Westpac economists are now picking the Reserve Bank (RBNZ) will need to raise the Official Cash Rate (OCR) to as high as 6% - which is a new high forecast among major bank economists.
At the moment the OCR is at 5.25% and most economists have been forecasting there will be one more hike of 25 points at the next review next week, making the peak 5.50%.
However, in Westpac NZ's latest economic overview, Westpac NZ chief economist Kelly Eckhold says getting inflation back to sustainable levels [it's currently 6.7%] won’t be easy and that more is required to achieve this goal within a reasonable timeframe.
"As a result, we’ve revised up our forecast for the peak in the Official Cash Rate to 6%. Inflation has already been outside the target range almost two years, and our projections indicate it’s going to take another 18 months to get inflation back within the [1% to 3% target] band.
"The economy likely won’t slow as much as we feared a few months back. Net migration has rebounded faster than expected and population growth is set to rise to its highest level in decades.
“As a result, it’s less likely now that we’ll see the economy tip into outright recession, and the house price cycle looks to have bottomed out sooner than expected."
The Westpac economists say that since mortgage rates began rising in 2021, house prices have fallen by an average of 17% across the nation.
"However, rising population growth along with lower longer-term mortgage rates are likely to provide a brake on those declines. We’ve revised up our forecasts for house price growth, and now expect that mid- 2023 will be the bottom for the housing market. As interest rates are set to remain at contractionary levels for some time, we think the extent of the upswing should be limited – although this crucially also depends on the future path of migration."
The economists forecast house price falls of 3% for this calendar year and then an increase in house prices of 2.5% in 2024.
The Westpac economists are forecasting now a net inflow of 100,000 people over 2023, adding almost 2% to New Zealand’s population.
"This would be a stronger growth impulse than we’ve seen at the peaks of previous migration cycles," they say.
"...That sharp rise in net migration will see population growth rising from just 0.5% at the end of 2022 to 2.4% by the close of this year. That would be the fastest rate of population growth New Zealand has seen in decades, and it signals a large increase in many businesses’ demand base."
They concede there's a great deal of uncertainty about what may happen and that the current inflow might peter out.
They say there’s also a great deal of uncertainty around how this rebound in migration will flow through to the wider economy.
"On one hand, an influx of workers may help to take the upward pressure out of wages – employers are certainly hoping this will be the case.
"But in other areas they are likely to add to already- strong demand, particularly in housing, where population growth is set to outstrip the pace of homebuilding in the year ahead. This uncertain balance will also have important implications for monetary policy."
Unfortunately, the surge in migration "has the potential to disturb the grand plan" the Reserve Bank has for reining in inflation, the economists say.
"The Reserve Bank has long regarded migration as an inflationary force on balance, adding more to demand than supply in the near term.
"Regardless of whether that proves to be the case this time, the RBNZ has little room to tolerate any upside surprises to the inflation outlook, and a continued surge in migrant inflows is likely to be met by policy action rather than waiting to observe its impact on inflation. For this reason, we now expect the Official Cash Rate to peak at 6% this year."
The economists say that this migration cycle is hard to assess in terms of its amplitude and duration.
"But based on what we can see now, it seems clear that New Zealand will see strong population growth that will add significantly to both the demand and supply for resources. The world is moving again post-Covid and countries like New Zealand are seeing people seek out opportunity and lifestyle benefits that have not been available for much of the last few years."
So, the economists argue that the monetary policy tightening cycle is not yet over, "and that more insurance is required" to be sure of bringing inflation back into the target range.
"We see the OCR rising further to 6% by August and remaining there until mid- 2024 when it should be clearer that inflation pressures have substantially moderated. By then CPI inflation should hopefully be closer to 4% and falling. For the Reserve Bank, the prospect of reaching the promised land of 3% inflation will be more than just a figment of an economic forecaster’s wild imagination."
The economists say that as always, significant risks to this central outlook exist.
