90 seconds at 9 am with BNZ

90 seconds at 9 am with BNZ: Fed eyes nominal GDP target, QE II set to go; AMP Capital eyes NZ$ parity; Aussie house price boom forecast

13th Oct 10, 9:06am by Bernard Hickey

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including details from the US Federal Reserve about its plans for a second round of Quantitative Easing or QE II has it has become known.

The Fed released minutes from the September 21 FOMC (Federal Open Markets Committee) meeting which showed the Fed was set to buy bonds before long and that it was considering a target for nominal GDP to boost inflation expectations and the economy.

Global markets are transfixed by the prospects of a fresh round of money printing by the US Federal Reserve, which is sparking competitive devaluations and moves to control capital flows and currencies in what some are calling 'Currency Wars'.

Meanwhile, AMP Capital has suggested at a briefing in Wellington that the New Zealand dollar could eventually hit parity with the US dollar as commodity currencies such as ours face high demand from developed and other economies engaged in competitive devaluations.

Back in America, concerns are growing about the impact of the 'Robo-signer' foreclosure crisis on the banking sector there and the economy more widely. Many banks have halted foreclosures because of concerns their paperwork on mortgages and titles is fundamentally flawed.

Overnight the White House rejected calls for a nationwide moratorium, while others see losses of US$2 billion a month for the banks while foreclosures are stalled.

Others see the US housing and economic recovery stalled while such a large 'shadow inventory' of unsold houses hangs over the market.

Meanwhile in Australia, closely watched housing forecaster BIS Shrapnel has forecast a strong economy and a lack of new housing supply could see house prices there rise 9% to 20% over the next year years.

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16 Comments

by Rob of the North | 13th Oct 10, 9:24am 1286915092

Anyone interested in more detail about the Australian housing market predicted 20% growth check out the full story here:

http://www.smh.com.au/business/property/house-prices-could-jump-20-forecasts-show-20101012-16h40.html?autostart=1

suddenly 20,000 kiwis fleeing to OZ clicked on the link and muttered" shite, we'd better sell our house here pronto before the price tracks up toooo much in Oz!"

by steven | 13th Oct 10, 10:32am 1286919160

A best guess...but you know they could be right despite the insane prices there now....

Or it could implode....from 9:1 now to 3:1 or worse....its a gamble....who gambles with a substantial part of their earning power for decades?

regards

by Casual Observer | 13th Oct 10, 10:07am 1286917673

Super Fund eyes dairy farms. Is this the govt way of sustaining the rural property bubble? Will be interested to see if they pay 'realistic' or 'bubble' prices for the land.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=106…

by FCM | 13th Oct 10, 10:16am 1286918200

Aussie is what America once was, Sydney the next New York (in regards to house prices- probably already overtaken it in some cases), Gold Coast the new California, minerals to burn, us Kiwis well we are like the Irish, maybe in a few years they will have a Waitangi day.

by Rob of the North | 13th Oct 10, 10:30am 1286919005

actually, FCM, i predict that eventually Aust. will require a Green Card system, as they do in the States, if you want to live there!

That's why i took out dual Oz/NZ citizenship when i was living there in the 80's...cost 35 bucks back then and all you had to do was be resident there for 2 years and have a cuppa with the mayor when you were inducted..didn't have to give up my Kiwi citizenship...where was the hard part?

but that's all changed now....if i ever want to escape Wolly or that bloody Island dodger and nymphet- chaser,Gummy the Pear, i can shift over to the lucky country with ease...(and that's not my GF's name !)

by Gummy Bear Hero | 13th Oct 10, 10:48am 1286920080

....... they have nubile nymphets in Ozzie , too ? ............. hmmmmmmm , cobberdiggermate , better 'ave a decko at the flamin' joint .

by Rob of the North | 13th Oct 10, 10:49am 1286920176

get thee hence , Satan...they're my nymphets and i'll fly if i want to?!

by Andrewj | 13th Oct 10, 10:18am 1286918313

Thats just a move to a fairer socialist country and bailing the banks at the same time. A win win outcome for everyone except the taxpayer and Intelligent thought.

by steven | 13th Oct 10, 11:10am 1286921434

Indeed (more socialist) so in the past we had ppl jumping over there because they were sick of HC or so it was claimed....now of course its the oportunties over in OZ, no one could be sick of the Nats....

and of course NZ with it reforms did so much better over the last 20 years than OZ....

