesting thought. One a massively overpopulated country with a poor fascimile of a military ripped off from the other. The other a nation of wide open space and resources with a greatly overextended militiary trying to cover said space? It would be an uneasy alliance at best. The most likely direct threat to Russia is China.

Looking back a bit. Russia and USA have worked together twice before with devastating fashion. Russia and China, not so much. A bit of meddling in the old Cold War days, but nothing decisive.

by Audaxes | 23rd Mar 21, 10:16pm 1616490987

Hypothetical indeed.
Cheap, modern hypersonic missile technology more than covers the dimensions of Russia's borders. China seems to be in possession of the same if not quite as agile and penetrating as Russia's latest versions. But Russia's radar tech has been passed to China - which is second to none. The whole world and it's armaments are visible from the ground up.

by Fritz | 23rd Mar 21, 10:18pm 1616491098

It's a weird tangent you are going on.

by Fluffybunny | 23rd Mar 21, 11:29pm 1616495364

They don't need too. We just open up our borders to IImmigration, sell our land freely, they naturalise, then vote. Not a shot fired...

by Rosenstein | 23rd Mar 21, 7:19pm 1616480345

If we are all so concerned about China, maybe we should stop selling them so much stuff, or.... we shut up. Seems super hypocritical to take all that abusive money then turn around and bite the literal hand that feeds our exporters.

by youngdumbandbroke | 23rd Mar 21, 8:09pm 1616483379

Out of sight, out of mind is the moral of the story. Offshore the pollution and the slave labour

by Cowpat | 23rd Mar 21, 4:34pm 1616470456

At the same time that one hand taketh, the other giveth plenty as many homeowners , including investors will be lowering their outgoings , as they continue to lock in mortgages 175 and 200bps lower .

by Dave Moderato | 23rd Mar 21, 4:40pm 1616470858

Today we're looking at a forty percent increase in rental prices over the next four years. And there are even larger figures being bandied around.

by custard | 23rd Mar 21, 4:49pm 1616471372

They may be looked at – and they may be bandied around.

I can play silly games with numbers all day too – doesn’t mean it’s going to happen.

by Burni | 23rd Mar 21, 5:13pm 1616472814

No problem. The accommodation supplement will be boosted accordingly or legislated rent control introduced.

Its a slippery slope.

by brisket | 23rd Mar 21, 5:25pm 1616473539

I’m considering dropping the rent I pay by 40%. I’ve discussed it with other friends who rent, we all agree it’s a fair response to the current situation. I can’t see any problem with this plan.

by dollar_bill | 23rd Mar 21, 7:45pm 1616481954

lol - I already think my rent is too high - happy to live in a not so nice place to maintain disposable income levels

by Fritz | 23rd Mar 21, 4:49pm 1616471371

I give the govt a B for today's efforts. Some good stuff on the demand side, not enough on the supply side.

by J.C. | 23rd Mar 21, 5:14pm 1616472841

C+ on my grade scale

by blobbles | 23rd Mar 21, 5:24pm 1616473469

D from me. They handed in their assignments 3 years too late due to all manner of excuses. Even though they said they had been working on it for a long while, it was obviously done on the back of an envelope over a couple of months. Even then they ignored most advice and didn't cover off some of the major points. But they did do something, which is more than the previous administrations have done. They will need to back this up with more action and respond to the market accordingly in the future to get some sort of passing grade from me.

by Fritz | 23rd Mar 21, 5:29pm 1616473773

Gee, I think that's bit harsh.

by richard1965 | 23rd Mar 21, 4:51pm 1616471469

https://www.nzherald.co.nz/business/chilling-effect-on-investor-demand-…

Tbis reaction from RE lobbyist is in extreme only to get the the shit out of government and dettering them to take further action on spe ulatorsimei terestonly loan.

His credibility should be judged, if housing prices do not fall as he is shouting / fear mongering - refle ting that he is just a jerk on payroll from re industry.

by Fritz | 23rd Mar 21, 5:31pm 1616473866

Just ignore bank economists. They are full of vested interest and BS.

by Zack Brando | 23rd Mar 21, 5:09pm 1616472596

interest.co.nz servers are working hard today lol :)

by Becnz | 23rd Mar 21, 5:15pm 1616472945

After pumping up house prices for last 12 months they may now crash them 1-2 percent ( just joking) and claim to have solved the housing problem and many will fall for it.
Our whole country now faces massive problems if prices keeping heading north.
I know people who have jobs offered to them in another town but will not move while prices are so volatile so the jobs are still vacant which has a massive flow on effect this is just one problem another is making our living costs so high we will become to expensive to compete with other countries even Australia.

by VeryInterested | 23rd Mar 21, 6:04pm 1616475861

Housing policy, housing policy, housing policy.. says it all really, no wonder we are heading into another recession! Imagine if we had concentrated on real business investment and innovation we would be a much richer country. Instead we are debt riddled and the only way of paying down a significant part of it is via 8-10 years of inflation. So far wages have not kept up with the increase in the debt burden. God help us if interest rates go up even a little as the cost of living goes up to!

by Roger the dodger | 23rd Mar 21, 6:10pm 1616476241

Have explained the new rules to my partner who has a rental flat in trust with her siblings. Being kept for the next generation to help them get started. It runs slightly cash positive, with an additional small contribution each week. Rent is on the low side which retains a good long term tenant. Has had money regularly spent on upgrades such as heat pump and paint and meeting the new regs.

