With 2021 over it is disappointing to realise that it actually wasn't that much different to 2020. Bummer. Perhaps less fear, but certainly more frustration.
It is New Year's eve, so time to think ahead. And forget about the past year or two as much as we can.
How do you think our economy (housing, agriculture, tourism, education, to name the key sectors in decreasing size) will fare in 2022? Both tourism and the education sector never really recovered in 2021; will they rise next year? or are they toast for a long time yet?
Who will be the winners in 2022?
And how do you think the big economies on the global stage will fare? There were plenty of huge stumbles in 2021. But at least the US got back some competent leadership and is firing on all cylinders now economically - even if the conspiracy theorists continue to ignore the obvious realities (and there are more closet CTs than we had realised, not doubt egged on by Eastern European troll farms, and Fox News).
And how will the financial marketplaces perform? This past year has seen plenty of unexpected winners, along with the expected losers. Inequality has widened. Will BEPS, CCCFA, and 'common prosperity' arrest the winner-takes-all global economies?
'It's Covid' has been the political excuse of the decade for not getting things done - and for wasting time attempting things that are kind of pointless (light-rail anyone? harbour bridge cycle line?)
It is time to test your prediction skills and bravely record them here in the Comment stream below. (Sign up here.)
And of course there is the small matter of bragging rights on your 2021 predictions. How good were they? Here is a quick link to last year's set.
This article is to encourage you to record your 2022 predictions. Gareth Vaughan's are here. Our 2021 Interesties are here.
They can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, the RBNZ, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international economic influences, even the shifting international power balance, and the like. But please try to ground them in the economy. (For example fashion or celebrity comments are not relevant, but climate change issues certainly are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others' differing views in a respectful and civil way).
Over to you.
153 Comments
"" even if the conspiracy theorists continue to ignore the obvious realities "". But sometimes conspiracies are true. Remember the Māori leaders who asked Queen Victoria to become sovereign. Remember Winston Churchill in the 1930's warning about Hitler - that was unpopular. So was Orwell in the 1940's warning about Stalin. And in the 2010's those comments about Chinese spies being elected to NZ parliament were rejected as unpatriotic conspiracies.
Reality is reality but how 'obvious' a given reality is does vary from one observer to another. However aggravating the conspiracy theory is it still deserves discussion. It is the conspiracy theorists and the conformists who are unwilling to debate that should be worried about.
That's a pretty antagonistic approach - it basically gives someone free license to propose whatever harebrained garbage with zero credible evidence they like and places an onus in those who aren't insane to disprove it - that's a pretty crappy way to decide whether something is legitimate or not. Frankly no one has time for that anymore - we don't get to stop the clock just so we can re-litigate the same conspiracy theories over and over again.
If something is entirely hairbrained garbage then everyone agrees (the moon is made of cream cheese) but because a viewpoint on a significant issue is held by a minority then it shouldn't be dismissed out of hand (eg votes for women, prohibition of alcohol, etc). The word 'significant' is relevant.
If a conspiracy issue has been litigated (man landing on the moon, death of JFK, flat earth) then there is little need to debate just direct the minority view to authoritative sources. It is with important issues where the evidence is still being collected that we need to be polite and listen to others - for example mask wearing, vaccinations, global warming. On all of those three I strongly hold the conventional view but I'm willing to listen to the conspiracy and for good reason - pushing the minority into a corner does them no good and in all these three cases actually increases my risk.
Counterpoint: These idiots are idiots and will always find something to be wound up about now. You're going to spend your entire life listening to conspiracies because despite they're a problem with the people who believe them, not an actual exercise in fact vs. an industry devoted to making money from people's distrust of credible information.
Meanwhile the actual march of time goes onwards, regardless of how we spent it. Our problems continue to escalate while we're all trying to get everyone singing 'Row row row your boat' in a round. I've come to appreciate my time is limited and not worthless - if other people want to act like theirs is, don't make it your problem.
The government has no option other than to address tax reform next year in order to give fair notice for their eventual manifesto pre 2023 election. Tax bracket creep has been of great assistance so don’t expect that to be adjusted, but the immense capital gain in property price values is a target both stark & tempting. With a mind to the fact that the Greens will be in cabinet if Labour is to stay in power, therefore look for both acknowledgement & concession to the Green’s wealth tax concept, in the guise of coalition necessity, and especially as it has already been legislated to give the IRD the necessary mechanisms and power to investigate and implement.
My guess is a token tinkering of the rates, but it to be more than mopped up by the proposed Kiwisaver, Unemployment Levy and the excises we need to go over and above our current climate commitments.
Expect far more people to start talking about net incomes relative to living costs, as the government takes a bigger and bigger chunk of what people get paid. The only way I see this not happening is if we experience another year of massive wage inflation - which I'm sure the government is banking on.
Here goes :)
- Political
Labour to keep fluffing it, Luxon to miss the mark, polls end the year slightly more in Nat's favour than currently, with Labour and Act down
- Economy
Goes flat but avoids full noise recession, consumers less fluffy due to housing market dropping 15-20%.
- Interest rates
RBNZ to lose it's mettle on increases and keep it flat after 1 more increase, driven by inflation slowdown, and unemployment increasing slightly.
- Stockmarket
Rough ride through the year, ending pretty much where it is now, no significant new listings on NZX50
- Covid
At the end of the year, predict we'll be living with restrictions around travel into NZ, masks and large events.
Goes flat but avoids full noise recession, consumers less fluffy due to housing market dropping 15-20%.
Hmmmm...would probably mean the wealth effect is not real. Losing 15-20% of people's 'savings' is quite a hit when its saved in the house.
Rough ride through the year, ending pretty much where it is now, no significant new listings on NZX50
NZX50 using FNZ as a proxy was negative in 2021. So that would negative for 2 whole years.
I'm thinking the slowdown / coming off the top of prices is what will stop the wealth effect, and add to unemployment as development slows down, which has knock-on effects on Interest rates, which then flatten out, increasing confidence marginally again, enough to keep it flat.