"But our sense is that these remain to the upside in terms of inflation persistence and hence interest rates. A key upside risk is the size and amplitude of the migration cycle we are now firmly within. We have included a reasonable assessment of what might be expected but if a greater and more protracted migration cycle eventuates then we would expect the net demand impact on the economy and inflation to be greater and more persistent. If inward migration triggers an early return to a strong housing market, then the resultant boost to consumption, investment and the labour market could really challenge the assumption that inflation expectations remain anchored to the 1-3% target range.
"Downside risk scenarios can be contemplated – particularly with respect to the degree to which the tightening which has already occurred impacts domestic spending now we are firmly in the “sweet spot” of their impacts on the economy and inflation. But our sense is that the RBNZ would gratefully accept such surprises as gifts which would speed the return of inflation to target as opposed to raise significant concerns that tightenings are overdone, and policy reversals are necessary.
"Better to finish the job now than to have to come back with stronger more painful measures later."
148 Comments
I believe the received wisdom is there hasn’t been enough time yet for the effects to flow through. Kiwis being mainly on fixed term, whereas in Australia c80% are on floating rates so effects are immediately felt.
The next 12 months will tell us as the majority of refixing takes place
that would be correct - A high level of fixed rate loans only delays the inevitable. It unfortunately also makes the hit to family budgets that much worse - repayments go from $2000 a month to $4000 a month in one hit, this may also lead to people needing to sell as they haven't taken the time to adjust their budget sufficiently to cope with the new impending rates.
I have never actually understood NZ's obesession with fixed rates (it is a clear and present danger to the economy - in the fact it makes monetary policy slow to kick in) as it often results in borrowers paying far more in interest on their loans than the original principle.
No I'm not personally shorting ANZ.
I'd look to short a bank that overshot lending through the peak, had questionable DTI stats, were reined in by regulators, and are heavily stockpiling for a rainy day. I'm not currently shorting any NZ bank, if I were I would do a lot of research on said bank first, which I simply don't have time to do right now. Jarden, who do have time and resource, are.
Are you actively buying property and why? Genuine question, no piss take.
Am setting up a million dollar trading business which I've previously mentioned. And still working on getting development resource consents, waste of time and money but not prepared to give up. Am then planning to build multiple homes for rentals not resale, but will cross that bridge later.
its not the peak -- its the expectation that inflation will drop into the target range in 18months or so -- Not seeing any real signs that is a likely scenario - climate events - Oil is actually cheap at the moment and has plenty of upside risk - wage growth - infrastructure investment at council and government level - and does anyone seriously think any businesses are going to drop prices anytime soon - or ever going to be higher for longer
Almost exactly one year ago to the day:
Westpac New Zealand's economists are increasing their forecast peak for the Official Cash Rate (OCR) by 50 basis points to 3.50%.
https://www.interest.co.nz/bonds/115834/economists-westpac-nz-say-rbnz-…
Good quote, shows westpac (and other economists) have little credibility, and little idea what's happening.
Brad Olsen, one of the most verbal economists, was saying he expected the March CPI to RISE to 7.4 percent. He was raving how he had been accurate the previous two times... when there was no change. Instead it Fell A LOT and his claims were made Just The Day Before The Announcement. The next day he just carried on as normal with no mention he was so far out. Pathetic
Ignore the shiesters.
It is bleeding obvious that with all these experts getting it wrong the " market" is not normal and "all over the show" .
Banks rates, OCR, employment, Govt Debt, Govt stimulation, etc are all over the place and are not influencing markets in a normal way.
We've got the RB pulling one way and the Govt the other.
Robertson is buying votes with money borrowed while driving inflation higher and Orr tweaking his tools to bring it down
It the battle of two faulty towers!
" Out stareing each other thru distant office windows"
If your wondering where house prices are going just ignore the experts and spend your time analyzing properties in the areas you are looking at or randomly if you like confusion. Every area is different depending on stock v buyers eg Kaitaia v Remuera v waikanae beach🧐
Watch the volumes of stock,, dates listed and watch how they fail at initial tender/ auctions then sit listed at a price or by neg.
