A review of things you need to know before you go home Wednesday; some TD changes, Auckland consents lose momentum, but others gain it, job ads strong, 'bleak' property outlook, swaps rise, NZD stable

A review of things you need to know before you go home Wednesday; some TD changes, Auckland consents lose momentum, but others gain it, job ads strong, 'bleak' property outlook, swaps rise, NZD stable

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

MORTGAGE RATE CHANGES
No changes to report today.

DEPOSIT RATE CHANGES
The Nelson Building Society, and FE Investments have both changed rates. NBS has trimmed its one and two year rates. FE Investments has a new higher 6.18% one year rate, but it has withdrawn its two year 6.80% 'special'. Update: ANZ has followed its rivals and reduced all its term deposit rates by -10 bps for terms of 18 months and longer.

MOMENTUM DISSOLVES
Building consent data out today for July was not impressive. It was still weaker than it should be for Auckland. Momentum in the Queen City has been lost. But the Bay of Plenty and Otago, both show very impressive levels of consenting. Hamilton is not too shabby either. Consenting performance is clearly a Council thing and the Goff-led Auckland Council isn't hitting the levels the Brown-led one did.

MOMENTUM APPEARS
In Australia, they also reported building consent data today and it was better than expected. A -5% drop in the number of new houses consented was expected, but in the event they got a +1.7% rise. However, things are grim in the apartment market with July consents for that sector down more than -30% compared with July 2016. Things are 'better'/'less bad' in NSW. Data out for construction completed was also much better than expected, being up +6.8% s.a. when a +1% rise was expected. Still, this may not be all it seems; private sector work is falling away fast, with the overall numbers only being held up by public sector projects. You take what you get and currency markets rewarded the AUD for this data.

DEMAND RISING
MBIE's Jobs Online report for July showed a rise in vacancies, in fact to their highest level ever. All sectors except accounting/legal, and IT were higher. Construction vacancies are an amazing +20.4% higher this year than in July 2016, hospitality and tourism is +8.2% higher. And it is unskilled and semi-skilled jobs that are in highest demand. And that demand is rising. (Shiny bum jobs are not where the online ads are.) This is data that challenges just about every standard narrative surrounding the New Zealand economy.

'BLEAK' PROSPECTS
According to CoreLogic, property market activity, measured by the number of valuations run by banks to support loan activity, confirms a particularly bleak end to the winter season and indicates that sales volumes for August are likely to continue on from already low sales turnover experienced in July.

ON BUDGET, FASTER
Another $270 mln is to be 'invested' to bring the nationwide UFB rollout to be completed two years earlier than planned. It will now be all done in 2022. The final steps are now funded, with half today's commitment to finish the urban aspects, and half to finish the Rural Broadband Initiative. It is an impressive achievement, the more so when you compare how well it is going in NZ versus Australia's NBN. Once completed here, New Zealand will be in the top five countries in the OECD for access to high speed broadband. Remember that in 2011 we were placed 26th with very little connectivity.

WHOLESALE RATES RISE
Swap rates have stopped slipping and are up +3 bps across the curve today. The 90 day bank bill rate is also up +2 bps to 1.97%. That is hardly a high level, but it is actually a six week high.

NZ DOLLAR STABLE
The NZD is little changed at 72.6 USc. On the cross rates we are lower however against the Aussie on their surprisingly strong building consent rise at 90.9 AUc and at 60.6 euro cents. The TWI-5 is stable as a consequence at 74.7. The bitcoin price is up to a new record high US$4,672, a +5.5% gain on the day. This a purely speculative market whose recent performance is attracting many more speculators.

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David, you blame the Auckland Council on the building consent numbers.
Do you have data to show the drop away in approvals is a result of poor council performance as opposed to fewer applications being lodged?

Fewer Akl applications approved. Roughly correlated to Unitary Plan approval. Have developers given up? (Clearly they haven't in the Waikato, BOP, Otago.) Why would developers pull back in a supply-constrined situation? Unless the plan is too hard/uncertain, or affordability constraints are biting too hard. Affordability is all about the land and consent process costs.

I am hoping to have a review of Title -> Consent -> Build data for many key regions, including Auckland ready for Saturday. A big job. May have to do it in parts. (And I am off travelling next week.)

I think affordability is mainly about material and labour costs with 15% GST on top. By the way have a wonderful holiday.

I agree. Being the owner of a vacant section it's still cheaper for me to go buy another house of the same size than it is to build. Material and labor costs are out of control. Government should consider removing GST on these to encourage building.

No it is more complex than that and it relates to a number of financial and regulatory factors.
It is likely that there was a surge middle of last year due to The SHA frenzy. In July 2016 the Unitary Plan decision had not been issued yet developers could rely on the unitary plan in SHAs, hence it made sense to attain consent approvals when there was still a risk that the unitary plan decision may have pulled back on density.
Plus financing has tightened up which will disproportionately affect Auckland where there are more risky high density projects versus more conventional and 'safer' low density projects in the regions.

When Councils waste a huge amount of time intentionally delaying consents it costs developers a lot of money just in interest costs alone. Who wants to risk a project when the interest costs may end up sinking the project or making it more profitable to invest elsewhere?

Certain Councils are very difficult and obstructive. It does put people off applying for building consents as well as the finance issues. Stressful processes and financial stress are a bad combination.

Strange there was no follow up to the news yesterday over farmer lying about his police interview re the gift that keeps on giving - Todd Barclay.

The fact that Bill obviously lied to parliament is significant to me but the rest of NZ seems blithely to be happy to ignore it. Lying to the house used to be a poor show - have we just become too inured to the Nats lying??