I don't believe that. The unvaccinated make up less than 10% (and shrinking) of our society and are clustered mainly in less urban areas. My assumption is that their impact on economy and society will be negligible (except that they'll be in the news a lot - demonstrating, complaining how difficult their lives have become and of course falling sick and dying of covid)
Falling sick and dying of covid? More fear. Stop the fear. You do not die 'of' covid, if you are immune compromised and suffer a bunch of health issues, perhaps you will die 'with' covid. Vaccination is secondary. You seem to take pleasure in your vaccine apartheid stance, perhaps it is your 90% vaccination figure that warps your thinking and you have become a bully. Life becomes less difficult, when you are not controlled by 'health' (sickness) mandates and government control mandates. We demonstrate to save people like you from tyranny and suppression and just hope you don't lead me to the gas chamber.
Politics:
Grant Robertson to become labour leader and PM. Jacinda Ardern takes a well earned break from politics before embarking on international career.
Judith Collins leaves Parliament.
Russia and China continue to play brinkmanship games in order to boost internal political power, distract their populations from failing economies and to win concessions from the US and Europe. Turkey start causing issues in their neighbourhood for similar reasons.
Rishi Sunak to become UK Prime Minister.
Economy:
Supply chain issues worsen. Both importers and exporters find business more difficult. Markets consolidate as only the big players can secure affordable shipping rates.
Towards the end of the year immigration settings will be loosened in order to steady the falling housing market and bring in talent. Emigration rates will also increase in the 18-30 age group.
Covid:
Treatments improve further. Less reliance on injections. Trend towards managing within the community continues. Border open without restriction by 2023.
This is always a fun post. I'll do my predictions later, but here are mine from last year and I'll mark them as right, wrong, or half / half.
1) NZ House Prices to increase by 12% or so year on year - wrong on the low side. What was it, 25%?
2) There will be a 10 year bright line test, everything else tax related just tinkering (plus it definitely won't be retrospective.). The new 39% rate will struggle to bring in new money as investors turn in droves to Trusts. Right. IRD is also monitoring inflows to trusts so I think they are sensing a move to arbitrage the rates.
3) All key metrics for the government (child poverty, emissions, house prices, immigration etc) all to fail - but there will be some tinkering with the stats, or else they'll just stop reporting althogether - I'll mark this as right. Immigration is a funny one but its a force majeure with the borders still closed. Definitely some funny business with how they record key stats like employment
4) Kiwibuild 2.0 is gone forever and never re-emerges - Right!
5) Fixed mortgage rates to bottom some time around the end of the year - around 1.9% - Right! (almost to the exact percent)
6) Biden to step down and replaced by Harris. Trump to officially lose, but spend most of the year trying to challenge it - Half / Half. Wrong on Biden (maybe this year?) Basically right on Trump.
7) Clean energy and tech stocks to continue to run. Value stocks stay in the doldrums Wrong - just looking at my ARK ETF performance tells me this, although the big tech players seemed to be really well (Alphabet / Microsoft especially)
8) No new leader for National. They'll gradually recover in the polls to high 30s and the Covid effect wears off (and people realise that the only people better off are the rich). Half-Half. TWO new leaders, but the poll recovery was right.
9) Aussie bubble by mid year. Even by the end of the year travel will be limited, but mostly back to normal. Half-Half. I got the bubble opening right, but not the end of the year at all.
10) Covid mutations will cause issues and difficulties with vaccines, reducing the effectiveness and requiring regional lock-downs or travel blocks world-wide. Right (but an easy one to predict)
11) Gold to go up 15% or so. Silver to have a better year as industries come back into life. Terribly wrong. Gold down 5% and silver down a lot more. What an awful year for the gold vs inflation narrative.
12) NZD to keep rising, then start to reverse towards the end of the year, but ending slightly stronger than now (shall we say $1.35 ish). Half-Half. I was right with the movement, but pretty off with the number ($1.47)
13) Tesla Stock to run for quite a bit yet, with a blow-off top towards the middle the year. The hamster can only run in the wheel for so long before it gets tired. Right. In fact it had two blow-off tops looking at the chart, and now sinking quite a bit.
14) Record immigration for NZ (perhaps not in terms of actual arrivals, but applications) - this will be towards the end of the year as borders re-open. Half-Half. Wrong for the stats, but right on the applications (although many of the visa applications are simply halted)
15) Bitcoin will defy expectations and end its run earlier than thought - say around the high 30ks or early 40s. It will then have a double bubble, with a steep fall, bleed out, with its run super high in 2022. Printer8 will be checking Coinbase daily in anticipation of the price falling below $12,300. Half-half. We had a huge dump with an initial ATH of $42k, and the May drop took people by surprise. But I was way off on the $65k to $69k tops. I was right about the end of the year though. Hope I'm right about 2022.
16) Bitcoin dominance to go up a bit more - to say 80%, then start to fall down as altcoins recover. End of year back to 55-60% Wrong - way way off. Strong altcoins (and even ETH) destroyed BTC in terms of gains.
17) Bitcoin ETF (Van-Ek) is finally approved. On that day, Bitcoin will increase by 20% plus - Half-half. ETF was approved (and BTC ran pretty hard) but it was a futures ETF - not spot. Big difference.
18) China to go full crypto - with the first major rollout of a CBDC, but flanked by a host of blockchain initiatives. There may be some kind of crisis as China starts to take control of miners, creating a risk of a 51% attack on bitcoin Half-half. Totally wrong on "full crypto" but right on the China mining crisis (full ban, hashrate fell 50%)
19) USA to go full blown regulatory crackdown on crypto. Bitcoin and Ethereum will be okay, but many major projects like Chainlink will be slammed. XRP will continue to die - ending the year below 10c. Wrong - the administration is definitely going down that path, but we aren't there yet. Link didn't have the best year, but XRP ends at 83c! (though they are still engaged in their litigation)
20) DEX projects will explode. Uniswap, Sushiswap, 1 Inch and the like, plus new projects like Opium. Expect very very large increases in volume and funds under management via Defi. They will be the target of regulatory crackdown towards the end of the year, but people will learn you can't stop a smart contract. Right - total funds on defi protocols went from 18B to around 250B in a year. Defi is definitely in the targeting sights of officials, but there isn't yet much they can do.
