Twyford to launch KiwiBuild prefab tender; EU will 'react' to Trump's car tariffs threat; Merkel under the pump; US banks pass stress tests; UST 10yr at 2.89%; oil up, gold stable; NZ$1 = 69.1 USc; TWI-5 = 72.4

Here's our wrap of what's happened around the world over the weekend.

European Union leaders haven’t been able to find a quick joint solution to the region’s migration woes at a meeting held over the weekend. German Chancellor Angela Merkel had hoped to secure some consensus in the face of pressure from her coalition partner who wants her to up the ante on migration. If she doesn't, she risks a collapse of her government. Merkel says she’ll now work with separate EU states on the matter.

Meanwhile US President Donald Trump is calling for all illegal immigrants to be sent back to where they came from without going through a judicial process. 

The New Zealand Government has formally announced it will invite prefabrication companies from here and abroad to make KiwiBuild homes. Housing Minister Phil Twyford says it’s early days, but these prefabs could make up more than half of the 100,000 homes to be built through the scheme. With an official tender yet to be released, details around exactly what finance and investment arrangements would look like are scant.

The EU says it will have “no choice” but to “react” if the US proceeds with Trump’s threat to impose a 20% tariff on EU car imports. Trump made the call on Saturday (NZ time) – a month after his administration launched an investigation into whether auto imports posed a national security threat. The inquiry is expected to wrap up in February next year. Talk about tariffs has seen the value of car company shares fall. 

America’s largest banks have all passed the first phase of the Federal Reserve’s annual stress tests. While they all have enough capital to keep lending during a major downturn, some would take bigger hits due to higher credit card balances and a one-off accounting issue related to last year’s tax overhaul.

Markit’s US manufacturing PMI fell by more than expected in June to its lowest point in seven months. Despite growth cooling, the latest numbers round off the best quarter in three years. Meanwhile the services sector PMI only edged down a little in line with expectations.

Turning to Europe, improved service sector performance helped offset an increasing drag from the manufacturing sector. This lifted growth off the 18- month low seen in May.

The UST 10yr yield has fallen over the weekend to 2.89%.

Gold is stable at US$1,267/oz.

Oil is higher following an OPEC agreement to raise output less than feared. US crude is up slightly to US$67/bbl, while the Brent benchmark has jumped to US$76/bbl.

The New Zealand dollar is stronger at 69.1 USc and 59.3 euro cents, but weaker at 92.9 AUc. The TWI-5 is up 2bps to 72.4.

The price of Bitcoin has fallen by about US$500 since this time on Friday to US$6,193.

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56 Comments

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17

Wow , 90 at before 8 !

On the score of pre -fabricated houses , the crazy thing is that pre-fabs made in Germany and Poland to a higher standard than is required in NZ, cannot currently be imported

How ridiculous is that ?

Oh I forgot , Fletchers secured a tarriff on imported GIB and plasterboard , ensuring we overpay for GIB by a huge %

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14

You are right about the pre-fab imports. The government thinks there aren't enough houses because were naïve enough not to come up with these solutions. We will have to go down the import route, to build quickly, as these companies will have a tough time like we did a few months ago to gather the technical and managerial skills for similar operations.

Successive government in NZ have only engaged in dialogue and writing reports, memos, etc. instead of doing their real job of eliminating roadblock regulations in our construction market that protect oligopolies and inhibit competition.

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13

Spot On. Having imported housing from a large overseas prefab factory that ships houses all around the world, what was immediately apparent was the difference in how different countries have their act together, or not, when it comes to making it easy to import.

For example, the Japanese thought that they might have a future disaster big enough that it might compromise their local ability to supply resources to rebuild - so they sought out countries that could supply the quality and quality needed and pre approved their entry.

What this meant is that within 4 months of the Japanese tsunami disaster hundreds of prefabbed housing were being shipped to Japan.

Mean while in NZ, nearly eight years after the Christchurch earthquakes, the city still is in a mess and Twyford is calling for expressions of interest from overseas companies.

the german built prefabs are top quality and are designed for much harsher conditions than Auckland would ever see.
its crazy that previous governments have made it so hard for people to import them and they need to drop the 5% duty on them

A lot of people don't want to hear that it's possible. They want the free market to dictate terms, since they have got the taste of it under the national government

To a layman 5% on a prefab house sounds minor compared to cost of land and assembly. Is the obstacle simply the council approval that it meets standards? Couldn't multiple designs be pre-approved and if our govt will get 5% duty couldn't the govt pay for the pre-approval process (presumably a couple of building standard experts visiting the country of origin and some form of insurance that supplier will not go bust). Get a few suppliers from different countries pre-approved and market forces would do the rest.

