Auckland escapees, Wynyard, debt-to-income multiples

Bernard Hickey reviews the day's business news with Duncan Garner at RadioLive, Tuesday, October 25, 2016

25th Oct 16, 6:01pm by admin

Bernard Hickey reviews the day's business news with Duncan Garner at RadioLive, Tuesday during drive-time, October 25, 2016.

You can hear their discussion here.

There's a lot of talk today about people leaving Auckland because of the crazy high house prices and rents. There's plenty of anecdotes, but I'm skeptical about the actual numbers. We have yet to see confirmation. Previous internal net migration figures show just a handful leave Auckland. The jobs and services are in Auckland. People who can't afford housing are just crowding in with each other.

Everyone in and around the stock market is talking about the spectacular collapse of Wynyard. The NZX-listed security software company called in the administrators today just over two years after a high-profile float of shares that were valued at over NZ$300 million soon after they listed. A group of investors has appointed Minter Ellison to pursue a class action alleging they were misled. The company raised NZ$172 million from investors through three share issues and now it's all gone. It was spun out of Christchurch's Jade Software and sold database software to crime-fighting agencies, governments and big companies to combat fraud, money laundering and cyber-crime. One of the reasons felt misled is the company never actually described it exactly what it did, saying it did not want to tip off the crims.

The Reserve Bank has quietly and formally asked the Government for permission to add a Debt to Income Multiple control to its formal Macro Prudential tool kit, alongside the current Loan to Value Ratio restrictions. Bill English has responded to a request for information. The Reserve Bank looks set to wave this around next year if the Auckland housing market gets its mojo back after a two or three-month pause, which is what has happened with the previous two rounds of LVR restrictions.

I love a good fossick through the Auckland Airport traffic figures. This month shows big increases from Korea and Japan, thanks in part to the very strong yen (ie weak NZ$ vs yen and plenty of new services). It's not all about China.

The latest power company switching figures show 111,000 Kiwis switched providers in the last three months, with Mercury winning plenty with a new marketing/rebranding campaign and Flick and Electric Kiwi picking up plenty of new customers. Genesis and Contact were big losers.

This content was first released by RadioLive, and is here with permission.

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8 Comments

by BadRobot | 25th Oct 16, 6:15pm 1477372550

I think people talk of leaving / moving but when push comes to shove - it's a different story - family , friends and familiarity with a city have a tendency to keep people put.

by sharetrader | 25th Oct 16, 8:04pm 1477379088

still a lot of people from other parts of NZ heading to Auckland for employment opportunities. until that gets addressed with government policies encouraging companies to leave Auckland it will never change.

by BadRobot | 26th Oct 16, 5:12pm 1477455150

While true - you go where the jobs are as discussed in the audio. Generally it is the young without strong roots but once established it tends to be difficult is what I am trying to get at.

by Cowpat | 25th Oct 16, 7:19pm 1477376398

The trouble with internal migration is that there is no direct way to measure using census data. Although between 2001-2006 Auckland was calculated to have lost 18100 and between 2006-2013 another 10000 .The reality is 50 percent of New Zealanders changed address between 2006-13. Kiwis move .

by KH | 26th Oct 16, 2:38am 1477402697

The census numbers show net internal migration is out of Auckland - repeat out of Auckland. And have been that way for many years. More people move out of Auckland than move in. You can quibble that the number is not exact, nor that the numbers are really big. But clearly it explodes the concept many here hold, that Auckland is the magnet.
New Zealanders overall do not see any economic in moving to Auckland. And haven't for a long time.

by ngakonui gold | 25th Oct 16, 8:24pm 1477380281

Wynyard and Pumpkin Patch plus Feltex and a few others is exactly why property rules.

by BadRobot | 26th Oct 16, 5:08pm 1477454934

So if one property investor fails - all property investment is a failure - your logic.....

by unaha-closp | 28th Oct 16, 1:57pm 1477616221

Internal migration is probably only a small factor in the future of Auckland. Unless Hamilton, Tauranga, Christchurch double in size quickly the gap in job market type is just too large.

Auckland's significant size advantage over other NZ locales means its job market is more in competition with other million plus regional cities - Sydney, Melbourne, Brisbane, Perth. At the moment there are no massive cost advantage/disadvantage to any of these cities with respect to their various population sizes. All of Australasia's large cities are in a property boom with high pricing, very little to choose between them.

The interesting thing is that Brisbane and Melbourne are building at twice the construction rate of Auckland, so that when the property cycle corrects there will be higher office and accommodation costs in Auckland compared to other places. Couple this with a more restrictive attitude to immigration and we will likely see a definite flight away from Auckland, but most of it will not be internal migration.