Stock v time in market v sales is key. ( But remember TM stock can be removed because of a sale or non sale contract ending. I'm seeing more removals than sales in my target areas )
Watch as these sellers lower thier price ( use TM to save target properties too and get notifications when something changes ( I'm tracking 57 in one area , 11 have dropped price by about 4% in the last 2 weeks and still not sold )
Text the agent and ask for price expectation. Note this against the property notes in "my trade me" "saved property" files. And just wait
Remember 🧐The experts are "office dwelling "selective" number crunchers* with no crasp on the real house market per area / per listings. You are.
be patient
At the moment the vendors are setting the price, at some point forced sales will mean the market sets the price, we could easily see a 20% fall as this occurs..... ie the palmy north 1$ reserve got 400k corelogic had it at 480 value = 17% fall, that one was so well advertised... most wont be once they start in mass.
And ITGuys LOGISTICAL ANALYSIS is sound.
Unlike Mr HW2 BUILDING HOUSES AT THE TOP OF A BUILDING BOOM WHEN PRICES WILL FALL,
NOW THATS ROCKET SURGERY FOR YA
Shaft!... Can you dig it now?...
Shaft
Who's the black private dick
That's a sex machine to all the chicks?
(Shaft!)
You're damn right
Who is the man
That would risk his neck for his brother man?
(Shaft!)
Can ya dig it?
Who's the cat that won't cop out
When there's danger all about
(Shaft!)
Right on
You see this cat Shaft is a bad mother
(Shut your mouth)
But I'm talkin' about Shaft
(Then we can dig it)
He's a complicated man
But no one understands him but his woman
(John Shaft)
You’ve got to take any forecast with a pinch of salt. Forecasting is about predicting the unpredictable i.e. the future. It all depends on the underlying assumptions which can be manipulated to get the desired result. I really like Nassim Talebs writing, reckon that’s a good start to manage risk.
You do realize that 99.9% of what economists do is not publicly providing free forecasts right?
The only ones that do are selling something.
The good forecasters are snatched up by hedge funds/private equity firms/venture capital/investment banks and produce benchmark-beating returns.
Most economists do zero forecasting, and when they do they stress the uncertainty of them.
Speaking to a mate in Wellington in early 2022 he had said a senior figure in Westpac had left (around Jan) and taken all his 'senior' mates with him into a new investment banking start up.
Perhaps this is (also) contributing to this poor forecasting from Westpac NZ internally.
And I'm guessing poor performance at said investment venture too.
Interesting to look back at the commentary from the article a year ago....BrockLanders stirring the pot. He got pretty close with the 7% call, not so much on the 30% drop in prices (in nominal terms at least).
by Brock Landers | 17th May 22, 8:01am
7% mortgage rates.
-30% price drops by Christmas. Guaranteed.
Be quick
by Nifty1 | 17th May 22, 8:08am
Everything in this article suggest rates won't get to that point...
by rastus | 17th May 22, 9:13am
Don't expect them to come out and admit it's worse than it is - they know sentiment plays a major part in outcomes.
Best they can do is publicly forecast in a way that they don't look completely stupid when their projections are wrong.
by HouseMouse | 17th May 22, 10:11am
They have an abysmal forecasting record.
Issue more bonds, spend more, crush the productive, support the unproductive, kill working middle NZ.
Keep NZ like a sloth. No one inspired to do more.
The financiers and Wellington fat cats take it all.
Then do the woke thing and talk about child poverty.
NZ is a sad, deluded backwater.
I am only here because I have to be.
I can't speak for BeeBop, but I'm here for family reasons only (well I should say my wife and I are).
My parents came from Europe a few years after I was born, and my siblings have already left NZ for greener pastures so I'd feel guilty leaving the olds here with no other family. My wife has a large and very close-knit family and they are always getting together and doing things so that would be hard for her to leave.