Not very many people say nice things about Fletchers, the trade and public in general that is. How did they get to be so dominant? Were the seeds of cronyism and self interest planted in the days of Muldoon & Trotter? If we look at recent events such as the dire consequences of their defective going on unlawful, government sponsored and sanctioned and very lucrative , Canterbury repair of residential EQ damage and now the chaos at HO and financial disarray and losses, what’s been in it for the rest of NZ?

It's to the point where subsidiary companies (Humes Pipelines etc) are being avoided by contractors purely due to the Fletcher's name.

It would be interesting to see what business thinks of the proposed changes in the Employment Relations Amendment Bill , which makes it compulsory for new employees to join the Union , among other outrageous proposals

We risk moving backwards to a 1970's them and us workplace relationship ............... and God help us if we went back to those dark days

Compulsory union membership who in NZ really wants this it did us no good in the past....

i think your listening to national spin again, i just read the amendments proposed and nowhere does it say or have any intention of compulsory unionism. having worked at both union and non union companies most of the time it comes back to how management treat the staff as to which way the workforce goes.
if employees are treated fairly no matter how many reps visit or how much paperwork they pass on people dont join, normally they only join when things are bad and it is a last resort
http://www.legislation.govt.nz/bill/government/2018/0013/latest/LMS8116....

I don’t like the idea of importing prefabricated homes. It misses the benefits to NZ from employing people to do this work. Plus, we lose the opportunity to have the capacity here to support private housing as well.

If the government guarantees a factory 1000 houses in a narrow spec (and quality). Then it will be easy for private individuals to buy 100,200,300 etc additional houses. In this way 1000 houses per annum of kiwibuild could support 2000 houses of total build. 2x job, 2x houses. The multiplier could easily grow over time reducing the need for the government once the sector was on the right track.

If you buy houses from overseas you completely lose these benefits. And the jobs which is critical. Damn even if there aren’t NZers to do the jobs bring in immigrants.

As for the timing, I don’t know why they didn’t issue this one day one. This is too slow.

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10

It's all to do with the building supply racket in NZ. It's way cheaper to import and in a free market thats how things get sorted.

http://www.prefabmarket.com/sweden-prefab-leads-market-adoption/

http://www.globalsources.com/gsol/I/Modular-house/p/sm/1146696326.htm#11...

In the UK I talked to an owner of some land and he was thinking about giving long term leases to people to build houses that return to him upon their death. It was because so many people want to retire in the South but land is hard to find and houses expensive but not like London. If you sold your £500k house in London you could build a Swedish nice pre-fab for about £200k. Leaving £300k to live on ( lots of people have no savings all wealth is in their house), he thought it would be about 25- 30 year lease on average. He had old houses on the land that needed either a lot of work or better, demolishing, so consent wasn't an issue for an existing rebuild, a new consent would be a nightmare.
I have some land and I've been considering doing something similar here.
I don't know if there would be demand or not? I suspect if houses could be built at a reasonable price I could own a little village, with a four hole golf course and little lake when I'm really really old.

Just got to be really careful we don't get our junk Pine timber exported back top us.

As we cannot supply what we need at the moment, it can hardly be taking away jobs.

The great thing about importing housing is that it can be used to plug the gap, between what we need and what we can locally supply, which at the moment is huge. and this can be adjusted downwards as the local supply increases.

As it is many of the components of a house are imported, and yet even if we start importing prefabbed housing, it is still not going be be more than 50% of what is needed to build a house. The rest being things like concrete, local labour and materials etc.

True. Moreover, a boost in construction output with pre-fab housing will create ample employment in services affiliated with the building industry such as banking and financial services, plumbing, electrification, wastewater drainage, landscaping, designing, logistics, equipment hiring, etc.
Given the huge backlog of houses and current population growth in major cities, pre-fab construction seems like the only way to go.
https://inhabitat.com/200-chinese-workers-erect-a-30-storey-prefabricate...

True. Immigrant builders will not give us diversity of housing but a range of foreign designed & prefabricated houses would give NZ some useful diversity. Stealing ideas is so much more effective than attempting to reinvent the wheel.

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10

So you expect ordinary kiwis to pay several year's salary more to build their house because it creates jobs. Frankly I'd rather pay those people to be on the dole and buy a kit-set from Poland, which is both better quality and cheaper.

If it's cheaper to ship an entire house from Poland or North America then the NZ building industry needs to up their game. If they see a threat from offshore competitors they probably will up their game and revamp tired product lines.

Regulations such as councils expecting BRANZ certification are NOT helping by adding huge compliance costs which shelter monopoly suppliers. For example standard materials for a foundation like cement, steel and polystyrene are often sold under an $$$ engineered system like RibRaft. It effectively eliminates competition and innovation as does the outdated building code. We should be doing something similar to motor vehicles - accept standards from a range of compatible countries. Our houses are behind the times, the quality is the equivalent of a new car without airbags - basic technology developed decades ago like insulated foundations and window frames isn't common here.