She has no choice now but to start raising the rent to cover the additional costs. Simple equation, simple outcome. More homeless people, more working poor.

by Zachary Smith | 23rd Mar 21, 6:15pm 1616476513

Landlords who are charging below market rent will unfortunately have little choice but to raise the rent to cover this extra expense. It is likely to be around $3000 which is significant. An extra $60 a week. It will be straightforward to justify if the rent is unusually low.

by Audaxes | 23rd Mar 21, 7:04pm 1616479442

It is likely to be around $3000 which is significant.

That's chump change for residential property speculators. Remind me? How much did Auckland property prices rise in a month recently - $100,000?

Spectators outside that market need a capital sum of $1.5 million deposited in ANZ's "Serious Saver" 0.2% per annum plan to raise $3,000.

by Zachary Smith | 23rd Mar 21, 6:59pm 1616479154

Landlords are in the business for a regular income, a business. Often only getting to that stage after working hard for many years and getting out of negative gearing. Also the example given above was for a house for the next generation and not speculation.
It's awkward and confusing, I guess, for the renter, but often landlords are asset rich but cash poor.

by Audaxes | 23rd Mar 21, 7:05pm 1616479518

The whole country is cash poor - we swapped jobs for debt. China got the jobs, we got the debt - that's "Free Trade".

by al123 | 23rd Mar 21, 7:55pm 1616482541

Its not confusing at all - but what is 'awkward' is that landlords seem to think that choosing to arrange their finances in ways which make them 'cash poor' does not actually make them poor, or deserving of sympathy. If I choose to go and blow a lot of cash on fine art, for example, i dont get to claim being 'cash poor' as an excuse to bleed others dry to maintain my lifestyle. Neither do landlords.

by Zachary Smith | 23rd Mar 21, 8:08pm 1616483333

I don't know, I charge $71 a day for a quite nice property in Auckland. Internal access garage, own driveway, nice grounds,. Hardly seems like bleeding my tenant dry. More like a bargain I'd say.

by custard | 23rd Mar 21, 8:34pm 1616484880

Hmmm – not sure how much longer this cost plus mentality can last – enjoy it while you can I guess.

by powerdownkiwi | 23rd Mar 21, 7:00pm 1616479237

That's an oxymoron, RtL.

To get them started? You mean, to be rentiers? Or owner-occupiers?

She does have a choice; sell to the renter. That, after all, is where her 'income' (capital gain or cash flow) is coming from, she's piggy-backing, nothing more. If the aim is to own a house to live in, why mention the tenant? Ask them to leave and move the family in.

Lapun has it about right - this was a generation rentiering another, who came late to the auction due to birth dates. Where I differ from him, is that this is all happening atop a sinking ship.

by mfd | 23rd Mar 21, 9:20pm 1616487628

What was the reaction when mortgage rates fell dramatically? By the same logic, I presume the saving was passed on to the renter? I'd be surprised if they're not in a better situation than a few years ago, balancing lower interest rates vs increased costs.

by Fluffybunny | 23rd Mar 21, 11:37pm 1616495868

Or... She can sell the investment at a reasonable price to someone who needs a home. Then take the money and invest in a nz based etf fund. I don't understand why people are complaining so much. The whole point was to make rental investments less attractive vs other investment options? Not far enough in my (well diversified) opinion.

by Nzdan | 23rd Mar 21, 7:46pm 1616481993

A flurry of activity (and rage) on the Property Investors Facebook pages today.

by Fritz | 23rd Mar 21, 8:06pm 1616483205

It's hilarious. My heart bleeds.

by Rosenstein | 23rd Mar 21, 8:16pm 1616483780

Muh gains!

by Robt. | 23rd Mar 21, 8:18pm 1616483915

"However, most of today's measures are 'demand suppression' measures rather than 'supply enhancing'."

The demand can't be suppressed while there are 5 million people to be housed.

by youngdumbandbroke | 23rd Mar 21, 8:48pm 1616485719

Wrong. Demand for investment properties can most certainly be suppressed

by custard | 23rd Mar 21, 8:43pm 1616485384

BTC has apparently taken today’s announcement personally – a bit down in the dumps over it all.

by GV 27 | 24th Mar 21, 6:51am 1616521887

BTC was due a channel-session. It's clearly finding some resistance around 85K and keeps falling back to roughly the same place. I'd be OK with this if it didn't take down all the other alt-coins with it.