My wife has a qualification and a job that would make it easy for her to pick up work in all manner of countries, and I can run my business from anywhere provided there is Internet and a power socket for my laptop ... professionally/financially there is nothing keeping us in the Kumara Republic anymore.
We have both discussed that at some point we will probably need to look elsewhere for a better financial future, superior education for the kids and more opportunities but things haven't quite got bad enough yet to force our hand (not that the government isn't trying ... and not that the alternative would be any better necessarily).
i concur. just here to let our kids complete their education in one place. everything is mobile for us and there are plenty of better lifestyle destinations. Aus is looking good now they have the citizenship deal to grab the best kiwis and export the worst ones back lol (what a deal).
Nobody skilled is coming to NZ for a long term future anymore and the skilled kids are leaving post education. its a place to work and experience for a period then move on to Aus or wherever.
The only people trying to get in and stay are the fruit pickers .. from countries that are worse. and even they will likely move on.
NZ will end up a big farm with some other stuff like forestry tacked on. Population will be a mix of gated communities (the land owners and landlords) and slums.
I give it 10 years unless a visionary leader magically appears (unfortunately those days are gone as they have skeletons and wont do it)
Mate, until you've tried Australia you will never know Fréedom from the crap NZ has impinged on your life.
Remember, when in Aussie their crap is their crap. you have not contributed 1 cent to it and it owes you nothing.
No Maori crap, less wokeness, roads that work and no ridiculous reduced speed areas, better options, beaches, weather, food, cheaper access to the world, blah blah blah
There is no comparison.
Until you step out of the ring of fire called NZ you will never know!
And remember... How many "days of summer" you have left in your life in NZ... Over here triple it!
That's all very well but how come NZ is attracting immigrants that are highly skilled entrpreneurs:
https://www.stuff.co.nz/national/crime/131988464/man-tagged-one-of-nzs-…
I guess you have to ask yourself what's more feasible:
- A government majestically providing you with all the conditions you need to keep yourself happy.
- Going somewhere else
- Focusing on improving one's own productivity where you are
That first option, is the far least likely, and the one you have the least control over.
Yeah I don’t disagree however the tax code makes it very hard to pull yourself through the system. The incentives are just not there, for instance the minimum wage and WFF combined takes a low income person up to a graduate level position. The grad probably has a student loan, so therefore is in a worse financial position than the minimum wage worker. And you wonder why the young people are leaving?
So maybe the "on rails" system isn't designed to enrich everyone (it never is), and young people should be crafting their own financial and vocational careers.
Definitely not easy, and there's no instruction manual. The short answer is get good at something (could take a decade or more) and charge accordingly for your time.
A graduate teacher with a student loan gets less in the hand than a minimum wage without one - for the first 3 years of teaching. It's not comparable to nurses either - nurses can do overtime and get shift allowance.
At the same time, if they're in Auckland (where 1/3 of the country's population and possibly teaching positions are), they also get to pay through the nose for accommodation - while they don't earn the median Auckland income till they hit 8 years of experience.
Auckland schools are cycling through young teachers at an alarming rate. Which is not surprising, given how poorly remunerated they are.
Meanwhile, we have Aus getting final year teaching student's into the workforce already, and with a salary almost 50% higher than NZ's starting salary.
At a personal level - yes. But at a population level does nothing to address the underlying issue. We NEED teachers (nurses, bus drivers, cleaners, etc etc). It's unacceptable to suggest those people upskill and move into different careers because then we just don't have people doing those jobs.
On another note, according to this (https://www.careers.govt.nz/jobs-database/health-and-community/health/r…), graduate registered nurses earn $67,000/year (and good for them). I don't know if this has made that news, but on an hourly basis that is MORE than graduate doctors earn. If I were a house officer I would 100% fuck right off to Australia. What an insulting state of affairs.
I guess the issue is we want prosperity for everyone, but don't want to pay for it.
