No rate changes, Auckland's housing pressures ease, population growth detail, RBNZ eyes watered down disclosure of bank rego breaches, swaps firm, NZD unchanged

No rate changes, Auckland's housing pressures ease, population growth detail, RBNZ eyes watered down disclosure of bank rego breaches, swaps firm, NZD unchanged

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

No changes to report today.

None here either.

Falls in migration and rising building consents mean Auckland's housing shortage could be on the verge of receding, but there's still a big backlog of pent up demand to overcome. Official decisions made a number of years ago are hitting the data now.

Kiwi Property Group has said it is about to launch a new bond issue. It has three issues already in the bond market, each for $125 mln. The new issue will be a seven year one, starting on October 29, 2018. It's existing December 2024 one currently yields 3.83% pa.

The Reserve Bank is proposing to change the way breaches of banks' conditions of registration are disclosed. Currently banks are expected to notify the Reserve Bank promptly of breaches of their conditions of registration and are required to publish them in their disclosure statements. However, the introduction of the Bank Financial Strength Dashboard and move from quarterly to six-monthly disclosures from individual banks means it can take longer for the public to become aware of a breach. Thus via a consultation paper the Reserve Bank is proposing that banks will be required to notify the Reserve Bank of all breaches, and that the Reserve Bank will maintain a list of non-minor breaches on its website. But in a change to current practice, it's proposed that minor breaches will no longer be disclosed.

The Green Party continues to oppose the Trans-Pacific Partnership Agreement (CPTPP) Amendment Bill, which would allow for the ratification of the CPTPP. Green spokesperson on trade Golriz Ghahraman says the Greens are proposing amendments to the Bill preventing countries like the USA joining the CPTPP unless they agree not to use investor-state dispute settlement (ISDS), a system requiring each state signatory to accord certain basic protections to the investors of another state which if breached, let a foreign investor take action to protect its investment. Ghahraman says the presence of ISDS has a "chilling effect" on our national sovereignty. NZ already has trade agreements with Singapore, Thailand, China, ASEAN, Malaysia and Taiwan that include ISDS clauses.

Waikato medicinal cannabis company Cannasouth has announced it will make an application to list its shares on the NZX main board through an initial public offering during the second calendar quarter of 2019. It is being supported by State institutions. Cannasouth has previously received funding from Callaghan Innovation to undertake research projects with the University of Waikato, focusing on the extraction and refining of cannabidiols.

Data was released today on regional population growth. Overall the nation's population grew +1.9% in the year to June. Auckland grew +2.3%, but there were a number of other local authorities that grew even faster. They include Hamilton and Wamakariri that grew at a +2.4% rate, Tauranga grew +2.7%, The Kaipara District and Carterton grew +3.1%, Selwyn District grew +4.8%, and Queenstown grew +5.5%, another 2,000 people in one year. But nothing compares with the additional +38,600 people in Auckland where surprisingly the fastest growth was in the inner city Waitemata local board area (+5,300) and where housing costs are among the highest in the country. (Gisborne grew by +500 people in the year, up +1.1%.)

Incidentally, it is Queenstown where the youngest population is, the oldest in Thames/Coromandel. Another interesting fact in the data released today is that almost half of the total natural increase in NZ's population is in Auckland (49.1%) even though it only has 34.7% of the population. Also interesting is that 39.5% of migrants choose Auckland.

Swap rates are up +1 bp across the curve today. The UST 10yr yield is marginally lower at just under 3.19%. The UST 2-10 curve is now just on +28 bps, slipping because the long end is a little weaker while the short end is holding up. The Aussie Govt 10yr is at 2.70% (up +1 bp from Friday), the China Govt 10yr is at 3.65% (up +6 bps), while the NZ Govt 10 yr is at 2.69%, and up +1 bp. The 90 day bank bill rate is unchanged at 1.90%.

The bitcoin price is now at US$6,448, a level hardly changed over the long weekend.

The NZD is identical to where it was on Friday at 65.5 USc after zooming up to almost 70 USc over the weekend. On the cross rates we firmer at 92.7 AUc, and 57.1 euro cents. That puts the TWI-5 at just under 69.9.