I was also going to say that in NZ, the rich will get richer, and the poor (especially working poor) will get poorer - but that would be too easy! Right of course, but too easy to get any points :)
Total score = 10.5 Should have just flipped a coin!
I've already picked Ardern will not be PM by the end of 2022 in an earlier post. The Labour Govt will be in disarray, but they will hang onto power for all their worth to get their Maori separatist agenda through before the wheels fall off.
The economy will splutter along. SME's will continue to suffer as Labour continues to milk covid for all they can. House prices will begin their slow descent into some kind of sanity. Hurray! Speaking of Covid - from pandemic to endemic? Govt permitting, let's hope so. Inflation will hold up over 5% as their are now just too many parts to it already going through the roof. Disposable incomes will tighten & people will stop spending on things they don't need. RB panics again & lowers interest rates. Give me strength.
The NZ people will march in larger numbers. Not the protestors of old, they're the one's causing the problems, these are the ordinary everyday Kiwis with a job & real families who send their children to school not prison & who are fed up to the back teeth with what's going on.
The global call is complicated & for precisely this reason things will not pan out as we hope. China is having second thoughts with its capitalist-communist model while the States continue their demise into eventual civil war & a possible split of the union. China is run by thugs so they can bully their way through anything, including offshore towards Taiwan & the South China sea. I would not be surprised if tensions turned hot.
There will be more huge natural disasters including one massive one in China. God will get them for Covid. And another on the west coast of America, just to balance things up. The Pacific region will not live up to its name.
Expect more inane politics from the left (who are currently running the USA as you might have noticed) but it's impracticalities will continue to frustrate people who just want to get on with their lives. The refugee crisis in Europe & North America will get out of hand as both are run by fools, with the same people also way too soft on law & order, which will become a big issue in NZ in 2022 as well. We are not told the half of it.
Banks continue their decline of a million cuts as technology continues to simplify the whole process. This means govts wanting more control of their people will eventually get everyone to deal with the one central bank (more IRD than CB). The BIRD. Expect more branch closures & more poor service as more things go online.
An early election in November 2022. The people will speak.
As I have posted before, I prefer to forecast in scenarios, but to restate my predictions of the more likely outcomes:
- OCR to peak at no more than 1.5-1.75 by August
- House prices down by 5-10% across the year, sales fairly sickly throughout the year
- Rents- flattish, slightly up perhaps
- Residential construction to start slumping by October
- Agriculture steady
- Tourism: remains in doldrums, education slightly picks up
- hospo and retail; fits and starts - overall a somewhat negative year
- Unemployment rises to circa 5.0 - 5.5% by year's end
- OCR cuts commence by November
- sharemarket slightly up by year's end
There were some quite good rates in Qtown the other day, Novotel offering about $550 for 3 nights (2 adults, one child).
You are aware that outside NZ Novotel is average at best. I think Queenie believes it's up there with the likes of Vail and Aspen. I don't think it is, despite it being a nice place.
"Rents- flattish, slightly up perhaps"
I always hear that we are at peak rental rates. In 2021, tauranga and rotorua the median rents increased 15 to 16 percent, to just pick two areas. Something like from $520 to 600pw for tauranga. Due to less rentals available, increased demand and landlords needing to recover imposed renovation costs.
Trends usually continue longer than expected and then tail off, they do not suddenly stop. I do not think it is helpful but in a high inflation environment I expect at least high single digit increases
Your reasons are plausible but.... those two factors, high level of new housing, low net migration both of which existed in 2021 AND 2020. 2021 had record all time high resi and 2020 matched the 50 year record of early 1970s. HM, You really need to have distinguishing factors if you want to say something will be different
Despite the high build rates there are actually low levels of rental stock available for this time of year. As per Trademe. In terms of new housing supply instead of flooding the market and reducing rents I think what I find is the opposite happens. Brand new homes as rentals are a new price level altogether. I dont know if these are being let to beneficiaries but whomever it is they manage to find the funds. That underpins the rents of existing homes and units. We dont normally have vacancies so do not get to test the market price too often. Anyway back to the thread which is 2022 forecasts, rental prices will increment at least high single digits nationwide.
There is increasing numbers of homes for sale and I think the figures that come out in January will show that.
The forecast for accommodation supplement costs will rise from $2.5 billion (actual) to $3.0 billion (forecast) and the government will subsequently introduce rental market price regulation coming into effect in December 2022.
No predictions on the form that regulation will take (but I'm working on it - lol).
No, you've got that all wrong!!!! Only tenants in private (non-state) rentals are eligible for the accommodation supplement (see last bullet - bold emphasis);
Who can get it
You may get an Accommodation Supplement if you:
- have accommodation costs
- are aged 16 years or more
- are a New Zealand citizen or permanent resident
- normally live in New Zealand and intend to stay here
- are not paying rent for a social housing property. Social housing properties are provided by Kāinga Ora (used to be Housing New Zealand) and approved community housing providers.
https://www.workandincome.govt.nz/products/a-z-benefits/accommodation-supplement.html
Kāinga Ora tenants are NOT eligible for accommodation supplements. Their rent is set by government at a level that is affordable based on the household income (i.e., no more than 25% of gross household income).
Accommodation supplement is a private rental market subsidy only. Once the government price regulates that market, the AS should go (i.e., no longer be needed).
Hi Kate I think that you will find that KO makes the application direct to MBIE, thus circumventing the tenant. KO is paid straight from MBIE rather the the funds going to tenant bank account. If the state tenant were to apply for the subsidy that would be a double payment. This topic clearly excites you to have given me four exclamation marks. Wow thank you. If the info is hard to find it is probably govt subterfuge. They do not really want you to know. TA was quoting it. Note that the instruction also says that rent paid to CHP is excluded. Do you really think that NGO housing providers will be missing out and if not what umbrella do you think that they come under! Ps only one exclamation will do
MBIE? Where do they come into it? Do you mean MSD? Give me a link to the info you speak of and I'll take back my exclamation marks :-). Otherwise you're just peddling nonsense.