The government messing with the building details is doing things backwards in my opinion. It would be better to make the industry liable for negligence - i.e. if a house doesn't last 20 years rot free some party (builder or material supplier) is going to get sued.

No I don’t expect them to pay more. Once the factory is built it should be cheaper to build in NZ. The problem is we don’t have the factory. If you have a competitive process that only looks at price you miss that one proposal involves building a factory that will produce long term benefits for NZ. I agree with comments above that imports can fill short term, but they have to choose options that boost prefab construction in NZ. I don’t mind if some German company wants to build their factory here - if so great. I just don’t want us to develop a approach where the long term plan is imported prefab.

I dont believe there is a long term benefit. That is a standard knee jerk reaction that will end up with over supply of housing and out of work builders. By the time the factory is built the crisis will have magically disappeared and will be sold off as a childrens playground (post wrapping it in cotton wool)

We should import, its easier to turn the tap on and off. Run roughshod over fletchers, carters, branz, hardies and all the other cronies milking the cow.- Just do it !

You don’t see benefit to having say three prefab factories with the capacity to build say 6000 prefab houses per annum? How many jobs is that? Those people will be paying tax and spending money in New Zealand. The factories can be semi rural boosting regional economies.

Any fool can "create jobs", if you don't care what the cost is.

Ban mechanical diggers, for example, and you'll create lots of jobs for people with spades. Ban spades and you'll create lots of jobs for people with spoons.

These people will be paying tax and spending money in New Zealand.

Do you think that would make for a healthier economy?

These people aren’t digging holes and filling them again, they are building houses we desperately need. I’m proposing they only be contracted if they deliver a competitive price - i.e. one lower than traditional methods of building - plus I’d aim for at least a 2x multiplier, that means selling at least as many prefab homes to private purchasers. So no, I’m not talking about a government work scheme, I’m talking about kickstarting a new industry for New Zealand.

Another week and another PHIL Twyford idea.
It is now not KiwiBuild, ii is now KIWI OVERSEAS BUILD!!!

Yes, is it not wonderful how this government is improving things in so many areas.

HAHAHAHA
OMG, TM2. You're so funny!
"KIWI OVERSEAS BUILD"!

Where do you come up with such comedic genius!
Quick! Better tell the wife and kids about your funny new line posted on an internet forum!

Man (no pun intended). I haven't laughed so hard in forever!
"KIWI OVERSEAS BUILD"
Goodness me.

Pleased you thought it was funny.
Wasn’t meant to be funny, just pointing out how ridiculous all of theses different ideas but never going thru with them are!
Import builders from overseas one minute, then bring in prefabs from overseas.
What are we going to do with the people who are getting the free education to be builders at the tertiary education colleges?
He is totally lost!
If you can’t see that then your head is in the sand.

They're not mutually exclusive initiatives ya know....

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10

So..who cares as long as they are warm dry and cheaper than the current mix I don't give a hoot. Still amazed at the number of homes and apartments wrapped in plastic around Auckland getting the rot removed and basically being rebuilt again. Can we not build houses in this country?

lol, true ... and read this : “One of the challenges for KiwiBuild is there isn’t the scale and capacity in the construction sector to build the number of houses New Zealand needs." PT says .... really? what a discovery!!

So all along, PT and his gang of useless advisors were Bullshitting us and paying for 1st year tertiary education etc to fool us that they knew what they were doing !!

There is no plans, just stabbing in the dark and try everything as they go. How on earth can we trust these people ?

Photogenic PT is the master of claiming credit of what National started back in 2016 - latest example is the already planned 23,000 homes to be converted and built for HNZ over few years and label some of that as KB ...his emptiness and desperation will cost him his Job after costing us a lot of money on consultations, committees and God knows what else ....!!

Housing: Auckland getting 23,600 new residences on state-owned land.
https://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=120...

In before "*scoff* *tired ramble about Coalition of Losers 9 months of inaction*".

HNZC's Auckland Housing Programme which began in June 2016 is a 10-year joint initiative between the state house provider and a subsidiary of HNZC - HLC (Homes. Land. Community.), a spokesperson for HNZC said.

"Oh these Coalition of Losers are just stealing National's ideas".

I do like how the thumbnail for the video shows a row of Sky Dishes, in a State House with Sky TV LOL.

But that's a good chunk of the 100,000!

Dodge these were already in the pipeline under the last Government!

Dodge (apparently) lives far from Auckland so he wouldn’t have a clue what’s being going on in in Glen Innes/Point England. Anyone that lives in the general area would know that it’s been being redeveloped for years. Twatford is desperate to show some progress, even if it means stealing other peoples efforts. Personally, I welcome productive law abiding people to the suburbs bordering 1071.