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At the risk of nit-picking, it was Queenstown-Lakes District that grew by 2,000. Less than half live in Queenstown proper. But if all 2,000 went there then it wasn't 5.5% growth, but 10.5%!

Australian banks now fall out of favour with institutional investors.

The move by the RBNZ's 'brand new' dashboard reporting is already being diluted to every 6 months from every 3, Porquoi? For those that would like to see how quickly a leveraged bank experiencing housing loses can be exposed in the capital markets - please see ..... Northern Rock, who posted pre-tax profits of £626 million in 2006..... 12 months later went pop. The RBNZ dashboard has just been censored at a time that the markets are exposing the folly of interest only debt into a housing bubble.


If you are going to get pretentious and start using French when there is a perfectly good English equivalent,then at least get it right. The word is pourquoi and why would do just fine.
The Northern Rock debacle is not likely to be repeated here. It had a leverage rate of between 60 to 80/1 and had been selling its mortgages to other investors,rather than holding them on its own balance sheet. None of our banks are doing that.


This won't be about covering short term international funding shortages. This will be about defaults and reducing capital ratios effecting credit to existing and new borrowers. Very different scenarios.

Northern Rock had a poor loan book, had leant mortgages at 120% of value (which is no different really to the type of lending we've seen in Australia and NZ) but generally limited themselves to interest only lending at 6 times household income.. The Aussie banks have been lending up to 9 times. This won't be a short sharp, can't raise funds go bust scenario, this will be a gradual erosion of banks core capital ratios over a 2 year period of housing market declines and continuing defaults. Westpac's loan book is 50% interest only lending and well beyond anything that northern rock ever dished out as a proportion of their loan book. CBA are not far behind.

This will be a squeeze on households that squeezes the banks, unlike the squeeze we saw on Northern Rock that then had it's effect on households.

Think housing crisis causes banking crisis rather than banking crisis causes housing crisis. UK never had a level of oversupply that the Australian market is about to experience, More Ireland than UK. Question also what the banks equity to leverage ratio looks like with a 30-40% reduction in their share prices?

What data source do you use to assume 120% loans are "no different really to the type of lending we have seen in Australia and NZ".

It seems very different - especially in NZ where prudential measures by RBNZ limiting low deposit lending has, for whatever faults it had, made a more resilient loan book.

Mister B -

Deposit lending assumes that the banks valuation is correct (and not massaged) on either the house being lent against or the house where the deposit is being raised against equity... if an owner can raise a deposit from a lender on a 'say-so' of equity or valuation then the system will eventually fall apart... That's what we've had.

The valuation measures for lending by banks are far more consistent in the UK than in Australasia (were before the crisis and are doubly so today) every mortgage involves a visit from a registered bank valuer before lending is offered.... In the UK it is also a lot easier to gain comparable sales info to provide valuation because more of the housing stock was built (large scale) at the same time. Essentially there are 5 major building periods where houses in most streets are all the same (or started off similarly before adjustments) and so valuation on last sale is easier (1900-1915) (1925-1936) (1950-1960) (1965-1975) (1980-1988) - It's also interesting that each of the major building periods in the UK ending in a housing bust..... That's why building consents are now more tightly regulated by central government... In NZ you may have a road of 50 units where all 50 were built by different developers... The biggest house sells for a million dollars, chances are the smallest house has been able to fudge their 'equity' position to borrow a deposit against an artificial value. The banks loved this because they could carry on lending to FHB's and investors when the natural stock of FHB's who had saved their own deposit started to dry up in about 2013.... Equity lending was then heavily courted for investment or to help out your kids....

In NZ the housing construction boom has been happening because every Tom, Dick and Harry has been buying plots to develop (with bank finance) to try and capture the boom, while at the same time the builders have done very nicely thanks off inflating unit prices, the materials suppliers have done the same all funded by loose bank lending and poor regulation of 'valuations' on financing.... That's why kiwibuild already looks expensive because the credit in the market is evaporating and the old 'land price' 'build price' metric doesn't work without lax bank funding on valuations.....

I'm here all week and happy to answer any other property related questions.

All those words and no real answer.