If by CHP you mean community housing providers - I imagine they are subsidised by government. But that's not my point. They are non-profits. My point is with subsidies being handed out to private businesses in the residential tenancy market.
That needs to end.
Ah yes CHP = community housing providers not California Highway Patrol or some other non related abbreviations. Non profits CHP receive income and do not provide housing for nothing though some of their low socio tenants would not know the difference. I get the feeling that accounting is not your strength so you do not know where the money comes from either. For the money CHP receive from govt, my question is "what umbrella do you think that they come under" in govt accounts? Surely not accomodation supplement! Shock horror! As well as KO (kainga Ora) of course. TA Tony Alexander has said that and I am prepared to accept it. DYOR (do your own research). PS (post script) for new years I have typed out in full
Seems to me you are trying to deny (or diminish the significance of) the fact that over $2 billion per annum (a welfare expenditure item second only to superannuation) is forked out by taxpayers to subsidise the private rental accommodation market. Here's your statement:
Govt is itself the biggest earner of AS through housing nz KO. Taking at least 1 billion of the total bill.
All I'm asking for is a link to proof of that statement - and all you can provide is 'Tony said it'.
Do you think perhaps you misinterpreted Tony? I DMOR and found nada.
If you are over your subject matter Kate, know the numbers already and not be asking an anonymous unknown on the internet to find out for you. I am not the one making the moving target claims regarding funds being shovelled into private pockets. At the outset it was initially "2.5 billion (actual) to 3 billion (forecast)" and now lowered to "over 2 billion"
1. NZ average house prices will have an annual rise of 9 per cent in 2022
2. The govt will go back to the drawing board with 3 waters not because they want to but because the political damage to their causes will not be worth the potential gains.
3. China will start to realise that popping a credit bubble in a time of demographic decline is a really stupid thing to do. A slow reversal of the policy will take shape then as nothing happens a panicky ramping up of stimulus will ensue.
4. Biden will put together packages from his Build Back Better bill more likely to pass and keep the US show on the road.
5. 2022 will be a bit of a holding pattern year as a majority of political leaders start to read the present as a time not to take risks and do things just because they can rather sensing that the underpinings are fragile.
Looks pretty good to me but if you said "Single Digit" gains in house prices next year your more likely to get your prediction correct. Of course I think this is more like what people are hoping for, but honestly anything could happen and double digit gains wouldn't surprise me.
For me, the overriding issue for 2022 both for NZ and worldwide is Inflation. Of course there are many other important aspects such as GDP, employment, housing, asset values and many more but IMO they will all mostly depend on inflation and the central banks' response to said inflation.
I also see NZ's economy slowing down markedly by mid 2022 because of rising interest rates and the end of the lockdown induced stimuli (wage subsidies, Resurgence support etc…) which I believe are stronger than the restricting measure of the actual lockdown
It remains to be seen if the government's new planning rules continue to help prop up prices. As I said a lot in earlier 2021, this was a big factor in the hot market. One Roof article on it today.
It might have run out of puff, especially if residential development falls out of favour as I predict, time will tell.
I fear for our country's future when we seem to have an increasing number of morons around, like these dirt biker idiots in Auckland today:
https://www.nzherald.co.nz/nz/dangerous-bikers-swarm-central-auckland-s…
I think one of the big housing issues at the start of the year is going to be CCCFA, it's going to be interesting if govt will flake to the mounting opposition...
Housing is in RBNZ's & Government's hands- I feel like if they want they can cause a correction - you can see this through the CCCFA changes & increasing rates. What will the public want though and how will the polling look like if the market swings the other direction? Could they risk pushing it too hard and the economy looses all momentum...
We have learnt to print enough money to prevent bad news and stay in political power.
Supply chain recovery and associated high commodity prices will continue to feed inflation and lead to large wage cost demands as unemployment stays low.
The best way forward is seen to be to inflate our way out of debt.
Being a millionaire was a great position only 20 years or so ago. Now it’s not even buying you a house.
So we continue to undermine the value of money and race to assets that we think will protect us from value destruction.
Ultimately we need to find sustainable cashflows.
Always tricky to separate predictions from wants, but I’ll give it a go...
- house prices 5% to 10% increase in main urban areas - but drop in provincial areas
- OCR 2% by year end as inflation subsides to around 3% (the two are not connected but people will still think they are)
- Govt tax revenues remain above forecast for first 6 months and then drop below forecast as unemployment increases to just under 5% due to reductions in govt spending
- Financial assets and shares drop back 5% to 10% as QE is withdrawn globally - triggering scare stories about market collapse etc
- Carbon units hit $72 but then wobble as govt considers switch to straight carbon tax as stories surface about investors continuing to rort the scheme
- Govt increases benefits again - but only enough to ensure progress on child poverty targets
- Cop 27 is a disaster for NZ and with increasing evidence of climate change impacts, and insurance companies starting to refuse insurance on coastal properties, Green Party starts to strengthen considerably
The S&P500 index will be lower at the end of 2022 than where it starts.
The S&P500 hasn't been under its 200 day MA this year. There have been four times this has happened since 1981 and in three of those that index declined the following year. In fact the last time the index was under its 200 day MA was April 2020.
We're now at 4SD [link] from trend growth.
As I did last year, I’ll first say what I think, in my humble opinion, actually happened this year before making any predictions.
2021 was the year of the vaccine, and the year of authoritarian government groupthink.
A chemically modified type of mRNA spike protein transfection agent was hurriedly developed in late 2020 as a vaccine. The agent was so radically different to previous vaccines that the dictionary definition of vaccine had to be changed to accommodate it. The mRNA in both Pfizer and Moderna was not simply mRNA, but “codon optimised” mRNA.[1] Natural uracil was synonymously replaced with N-methyl pseudouridine, a synthetic nucleotide base more resistant to mRNA degradation enzymes, and which was transcribed faster by the ribosome. A side effect of this “modification” was that the western blots of transfected cells no longer showed nice bands of pure spike protein, but smears on the gel indicating that many proteins of different molecular weights were instead being synthesized in cells.[2] The phase 3 trial of Pfizer’s vaccine was published in July 2021 showing an inauspicious 15 deaths in the vaccine arm versus 14 deaths in the placebo arm after six months.[3] Despite the poorly characterized vaccine, its dubious efficacy, unknown long-term effects, and serious misgivings from many prominent scientists including Nobel laurates, the FDA gave EUA approval for its use, and the vaccine has since been dosed to over 1 billion people.