Precisely - which highlights the absurdity HSL originally pointed out, that we take from the productive and transfer wealth to the unproductive lazy speculation on land, rather than having folk live within their means.
Yes, let's argue about who is more worthy of receiving a shit salary when we have the super wealthy extracting more than their fair share of the wealth we as a society generate.
Let's stick it to the lazy nurses and teachers. Praise the Lord for the super wealthy who through their expansive personal spending keep the economy ticking over.
Someone either has no idea what teachers do, or is being deliberately inflammatory.
For a start, unlike nurses, teachers have to fit annual leave into a schedule - that just happens to coincide (no, not really) with when everyone else takes leave so they never get cheap holidays. Very few other careers are as regimented in their leave structure (I can't think of any off the top of my head - perhaps politics?). And half the holidays are spent planning [you know, "earning their pay"].
Teachers plan their lessons outside of contact time. Do you think they teach and plan at the same time? And most of the planning isn't lessons btw - it's risk management for the increasing number of problem students - planning how to integrate them into the classroom whilst minimising the potential disruption to others.
Teachers often don't get lunch or food breaks - there isn't a separate set of staff looking after the kids during recess/lunch.
Contact time depends on the school, but it's at least 24hours per week in the classroom, plus professional development (required to keep their registration) and covering someone else's professional development. They're there before the student's are, and leave after the students do - my wife's schedule is 8am-5pm most days.
Well, when you put it like that it just reinforces how bad nurses have it. Go talk to one and ask them about having 7 complex patients when they should have 4 and one of them is dying and there is no support from anyone else. Working evenings, weekends, and nights, getting assaulted, dealing with families, bodily fluids, making care plans, administering drugs, dressing wounds, taking observations, doing shift handovers, and writing notes. 8 till sometimes 5 mon-Friday probably trying to tell the school nurse how to do their job. you're having a laugh mate, no comparison.
Dont get to 85 and say " I wish I'd done that!"
Shaft
Who's the black private dick
That's a sex machine to all the chicks?
(Shaft!)
You're damn right
Who is the man
That would risk his neck for his brother man?
(Shaft!)
Can ya dig it?
Who's the cat that won't cop out
When there's danger all about
(Shaft!)
Right on
You see this cat Shaft is a bad mother
(Shut your mouth)
But I'm talkin' about Shaft
(Then we can dig it)
He's a complicated man
But no one understands him but his woman
(John Shaft)
Whilst there’s something to your comment, don’t forget NZ has one of the lowest debt to gdp ratio in the OECD - we keep a ceiling of 30% and reality is lower than that to have sone aside for likes of floods and cyclone damages.
We actually do not borrow enough, hence our crumbling creaking infrastructure and woeful productivity.
Still, Luxy and his personalised IRD return showing how many cents of yours was spent on roads and education will sort Em!
the Luxon IRD thing- is such a non issue- i have no idea why people made such a song and dance about it. Australia has for over a decade issued a statement with your tax return showing you where all your taxes are going - they also issue a statement noting what benefits you received ie pension, dole as well as what money you received in Medicare (health) rebates through the year.
I have no idea why anybody would be opposed at spending less than a $1 per tax payer (effectively the GST on your Large Flat white) to explain how the money you drip feed in each week, fortnight, month is spent.
I thought we were a country who believed in transparency- but we cant even explain how taxpayers money is spent.
Probably because we are waiting for the Leader of the Opposition to set out his stall on the country issues and how he plans to fix them.
So far we’ve got tax breaks for landlords and an IRD return which nobody asked for and will cost a fortune to setup (when he preaches slashing waste).
It’s not the ird return per se, it’s the crushing averageness of it all
Being under 30 I got sick of my desk job and left to Aus a year ago next month.
Have to say it has worked out well so far.
