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US FHBs rush to buy; US jobless claims fall; China holiday sales jump; Canada retail sales fall; ECB worried by Trump; Aussies scrutinise mortgage brokers; UST 10yr at 2.92%; oil and gold up; NZ$1 = 73.5 USc; TWI-5 = 74.5

US FHBs rush to buy; US jobless claims fall; China holiday sales jump; Canada retail sales fall; ECB worried by Trump; Aussies scrutinise mortgage brokers; UST 10yr at 2.92%; oil and gold up; NZ$1 = 73.5 USc; TWI-5 = 74.5

Here's our summary of key events over night that affect New Zealand, with news China is back from its national holiday having spent up large during it.

But first in the US, data released overnight shows first-time buyers rushed into the market in 2017, making 38% of all American single-family home purchases, the biggest share since 2000. The 2.07 mln new or existing homes bought by first-timers was +7% more than in 2016.

Meanwhile, filings for unemployment benefits fell to a five-week low, suggesting tightening in a labor market already operating near full capacity.

Wall Street rose for the first time in three days even as most global gauges slumped in the wake of Federal Reserve minutes that seemed to boost the prospect of tighter monetary policy. The dollar fell as Treasuries rose. And Chinese markets rose on the first day back from their week-long Spring Festival holiday. Retail and restaurant businesses did US$146 bln in sales during the week-long national holiday, up by +10.2% from the same holiday a year before.

And China has stopped updating its homegrown version of the VIX Index, taking another step to discourage speculation in equity-linked options after authorities tightened trading restrictions last week.

In Canada, there was an unexpected fall in retail sales for them in December.

In Germany, their respected IFO business sentiment index fell more than the minor flattening that was expected

The ECB released minutes of its last policy review meeting and that revealed that they are watching with concern the growing beggar-thy-neighbour policies out oif Washington.

In Australia, their banking Royal Commission published an issues paper on the mortgage broking industry, clearly signalling that this sector is also up for scrutiny.

In New York, the UST 10 yr yield is marginally higher that at this time yesterday at 2.92%. After the US Fed minuites were released yesterday it did rise to 2.95% at one point.

The gold price is up +US$2 to US$1,330/oz.

Oil prices are up strongly today by more than +$US1, with the US benchmark now just under US$63/bbl and the Brent benchmark under US$66.50/bbl.

The Kiwi dollar is little changed this morning at 73.5 USc. On the cross rates we are up at 93.6 AUc and holding at 59.6 euro cents. That leaves the TWI-5 virtually unchanged at 74.5.

Bitcoin is down under US$10,000 again and now at US$9,853. That is a -7% fall from this time yesterday and recall yesterday fell -9.8% from the day before.

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

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10 Comments

Here's another interesting thing that's happening to the Canadian property market; they're upping their Foreign Buyers Tax from 15% to 20% along with a host of other taxes to help cool their market to become more affordable for residents, particularly for Vancouver.

They're also adding a new '2% ANNUAL Speculator Tax' The new annual speculator tax targets both foreign and domestic homeowners that don’t pay income taxes in BC.

Why? BC has been seeing a number of low income households, in very pricey real estate. This has made some suspicious that international income is not being declared by many homeowners.

Better Dwelling article: BC’s 2018 Budget Takes Aim At Vancouver Real Estate Speculators, Here’s Why
https://betterdwelling.com/bcs-2018-budget-takes-aim-at-vancouver-real-…

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Yes, that is interesting. But mainly it just shows that things like 'foreign buyer taxes' don't work in the end. If 15% didn't work, why would 20% work? There remains many, many ways to avoid these types of restrictions. What will be telling is when the tax-collected data is released. The data from the REAs doesn't yet show much slowing, in either volumes sold or prices paid (after adjusting for housing types, houses, apartments, townhouses etc.)

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Very true. It just adds another 5% incentive to avoid paying it.

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Yes I agree with you David, there are may ways that overseas speculative investors can avoid that tax. But some would argue that at least it brings in some tax revenve to Canada.

Also interesting if you read the comments to that article, where some Canadians praise NZ for introducing the foreign buyers ban last year.

So what I would like to know is, with our foreign buyers ban legislation, has it been enforce yet?
Last I heard on this from Labour was that they were still working out the details, and from an recent interview with Bill English (Just before he left National) He said that Labour would have difficulty authorising that foreign buyers ban legislation due to on going trade negotiations with China. So ant news on that subject?

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The Overseas Investment Amendment Bill (aka foreign buyer ban) had first reading in parliament in Dec but its certainly not law yet.

Reading the CPTPP Article 9.4 National Treatment on the MFAT website I'm not sure how this Bill will make it into law?

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Sure the volume must be slowing by now, and the prices crashing. I mean we have been hearing about that pending outcome for a couple of years here now :-P

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@CJ099 , the increase in foreign buyers tax will no little difference to the investment decision by a foreign buyer in Canada , here's why :-

Basically there 2 elements

Firstly , there is an interest rate differential between the cost of borrowing in Tokyo, Hong Kong or Shanghai and Vancouver , which creates an arbitrage opportunity

If the foreign buyer can use money costing say 2% in Asia and invest it in a Vancouver property returning 3% its a cash positive investment from day 1 , and the Canadian will have to feed the shortfall when Canadians have to pay 4% for the same amount of money .

The second issue is that the Asian investor is willing to take a currency risk knowing the Yen is unlikely to become more expensive , and knowing that the Yuan will not be allowed to appreciate by the CCB

There are also lesser elements to consider , Canada is the biggest net recipient of migrants in the world , so housing demand is very high, meaning prices will be held by strong demand from new arrivals .

And if you thought serviced land was expensive in Auckland ............ try Vancouver . The city is restricted by the sea and mountains meaning that land is scarce and unlilkey to lose value over time

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Here's another interesting article - a brave politician.

Finance Minister Carole James says the goal of her budget’s new housing taxes is a downturn in the market and a drop in home prices, potentially making the market more affordable but also potentially putting some existing homeowners under water on their mortgages.

http://vancouversun.com/news/politics/government-says-goal-of-budget-ta…

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The National Association of Realtors is confused. The trade group for real estate professionals and salespeople just reported a significant drop in the level of resales for January 2018. After peaking at an annual pace of 5.72 million (revised) in November, existing home sales declined to 5.56 million (revised) in December and now just 5.38 million last month. That’s the lowest level since September 2017, more like mid-2016 than even close to a healthy trend.
http://www.alhambrapartners.com/2018/02/21/not-at-all-the-inflation-the…

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The "five-week low" in unemployment is the 2nd lowest in decades? "Thursday's mark is the lowest since the early 1970s, setting aside the week of January 13, when claims touched as low as 216,000."
http://www.washingtonexaminer.com/jobless-claims-plunge-to-222000-secon…

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