If you can show me empirical evidence of valuation issues, please do so. NZ banks have some of the best capital adequacy ratios in the OECD. It's disingenuous to compare with 120% LVR loans of Northern Rock (the starting point of your conversation). You entirely miss the point of the RBNZ restrictions, which precisely dealt with that issue, because very VERY small parts of the NZ book now are even over 80% (of Origination value, not even current value) .. hence protected somewhat from price correction.

Don't get me wrong, I believe NZ asset prices, especially housing, are inflated and on balance of probability will correct, but the stress testing and capital adequacy requirements mean the banking system is reasonably robust. It just seems like every comment you post projects yourself as an expert and yet use only UK experiences as 'evidence'. You're welcome to return there you know.

I thought I actually provided lots of answers but happy to stand uncorrected.

lots of words <> lots of answers.


Shall we start with banks already lending 15-25% less to new borrowers in anticipation of a correction....... as seen here on It's a self fulfilling prophecy, you take 20% debt capacity off idiots and guess what happens? You have idiots able to borrow less at the top of a bubble... general result is a correction greater than the 20% (it was only the idiots that were borrowing the bubble anyway) so the market corrects to a greater degree..... Here's Gareth Vaughan of explaining the reduced borrowing ability of idiots.

No. The dashboard remains every three months. It is the GDS's that move to six months.

'However, the introduction of the Bank Financial Strength Dashboard and move from quarterly to six-monthly disclosures from individual banks means it can take longer for the public to become aware of a breach.'

Sorry, that wasn't clear in the statement.

23rd October. The first regular working day in the post 'One house purchase equals one more vote for National' era.

National unsold housing stock (real,nz) has risen from 35,091 (16/10/2018) to 35713 today A rise of 1.8% over the week
Auckland unsold housing stock (real has risen from 13,259 (16/10/2018) to 13,440 today. A rise of 1.4% over the week.

David said he’d get interested at 15,000 so if we can get another 1,500 we’ll be in business.


At current rate of increase that could be with us around Christmas...

Probably more like March but I’m excited about hitting this milestone.


re numbers

29/09/2018 33,448 Nationally. Auckland 12,681

let's see...I'll have Gentlemanly wager with you of $10.... that we'll see 15,000 (total land and house listings in an Auckland search result before December 24th.... I'll post the envelope to tomorrow.. David can hold it in kind.

Ok, let’s do this. $10.

You’ll have to remind me though but you see the type to remember.

Funny thing is I hope you are right but I’m expecting it to drop down a bit before a post Christmas surge.

Lol,the desperadoes are coming out in force..

Might have to start keeping track of words like.. Desperate, has to sell, overcommitted, leaving Auckland, overseas... if not sold will end up in mental care...

Now that the foreign buyers ban is in place, no doubt house prices are going to drop another 40% ; )

It's already on the way: 107 Melanesia Road just sold for 91% of the 2017 CV. St Heliers is out of favour.

Yeah, nah. The 2017 valuation of 2.45M is way out of whack compared with 1.390M in 2014. No surprise that the actual sale price would be somewhere in between, and nothing unusual about St Heliers in that respect.

Damn, the DGMs didn’t take the bait. The property sold for $855,000 in September 2009 and $2,230,000 is right on market now. The value is in the land, which the CV has at $2,000,000. It will have been bought to subdivide so the house value is probably $50,000 to a house remover. $1,100,000 is right on for a 400m2 site. They will likely have double story 320m2 houses built on them and sell for $2.5 to 2.8 million.

What a dud


n light of all the politican "donations" being collected in NZ, it's important for private NZ citizens to know that the Organised Crime and Anti-Corruption Bill (‘OCAC Bill’) means that you as an individual can be prosecuted for any form of corruption, even outside the national borders of NZ. So if you receive any "donations" or "favors" associated with "business", you're effectively breaking the law, regardless if you're in China, Vietnam, wherever.

The above is a pretty clear example of the difference between entitlement (for those who find themselves in political power) and corruption (which is grey for the political front, but back and white for you as an individual).