Making a lot more money, expenses are significantly lower since I have no fixed abode or recurring costs, I just stay in short term accommodation on my week off of my 2 on 1 off FIFO roster. I have travelled a good chunk of the countries East coast and South West, and have payed off a good chunk of my mortgage and increased my Bitcoin purchases.
Oh and as an added bonus, they did not increase the interest rate on my student loan this year, so it is still sitting at 2.9%!!
All in all a great choice for me, and I would encourage anyone that is considering the move to have a crack. But it all comes down to how you weight the personal pros and cons.
I have so far convinced 4 of my friends to jump the ditch, they will be arriving later this year :)
They said 4.5% peak, then said 5% peak, then said 5.5% peak, now 6% peak. What will they say again in 3 months?
More cheap labour into the country so employers don't have to pay more.
Everyone wants million dollar houses to become two million very soon with 8% interest rates. We are living in a dillusional country. Still the old memories are hard to forget and people keep pouring ridiculous amounts of money into 4 walls and a roof. And why are they doing it?
Inside in their mind they all are greedy and expect to get huge amounts of capital gains gains on their house. A very legal con from the old to the next generation. Father conning a son.
I cant’ reconcile their two predictions. The current OCR is inhibiting the housing market. They are predicting the OCR to not only stay this high, but go higher. That will take time - over two or three OCR announcements. However they see house prices peaking middle of the year - that’s in 4 weeks? A 3% drop in total left? Auckland City dropped 2.7% last month alone? Zero sense.
6% feels about right - given the current 5.25% seems to have not slowed the economy- I'd be even tempted to say that 6.5% may be the top of the OCR not 6%. It will be a minimum of 12 months for inflation to moderate (especially as its now embedded in wages) and it is possible it could be late 24 before inflation reaches the 3% level needed.
Unfortunately for NZ - the government has not helped inflation in anyway- overstimulation and reactive politics - designed to please all is not ideal in an inflationary environment.
So they’re predicting both higher interest rates AND flat or price increases for the property market. Something doesn’t add up there, unless we are getting some really high income immigrants the numbers just don’t add up. INZ should release stats on the income tied to every work visa they approve (anonymised obviously).
They are trying to control the narrative and pre-empt panic.
They have a shed-load of overpriced housing linked assets on their books. If people start to believe en masse that housing is way overpriced (most people still do not understand how much housing is actually overpriced) it will cause panic and a complete and sudden collapse of the housing market. This would be really bad for the banks.
They know interest rates are only going up. They have also been using interest rates going up as the excuse for why housing is crashing. They now need to try to make the case that it's OK even though interest rates are going to go up further it's all good and the house crash is reaching the bottom. Obviously nonsense, but it will keep those hanging on to any hope of housing not falling further from capitulating en-masse.
They are trying to orchestrate a soft landing. In this case a soft landing doesn't mean less of a crash in percentage terms it just means an inexorable, slow and steady decline over many months.
6% could be The Top if the RBNZ sets the OCR at that rate on the 24th. Shock factor; gets it over and done with, and as CPI falls back they can hold the OCR there util CPI has passed it on the way down, and the OCR then 'stays up' for a shorter time than otherwise would be the case.
Chance are, that won't happen, and as the OCR continues to chase CPI up in a long, drawn-out process, 6% won't be The Top by some margin.
European cousin commentators seem to have twigged to how it will play out.
ECB rate hike impact on inflation small so far, but more coming
https://www.reuters.com/markets/rates-bonds/ecb-rate-hike-impact-inflat…
This time last year I thought "one more 50bps, then a few 25bps after that and hold." - I believe I commented on here about it too. So far wrong I was!
Who knows, I'm not sure we'll make it to 6% this year, but we may in a few years time. I'm brushing up on my yoyo skills.
"The Westpac economists say that since mortgage rates began rising in 2021, house prices have fallen by an average of 17% across the nation."
in comparison, the nzx50 dropped 18% from peak to bottom, now it's picking up again for some time already. So housing price drop has reached bottom, regardless of OCRs.
short answer is no, I didn't check other evidence for this correlation. my theory is that, the property market is no different than other financial items in terms of how OCRs influences. The differences that, housing prices change tend to be slower than NZX changes.
so, NZX50 dropped about 18%, NGB dropped about 16.86%, so housing market is pretty much the same if my theory correct.