Many scientists objected to the mRNA vaccines. Some on the basis that a non-sterilising vaccine would lead to directed evolution of the spike protein. Mechanistically this could be accomplished by serial passage of the virus though the vaccinated population, and in June 2021 this theory was all but proven to be correct.[4] Some scientists argued that we might create with vaccine enhanced disease. However, by the grace of god the opposite happened with the emergence of omicron a highly contagious but very mild form of covid19 which unsurprisingly had a highly mutated spike protein.
Despite the mRNA vaccines being the most unsafe and ineffective vaccines in the history of vaccinology, the government, and media became myopically focused on them as the only way forward. To counter a growing public backlash, propaganda levels were increased to war time settings. Policy makers became entrenched in groupthink, and appeared to suffer a complete loss of objective reasoning which some have humorously referred to as “data hesitancy”.[5]
Some examples of the nonsensical and counterproductive groupthink from this year; People who’d acquired robust and long-lasting immunity through covid19 infection[6] were not acknowledged as having any immunity at all, and were coerced to taking a vaccine which would provide them no benefit. Likewise, healthy kids are known to have virtually no risk from covid19 infection,[7] but were approved for vaccination anyway. Their parents will likley now be encouraged, coerced, and ultimately be forced to transfect their kids. The very high degree of risk stratification of covid was completely ignored in the one-size-fits-all vaccinate everyone approach. Effective medical treatments like ivermectin, vitamin D, hydroxychloroquine & zinc that could’ve kept people out of hospital were dismissed as conspiracy theories despite a mountain of high quality clinical trial evidence in their favour.[8] Any scientist caught disagreeing with the mainstream narrative, for example Dr Simon Thornley in NZ, found themselves publicly discredited. In New Zealand 1300 health care professionals quit their jobs as a result of the counterproductive government mandates. The tenants in one of my houses lost their jobs because they refused to get vaccinated and they had to move out because they couldn’t afford the rent.
Green shoots began to emerge this year. More people seem to be waking up to the reality of what’s going on. People are turning to alternative forms of media. I predict more trust erosion particularly if the government maintains it’s current course. I used to think of myself as an anti-neoliberal and now I think of myself as a libertarian – and that’s quite a change. I predict the stockmarket and housing market to correct, although I’m still invested because for some reason I don’t really believe that. We live in a world where up is down, and down is up. Whatever you think will happen the opposite will probably happen. Happy new year.
Best case scenario; By vaccinating kids we’re effectively transferring risk and ill-health from the old and obese onto children.
Worst case scenario; Kids were never a risk to the old/obese either because omicron is innocuous, or because kids generally don’t get sick from covid and simply aren’t contagious. In this scenario, by vaccinating kids their health is being sacrificed for nothing.
Interesting moral dilemma
Predictions for 2022:
- One of the anti-vaxer nutters posting on this forum will spend time in hospital but not admit it
- Immigration will increase on 2021
- Interest rates will go up slightly and then drop again as the economy takes a hit
- Bitcoin will drop to 25K as people start realising it's worthless
- The average price of NZ houses will go up 5%
- Insurance premiums will go up, and premiums for house insurance will become more targeted to reflect the cost of climate change
- The agriculture sector will have its greatest ever year
- The tourism sector will reconfigure to accommodate locals
The one thing that matters to people on this site house prices: will be flat this year.
In 2014 similar tight conditions occurred and that kept prices flat at the time while the banks rebalanced their mortgage books with 20% deposits. The FHB were in a tough position and that will happen this year.
My other prediction is that government bureaucracy will stay at the same high level holding back any part of the economy it is in contact with.
Jacinda will still be PM by the end of the year
Labour Greens bloc to maintain a lead over National Act in all major opinion polls and enter 2023 the favourites heading into the Election
Cabinet reshuffle will see Poto Williams and Nanaia Mahuta demoted and at least two backbenchers promoted to Ministers
Government will ease vaccine mandate requirements
International travel for New Zealand citizens and residents will be made easier this year, but borders still shut to tourism.
House price inflation to drop to 10%
Mortgage rates to hit 5% for 1 year fixed term before stablising and easing slightly
CPI to peak at 6% in Q1 and ease slightly over remainder of the year
Scott Morrison to remain Australian PM after their election
Joe Biden to declare he is not standing in the 2024 Election
2022 predictions
- House prices to fall -20% in Auckland, flat in the regions but continue to grow at +5% in Christchurch driven through internal migration into the region. House price falls will be driven by new build townhouses with investor demand falling away and FHB priced out
- Luxon will continue to perform well moving Labour to the centre right. 3 waters quietly dropped by Labour and interest deductibility loss will not be grandfathered to existing purchases. National support to grow with Luxon crowding out Seymour. ACT to fall to 3% support
- Delta eliminated by March and we keep Omicron out until July. Affected areas go into a level 3 type lockdown
- Number of tourism operators especially in the South struggle to adapt to cater to the local market and shut down due to the uncertainty of CV19.
- Civil unrest due to vaxx protests and strike action due to high cost of living
- All Blacks lose 4 tests next year. Calls for Razor to coach the team are ignored by the NZRFU
- Blues play Crusaders in the Super Rugby finals. The team that hosts the game wins (most likely Crusaders)
- NZ loses skilled talent to Australia as Aus pen up borders and recruit Kiwis
- India beat NZ in the WCT20 in Aus this year.
It's always hard to time these things, but we're well overdue for a major asset price retrenchment globally. This means stocks, bonds, crypto, commodities, and especially in the case of New Zealand, property.
Will 2022 be the year it happens? Who knows, but it's as good a pick as any. Having made the same prediction in 2020 and 2021 and been wrong both times, some might be tempted to change their tune the third time around and join in the chorus of "to the moon!", but I don't quite see it like that. The fact that it didn't happen then only increases the likelihood of it happening now, and if it doesn't, it's even more likely to occur next year instead. Such is the nature of inevitability.