Cow Pat you make silly assumptions. Even National occasionally have good ideas, but it is Labour that currently is ramping them up considerably.

Weird that every announcement now is attributed to the national party's initiative. . Even though in 9 years they did sweet bugger all

It just goes to show that National were all ideas and no execution.

Labour are lambasted for 9 months of perceived inaction with building houses, then the same crowd give credit to National for it being their "initiative" that has taken 2 years to get to this point.

Been watching a tv programme o Flat Pack Houses.
Some guy in the UK wanted a 6000sq ft house.
The Germans made it in 5 days,trucked it to the UK and the frame was erected in 4 days.3 stories from memory.
Top end of the market material was used.

Haha, I am waiting impatiently for a Greg Ninness article glorifying PT's Proposals for KiwiBuild off-site factories today ... or the 23,000 HNZ KB combo that this CoL will achieve under his reign ...:)

I am sure the DGM will be out in droves hailing the dawn of KB ...and the 23000 houses started under National ( who apparently have done nothing at all in the last 9 years) not only built one extra house !!!!!!!!!!

You know it's the truth, but you just can't man up to it. .

Hopefully you will wait quietly as well.

23,000 houses started under National in 2016. So why after 12 months was nothing built prior to the election?

Just googled images of Polish prefab houses. Impressive design variety, many would fit right in here. Many with impressive passive features for their harsh weather.

Just get on with it Mr Twyford.
Stop suggesting things and then doing absolutely nothing about it!
Import these boxes and then let us see where you are going to put them!
Let us see how many of the first home buyers who have saved 120k deposit can afford the servicing of the remaining mortgage, that want to buy these boxes!
Proof will be in the pudding and at this stage we haven’t even got the ingredients ready.
The sooner he gets started the COL knockers can see how successful Mr Twyford as the housing minister is going to be.
We all want things to improve but from what we have got so far from Phil Twyford has been blatant BS?
The new Ministry of Housing that Mr Twyford recently announced with 200 employees, is that now going to be extinct, or is it going to need that number of staff to enable these prefab box’s to be imported from overseas?

It is fantastic to see a government that firstly admits we have a housing crisis in Auckland as so many people want to live there and secondly a government that is getting stuck into doing something about the crisis. What a breath of fresh air. A government that actually cares about the less fortunate and those who were unlucky enough to be born at a time that means when they go to buy their first house it is ten times income. Us boomers have certainly been treated well by the passage of time.

That's because the previous two PMs didn't have the balls to admit it.

Yes it is great that they admit that there is a housing crisis for some. People who can’t afford to buy a home and never will be able to due to decisions they have made.
If you think that this COL have any chance of making things better for them then you are sadly totally deluded.
Totally lost and no idea of what to do.
Gets funnier by the week and a week closer to being ousted from government

At this rate you may not last till the next election

They will last at least two terms as they have heart. You could not use that word and National in the same sentence as they denied the obvious which is that Auckland which has so much going for it had a housing crisis. So many people want to live there because it is the engine room of our economy and it is a beautiful city with its water and islands. When one looks at the asset register of National MP"s it is peppered with rentals. I wonder whether that factor clouded their judgment.

It is a beautiful city with its water and islands but it is not the engine room of our economy (or if it is that would explain NZ's flat productivity growth). The engine room of the economy is in rural NZ: exporting natural resources and attracting tourists. It is hard to explain why Auckland has such low productivity because equivalent cities in other countries really are major centres of wealth (compare with Lyon or Leeds).

This is exactly the debate people should be having.. not some ridiculous baseless comments that prices rose in the last 10 years, so it will continue for the next 10 years

Aucklands share of GDP is in line with its population.. ~35%. Its over a third of the economy.

Auckland’s contribution to national GDP increased to 37.2 percent in 2016. Wellington's contribution dropped slightly to 13.5 percent, Canterbury's was unchanged at 13.2 percent. The West Coast region had the smallest contribution to national GDP with 0.6 percent, slightly less than Gisborne’s 0.7 percent.

In 2016 Taranaki retained its position as the region with the highest GDP per capita at $71,297, followed by Wellington, $67,888, and Auckland, $58,717. The national average was $54,178.

New Zealand’s total GDP was $251.8 billion in 2016. The North Island contributed 77.1 percent to total GDP, compared with 22.9 percent for the South Island.

The building industry here is ripe for disruption and prefab manufacturing could be the way. The building suppliers stranglehold needs breaking. Just hope it’s an overseas prefab company selected and not some NZ outfit.

Lol. Unbelievable

You can build as many prefab houses as you like,but if your paying rent at present how can you save a deposit for a 650k house.Idon't believe that there are want to be home owners holding off buying until these kiwi builds are built..Friend has just purchased a 4 bedroom.,2 bathroom 2 car garages newly built in Perth for 580k.