GBH of course seems to want to go there, which seems funny as...even more pointless convulted and biased regulation and tax laws for him to enjoy.

regards

by Gummy Bear Hero | 13th Oct 10, 11:19am 1286921996

But but but ........... they have nubile nymphets ............ high employment rates and nearly double the average wage of NZ , as if those things matter ........ meanwhile , back to the nymphets , wanna Gummy , hunny ?

by Robert M | 13th Oct 10, 10:34am 1286919240

Re: "Sydney is the next New York..."

Median price in New York is US$375,000

Median price in Sydney is A$550,000 (and US$ = A$, nearly)

by Nicholas Arrand | 13th Oct 10, 10:47am 1286920020

But..."..the rise in the Australian dollar ...has turned off the China buying tap. Suddenly Sydney apartments look expensive to ...Chinese investors and they can see the potential of a price decline. ... If this response from Chinese investors continues for an extended period it will reduce prices of Sydney apartments. ...There are certain areas of suburban housing where Chinese buying has been important and they may be affected directly by the Chinese withdrawal, but indirectly a fall in apartment prices will subdue large areas of the dwelling market. ...The Reserve Bank is looking to lift interest rates further. If they do that and the Chinese stay away, then the effects will be substantial."

http://www.businessspectator.com.au/bs.nsf/Article/Australian-property-takes-a-hit-pd20101013-A6S99?OpenDocument&src=sph

by Rob of the North | 13th Oct 10, 10:52am 1286920343

i think one day Sydney will be like New York but for now i know where i'd rather live...Sydney but only if i had too....currently,( emphasis on currently), Sydney isway overpriced but because it's the lucky country and everyone wants to be a part of it they actually do have a housing shortage which inflates price..not like that shortage nonsense that people spout on about here in NZ !!

by iconoclast | 13th Oct 10, 11:23am 1286922224

Nicholas Arrand states: "The Reserve Bank Australia is looking to lift interest rates further. If they do that and the Chinese stay away, then the effects will be substantial"

This item was posted 6 weeks ago in another thread. It's called "money laundering" and "land banking" and isn't going to slow down any time soon. It's how to shift large amounts of currency under the radar. They pay cash. Interest rates are not a concern.

There are many Property Market articles in OZ, with one important aspect that's never discussed .. political correctness .. There has been evidence of many 20+ year old overseas students successfully outbidding and obtaining $2 million properties in affluent suburbs. Of itself that is not evidence of a trend. Further evidence has been reported of groups of these properties being purchased and remaining unoccupied. What does raise questions is when more than handful of expensive houses remain unoccupied simultaneously in one street. That should be an alert. A review of the AUSTRAC website reveals that Real Estate Agents are exempt from AUSTRAC reporting which means on execution of the purchase agreement the 10 percent deposit together with the final settlement can be transferred directly to the Real Estate Agents Trust account, electronically, from anywhere in the world, all under the radar. AUSTRAC centre is an Australian government agency, established in 1989 under the Financial Transaction Reports Act 1988.

by Rob of the North | 13th Oct 10, 11:57am 1286924241

but then on the other side of the Sydney real estate coin we have:

http://www.smh.com.au/business/sydneys-suburbs-face-worst-mortgage-stress-moodys-20101012-16gtp.html

by me | 13th Oct 10, 12:00pm 1286924406

House prices in past 12 months have continued to rocket ahead in Australia, whereas in NZ there has been some decrease, may be 10%, since 2007. If the prices continue to rise as some predict in Aussie, that will make NZ prices seem rather reasonable. Most property investors who are only getting about 3- 5% return on capital are settling on this as the new reality. Anybody predicting a big drop of actual current prices now in NZ is probably in the hopeful category, but there should be a relative decline with prices not keeping up with the inflation.

The NZ super fund investing in the farming sector will give some underlying strength to the rural land prices, all ' poltically good' for the government in the run up to the elections this time next year. But there are about 20% of farms that are in a sub-prime situation, and the Banks do forsee quite a decline in farm prices, as NZ goes to a model of return on capital being a driving force, rather than a model of capital gain on sale