1) covid will be less of a problem worldwide than last year and world economies will continue to improve.
2) house prices will fall, possibly by 10% or more, particularly in the regions
3) national will continue to poll better under Luxon but will mainly take votes from ACT. Polls will be much closer this year and labour will need to start performing other than covid.
4) government will pretend to care about climate change but take none of the big steps needed to make a serious difference.
Twenty more predictions, just for fun:
1) House prices to keep increasing (defying experts) - but a more modest 5-10% or so. We get less interest hikes than expected - say another two.
2) Omicron turns out to be a fizzler, with low rates of deaths. This time towards the end of the year we WILL see the world starting to re-open (if not by that point). NZ borders fully open at end of the year. But for those not vaccinated, things will continue to be difficult
3) Rents keep spiking. Another 8% or so up. I expect at least one more barrage against landlords. Maybe not a tax thing but something like a rental WOF or more likely making it more difficult to increase rents or more burdensome contractual requirements
4) Tax - Trust rate to change to 39% (or maybe the tax rate of the primary settlor). This will be another "the rich pricks just use trusts to evade tax etc" moment
5) Ardern and Luxon both to stay on as leaders by end of year. But if polls narrow then I expect Ardern to resign like Key, just not this year.
6) Expect polls at end of year to be something like 40% Labour, 35% National, 10% ACT, 12% Green
7) 2021 will not be the hottest year ever (not by a long way) and 2022 will be cooler. But expect climate change initiatives and rhetoric to ramp up to the max. And yet NZ emissions will continue to go higher
8) Biden to resign for health reasons - replaced by Harris (I said this would happen last year - more confident now)
9) In the markets, commodities will have a great year. Gold turns positive (say around 10% up) and Silver follows
10) Inflation continues to be a huge problem - say 5% in most developed countries. Wages will not catch up
11) Labour will be losing too much in the polls to risk introducing new hate speech laws.
12) US shares continue to outpace that of NZ. Expect markets to start a big recovery towards the end of the year as covid is fading away. Winners will be those that were most hampered by covid (hotels etc) but I think airlines will have to wait to next year to recover
13) Tesla has some huge scandal (either leadership, technical failures or something else) and ends up lower than the start
14) There will be one final lockdown in the year (more likely level 3 rather than 4) either due to Omicron spreading too fast, or a new variant. Expect needing at least two more boosters.
15) Turning to the crypto, ETH beats Bitcoin but won't flip it this year - that flippening will be the talk of the crypto markets. ETH ATH will be around 8k despite many delays for the ETH 2.0 MERGE.
16) Big themes for crypto will be "the metaverse" and gaming tokens plus interoperability and bridges (so expect tokens like DOT and Cosmos to do well). Privacy coins will continue to lose against the market.
17) Bitcoin is so hard to predict even in a 1 year period. I don't expect a super bear or bull market. The excitement of other coins is going to drain bitcoin's growth - I see an ATH of perhaps mid-high 70ks. As with this year, we'll have at least two bearish phases.
18) One major country has a full ban of crypto (I think Russia) but at least one more makes BTC legal tender. Expect a regulatory crackdown on stable coins (already underway) and DEFI.
19) China ramps up its "blockchain but not crypto" in a big way, with a full roll out of its digital currency and other blockchain type stuff. It decides to reverse its btc mining ban.
20) Total market cap EOY for crypto will be around 4.5 trillion. BTC dominance keeps falling - to around 25% end of year. XRP and ADA fall out of the top 10.
And just like last year, the benefactors of a Labour government will be those who don't want to work, and those with large assets.
Yes but I predict that many of the measures put in place to try and combat them will have the reverse effect.
And then there are other things. I know a lot of people on 7 figure incomes with no investments (aside from managed funds). Now they are taxed at 39% they are starting to talk about buying tax free investments - including property
predictions for 2022:
- OCR reaching 1.75% by end of year; Aus raises its OCR in 2022.
- Omicron creating not much in terms of health risk; pandemic turns into endemic and we all have to live with it with vaccinations every virus season.
- House prices slowly falling- down 8% by end of 2022.
- EU in severe economic strain
- New listings on NZX -2 degrees+orcon;
- Z becoming Ampol.
- FHB life becomes easy with excessive fees to buy a house for everyone else, like increase in property title fee, rates, lawyers fee for trusts and investors.
In 2022:
- Jacinda to resign.
- House prices fall and a credit crunch sparks a review of CCCFA
- Inflation goes wild as RBNZ pause rate hikes in the face of house prices declining
- A crypto meltdown happens when assets held by 'pegged' coins turn out to be bogus
- The price of physical metals go through the roof
- Peloton is the stock of 2022 rising 250%. Locally, A2 Milk and Sky TV make big comebacks.
Hi LFCYNWA
I agree for the most part. I personally think that building companies will start to struggle too.
There will be a gap between what builders can sell a house for and what buyers can get approved to borrow. This will prove to be the biggest factor for the bottom end of the market collapsing. I think existing homes in good areas will be fine and will not get the same drop… but new builds will get ugly. The rents currently asked for townhouses is already too high, storm clouds gathering.
Smart money is in metals. Gold is commodity that the Turks are flocking to, this made sense to me. NZ property has done it’s dash. It’s an investment for the heart, not for the head.
so many people are ok with topping up a rental property, with no capital gains, it’s death by a thousand paper cuts
I think a lot of cash will pour into new builds but a lot of that cash does not understand the risk. Many people look at Evergrande the way others looked at Northern Rock in 2007 and think 'that's something happening elsewhere'. However, our new build issues will be a 2023 problem IMO.
They (comments) can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, the RBNZ, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international economic influences, even the shifting international power balance, and the like. But please try to ground them in the economy.
Now for '21....
- The winding down of subsidies, hand-outs, and other Gubmint largesse will coincide with a difficult winter for many businesses. Hospo, tourism, international education, aviation and their supply chains are especially vulnerable. There must be quite a few zombie companies out there, shambling along until they don't. Attempts will be made to save those in the more marginal electorates, but realistically, with a mandate like the current lot possess, who actually cares? So as a direct result, homelessness, food banks, fevered-brow-soothers and Helping Professions are gonna have a killer season ahead.