So when a supplier hands over a box of prezzy cards to a contractor or local government official to entice awarding project supply to them, or contractors give a purchase order to the supplier that flies them the furthest overseas, this is deemed in breach of the law?

So when a supplier hands over a box of prezzy cards to a contractor or local government official to entice awarding project supply to them, or contractors give a purchase order to the supplier that flies them the furthest overseas, this is deemed in breach of the law?

I guess it all depends to the extent to which it is seen as corrupt. All I can say from experience is that a company I worked with in SEA couldn't accept a contract because of anti-corruption laws in NZ and Australia. Anyway, the point is to highlight how political parties have far more leeway than private idnviduals and business in this respect. In the case of poltiical donations, this is generally not seen as corrupt. I don't know how others feel about this but I feel there is a fine line.

BTW, here is some core explanation of OCAC.

Shanghai stock exchange on the slide again today 1.35% down so far... Time for a home team boost?

Nikkei 250 down 2%, Hong Kong Hang Seng down 2%. ASX down 0.9%, bank shares taking a hit.

Could there be continued challenges for banks that funded 'over-extended' local speculation to those who were trying to compete with Chinese gambling 'liquidity?'

Nic, did you listen to this guy? you can Jump to 2 mins in if you want.

Andrewj.. Thanks again.. I had heard it previously, but as always you understate the usefulness of the information you provide. For those that want to know a bit more its worth 10 minutes of your life even if you don't understand all of it. (actually it's worth reading almost all of Andrewj's posts)
A couple of thoughts before you listen though.. The combined valuation of the FAANG stocks, (Facebook, Apple, Amazon, Netflix and Google (alphabet) have a valuation similar in size to the GDP of Germany or Japan.... Consider these 2 realities, 1. with the exception of Apple, the valuations to earnings are enormous. (200 times earning in the case of Amazon) 2. How many employees do they support, pay who can use their employment to cover a mortgage? - info below.

Facebook employ 25,105 people
Amazon employ 556,000 people (that has doubled in the last 18 months as more drivers clog up the M1 and M25 in the UK).
Apple 123,000 people
Netflix employ 5,500 people
Google (alphabet) employ 25,105 people...... Cumulatively 734,000 good souls worldwide who we are relying on to save the financial system!.
Population of Germany. 82.52 million. Population of Japan 126.8 million. Do the valuations of these firms make any sense to anyone here on price to earnings or return by value to jobs created?

45% of all comments so far made by 1 single commenter!

8.6% of the comments providing no value of understanding whatsoever.

You wasted a minute of yours and 2 seconds of others

True, but he's got something worth saying, which most of us don't. What he's saying is we're f......d financially & I would have to agree. When you can't pay the debts, so you buy someone's else's debts and pay them to do it, to keep the money go-round going round, you know that we're pretty close to.... (you chose the words).

Happy to report we are not all f....d, I can easily pay my debts and I and many, many other people are doing financially well. : )

Why do you sound so desperate most of the time

But not as well as those that will never need a bank!


Jut because a white guy doesn't need to borrow any more they're now considered a 'Money launderer' ????? that used to be referred to as someone who was disciplined?

Banks aren't just lenders you muppet. Most people need banks to transact and conduct legal business. In the Western world, anyone with no bank accounts is likely to pose an AML issue.

That is a very ignorant thing to say Nic. Unless you are born into money you need to borrow to build a business. I would have never been able to be where I am now if I wasn't able to borrow money from the bank and the same applies to most businesses.
My dad never had a loan, he worked as an employee his whole life and he never owned anything.

That's bollocks Yvil.... If you have low costs (you live at home and don't already have 5 kids to support) and have a good idea and work ethic you can do anything without bank funding (that's not what our banks have encouraged with the herd speculating in house prices we've been used to), believe me a good business will grow organically on recycled profits without debt.....

I'd be happy to throw 10K at 10 businesses tomorrow if I got to sit down for 2 hours with the starters, meet the drivers and hear their ambitions, then judge them as people and see their funding? No, I'd want to have some fun on their journey and help where I can.

@nic Johnson at interest if anyone has an idea that's worth doing without debt.

If you throw $10k at the businesses as you suggest then they are in debt, you're proving my point perfectly