- Interest rates cannot fall much more without crunching bank margins and turning off the few term investors left out there, and cannot rise much without causing grief, woe, negative equity and other effects in the wider economy. Perhaps not much change therefore, but this is Black Swan territory....
- Inflation may well surprise. The relentless rise of Gubmint and TLA fees, levies, charges, contributions, rates, imposts - but No New Taxes, mais naturellement - will start to feed into costs everywhere. And then, depending on the exchange rate movements, freight/logistics/supply chain effects, and the machinations of much larger countries jostling for their place in the sun, much cost inflation may be imported. Against a background of somber local economic issues, this will be rather unwelcome....hello, stagflation.....
- The economic performance of Gubmints and TLA's - or their all-but-inevitable fusterclucks that '21 will bring - will have many questioning structures, staffs, MO's and cost/benefits. Yet little will result, except for a growing undercurrent of dissatisfaction with them all, and a growing disengagement of their publics from the Mandarins' Machinations. A certain John Galt may rear his head.....
Scorecard:
1 - achieved in spades, except for the continued, debt-fuelled plunge protection policies which still exist, smelling more and more like deal seals half buried in the hot, hot sun (image drawn from Jimmy Armers Beach in Kaikoura). As for the affected businesses, 2022 is fish or cut bait year... .
But the Helping Professions are still having a bumper year.
2- interest rates, quelle surprise, are rising, so 100% on the mark.
3-inflation and stagflation rampant. It's hard to produce Stuff at the best of times, so tipping disposable income into the hopper, and expecting that not to interact with fixed supply is pure Gubmint policy craziness, but I repeat myself....
Little local sign of the times. Sections in Kaikoura next to the golf course were advertised at $225k when we rocked up in early 21. 6 months later, the signs were pasted over with a $275k price. Lo and behold, cruising down to the Kowhai mouth coupla days ago, another pasteup, sections now $325k.
And try buying timber.....
4-disenchantment with the Mandarins, the medical establishment, etc al, is there but not yet to fires in the streets volume. More of a quiet rebellion, and if John Galt is about, that won't be obvious until the Mandarins all realize that there are fewer taxpayers about. Unexpectedly.
So for 2022:
Well, really, all of the above - it's deja vu all over again.
With the added frisson of geopolitical shenanigans, energy crises caused by demonizing the very fuels which enable some sort of sensible transition to nuclear, hydro, solar, wind, tide etc. Poster child Europe....
And not to mention the pandemic, doing Sterling work in culling the population, generating disillusionment, and generally causing wholesale reevaluation of how we all live.
1 variant omicron will make its way into the community and not before time, following nz opening international borders the virus will escape.
2 omicron being a less severe form will cause the pandemic response to collapse. Contact tracing will be seen as irrelevant, those with symptoms will not bother to be tested, merchants will not do the my vaccine pass checks for fear of loss of customers
3 housing prices will not fall. The hpi and median will continue to increase albeit at a slower pace. Construction will begin to slow due to financing seizing up as well as inflation taking hold. New home buyers and banks will be nervous to commit. Builders and developers will nearly fully complete projects before offering for sale at fixed prices
4 rents will rise strongly, because of fewer homes both new and existing, being bought by investors. And for many other reasons such as increased demand after the international borders reopen and foreign students and tourists return. More homes will be used for short term lets thus removing them from the rental pool. Labour has unwittingly and fundamentally changed the structure of the rental market
My prediction/wish list,
The boarders will remain closed to mass tourism and students whose only goal is residency.
Interest rates will hit 8% causing a housing correction like the 88 share market crash. This will put an entire generation off investing in property.
The government will step in and buy up distressed property at a big discount and turn that into social housing.
Rents will halve.
The rest of us will learn to live with what ever level we have of covid and get on with life.
Your wish list kwbrn?? Or hit list ?
Remember how before Xmas, the good folk of northland had Honny batting for them and those on the east coast likewise had the mayor, telling aucklanders to stay away and not come to the beaches and baches. Did they stay away? No!
In the same way there will be more international tourists than precovid levels coming to Queen Cindy's little Queendom I am sure. Get out and see the country now beforehand
- More inflation. A lot more. Businesses push 10-15% price increases to keep staff. This is already visible in Medical, IT, Retirement and Construction. More sectors follow. This will repeat annually untill interest rates lift to slow it down.
- Labours is happy that wages rise. Rises are destroyed by increased cost of everything. This especially hits the retired, beneficiaries and teachers, nurses, police etc. Labour secretly happy at higher tax take as tax points dont change.
- Govt needs more tax. Greens pressure a wealth/land tax. Labours tries to hide this agenda till post election.
- Great resignation gets going. Mass exodus of medical sector to Aussie. More and more IT sector workers start teleworking into Aussie.
- Wage and price spiral puts lots of pressure on company profits. This equals less tax.
- Govt/RBNZ caught between a rock and a hard place. Rates lift to 6-7% to slow wage and price spiral. Housing tanks last years speculative gains. Housing lobby noises goes into overdrive.
- Banks tighten lending more to protect themselves. Over leveraged get a margin call.
- Jacinda pulls the ejection handle for a UN gig. Robertson takes over.
- Immigration and Covid are related. Who knows what will happen.
- Let's hope China and the US avoid a punch up while playing chicken in the water around Taiwan.
- Omicron is everywhere quickly. Unvaxed question themselves when the ventilator appears bedside.
I predict that the cat is out the bag and the youth now realize that the system is rigged against them. They can see that there is an invisible threshold of wealth that once you cross, the government will not allow you to ever lose or cross back again. The government controls who can pass the threshold and who can't. Wage earners cannot cross but children of the previously crossed can. The youth can see that hard work is now a pointless exercise. Expect more crime as a result, and seriously, who can blame them?
Grifting is the way to go - start a major conspiracy (make sure you don't believe said conspiracy) and then sell to the faithful - books , tee shirts , anything (something about taking candy from a baby).
Fake it till you make it seems to have become the mantra of many.
Yes crime does seem like the best way to go.
We should all collectively work together to form a New Bank and print and be damned.
Dollar cost averaging, we could Donate all Free New Money to those in Need.
You know, those Poor Politicians and Bankers who have not taken advantage of the previous Rort.
But as usual, I may be a little late, This Government is printing and giving freely to keep the Ball rolling. After all it is only a mere bag-a-tell...a few billion which you suckers may be taxed a teeny bit more in years to come...as you work in the "Public Interest".
Have a very Happy New Year. It is only sweat equity and Global Warming for years to come....30 Degrees here today.
Good Luck NZ....We will need it.
Jacinda has just broken a promise, for the second time, made when she took up the reigns of government. She then promised that she would not increase the price of cigarettes in the future. But there has been a second rise in the last week....it looks like it's around 10%.
No, I don't smoke myself but I do know one or two people under the Mental Health whom I help in a voluntary capacity. Cigarettes do seem to help these people. So, what is the Labour party doing? I suggest this is the beginning of a general increase in many if not all taxes to pay for Labour's largesse during Covid.
So, Labour has slipped in this cigarette tax increase in the middle of the holiday season to avoid media scrutiny. Very cunning. So, if Labour can break one promise (twice now) why couldn't they break another promise e.g. not to introduce a Capital Gains Tax; the precedent has been set.
Also, on an associated point, what has Labour done with the the 190 million dollars that was earmarked for Mental Health before Covid....I suspect most of it was rerouted to that pathetically underwhelming 'spectacle', the last America's Cup.
As a long time Labour supporter I am now looking askance at them and if an election was to be held in the near future I would have to think seriously as to whether I would vote for them; the only thing that would prevent me deserting them would be the unprecedented lack of any party constituting even a half credible opposition.
No excise tax hike on tobacco this year - there might have been a manufacturers price rise (inflation adjustment), but not a tax one. From the most recent decisions made toward the end of last year:
Between 2011 and 2020, tobacco excise tax increased 10 percent each year on top of the annual adjustment made to keep pace with inflation.
Dr Verrall has ruled out further tax hikes.
We're creating abject poverty in NZ with tobacco tax. There's a cohort of people out there who literally cant help themselves because of mental illness. They'll smoke come hell or high water. Raising the price is plain brutal. In my opinion the only humane thing to do is either ban tobacco completely, or lower the price by 90%. The cost of tobacco where I am in Germany is 40 g for 4.7 euros. Less that 1/10th the cost in NZ - and smoking rates are declining in Germany too. Wake up Labour to what you're doing!
Fat Pat
Well put. The NZ public don't want to know about mental health issues; they prefer it to be kept out of sight unless someone from their own family is affected. Even then the issue is so stigmatized that often they will do their best to hide it from outsiders. It is the last demographic bastion that needs to be broken down.
-1: The NZ dollar will get slowly but steadily hammered over the course of the year, with inflation continuing to rise on imported goods. (Note: currently at 0.682 vs USD. Prediction: 0.5x by December.)
-2: wages will rise a little, but not enough to offset these price increases, or the effect of moderately higher interest rates.
- 3: OCR: two rises of 0.25%. RB unable to raise further despite drowning NZD because of our extraordinary mortgage debt.
- 4: With households materially poorer due to inflation and higher interest rates, and with JC no longer a millstone around National's neck, Nats will poll higher than Labour by December. They will still have the massive problem of no natural coalition partner other than ACT - but ACT's current strength is a pool of National voters who will swing back to their natural home.
- 5: There will be problems in the new-build townhouse market, but the overall property market will be surprisingly resilient in nominal terms (even with negative real yields) as people would rather have money in a hard asset than a depreciating currency.
- 6: Stagnant year for the NZX.
- 7: US equities: unprofitable hype-stocks to get destroyed at some point, with a minor accompanying pullback on profitable tech. Overall indices to remain flat as that money gets rotated into safer names.
- 8: 'Supply chain issues' will remain disturbingly persistent (because they're not just supply chain issues). Economists will continue to insist that continually rising prices are not inflation because inflation is increase of the money supply; the public will continue not to care about that fine distinction.
-9: China's internal political problems will become more obvious and they will appear less of an external threat. There will be/is a battle within the CCP between those who have made megabucks and want to continue the current model and those who think that hypergrowth is dead and consolidation is necessary (Xi's faction).
-10: the EU will face extreme internal tensions reminiscent of the Greek debt crisis, as Germany (and similar) faces extreme inflation while Italy (and similar) can't afford to raise rates. One or more "Northern" countries will make serious steps towards defecting from the bloc.
haw haw ... a belated happy new year to all from my beach house on Seven Mile Beach, on the Cayman Islands....I say "belated" as I forgot there for a while, about little ol' "Aotearoa" , way down south and "outta sight - outta mind" as one says.
For 2022 and I'll keep it short and simple for the proletariat out there, as one must get back to "Cocktails at 5" ......"the rich will get richer and the poor will get the picture" ....haw haw
So keep up those mortgage payments for 2022 and keep the banks happy ......as that is all that matters ....haw haw
The reserve bank continues to pay only lip service to keeping inflation under control.
An unintelligible creole gibberish becomes the official language for all government and corporate communication.
Young talent increasingly flees New Zealand for a better life abroad.
The government clings to covid fearmongering and restrictions to distract from their failures.
Global sharemarkets experience a modest correction and the NZX remains a wasteland.
Crypto continues its ascent to the mainstream as disillusionment grows with the central banks.
The property bubble stops inflating and cracks appear in the construction industry.
The New Zealand dollar comes under significant pressure.
The rich get richer and the poor get poorer.
Politics: labour push through 3 water and health reform, billions spent with very little bang for our buck. National focus on wasteful spending and gain at the polls.
Covid: omicron arrives in time for winter. Lockdown fatigue and the political implications result in fewer lockdowns/bale outs.
Hospitality is hit hard. Education comes back. Foresty stumbles. Diary, hort and red meat do well.
Inflation above 6%. Orr keeps interest rates low (2%). House prices come off 10% in nominal terms. Share market edges higher as investors hedge against inflation.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.