I have taken the educated assessment that 'land' prices are swinging around a bottom +/- 5%. Ability to construct, with 'real' labour and material costs, makes sense now but only if you strip out the extreme finance and construction 'extra' margins. I am able to see the real costs and avoid the greed costs (few see this). Currently preparing for my 2024 portfolio on very low borrowings. Set to survive (2021/2022) then move to thrive (2023/2024/2025).
Anyone watching international news instead of sheep in the paddock will already know that the whole world is slowly sliding backwards. Bugger all you can do about it so enjoy each day. Finally we have caught a break in the weather its nothing but blue sky out there.
So many Kiwis have no idea how good they have got it in this country.
Many do understand it, but primarily those who have experienced what true poverty looks like overseas in less fortunate countries. Rural Guatemala comes to mind for me in particular.
But tell that to the increasing number people living in cars or on the streets, and how we have such a great place to live when they can't get into a rental due to landlords only wanting the perfect tenant. There's ups and downs but we can all agree the downs are piling up over time now in NZ and we need a change.
Govt is kicking the can further down the road and the RBNZ is chasing it, every time the RBNZ gets close, the Govt give it another kick.
Govt in election year want to spend, but spending increases inflation so the messaging is well we were going to spend over here, but now we'll take that and spend over this way instead, tada! fiscally neutral! $4bn of savings my ***.
Govt sees economic headwinds, sees house prices falling, only response they have is to open the immigration floodgates, again inflationary... not to mention further stressing our inadequate infrastructure, flooding entry level jobs and filling poor quality education facilities, stressing rents etc.
It's inevitable that the OCR will continue to rise, because the Govt is literally playing against what the RBNZ is trying to achieve.
Political intent in an election year is always about one thing, getting elected - and damn the impact on the country.
Well at least Labour is predictable. If it wasn't for Covid closing the gates for 2 years, just imagine where we would be now ! They were on track for record numbers when they said they were going to slash immigration. What a clown show, still apparently the audience loves it with 1 in 3 still voting for them, still I'm sure vested interests outweigh any logical policy for improvement for the rest of you sad sacks.
yeah and to import the deflation we needed to close plenty of local manufacturing plants
and now there are not many local plants so people join gangs
and we got shown the PMI numbers that always looked good....(because the closed down plants stopped doing the surveys)
but now we have a 30b dollar trade deficit
our only plan is immigration, infrastructure, monopolies and loans
no plan for investment into productive or export businesses
oh and pray like hell the housing market doesn't crash and take out half the sharemarket with it
https://www.interest.co.nz/charts/population/net-long-term-migration
Your numbers don't appear to match reality?
Lots of words coming from bankers at the moment to suggest something has spooked them in the last few months. Could it be they've finally crunched the numbers and concluded that they actually have a far bigger problem to deal with than they thought they did? Various statements from the RBNZ suggest they're laying the groundwork to blame us rather than themselves and the big banks.
They took a 150mil provision... some will be cyclone related but the rest will not be.
Tough times are coming for those who are not cash flow positive... my guess is 50-60mil is resi write offs. across there res book... remember this is a first cut, as they finish that tranche they will have a better understanding of the 2nd provision ammount.. this is how such things are done.
Any prediction or forecast from economists, I would take with more than a pinch of salt.
As for the net migration figures; A fair number of these migrants are going to be co-domiciling in sub-standard rentals for a few years while they work in low income jobs, trying to get the rest of their family over from whatever impoverished or corrupt country they hail from, all the while being abused and taken advantage of by the very people that say they are trying to help them. It's a crime and needs to stop.
Yes, we need population growth, but we need specialists, not daily labourers. We have enough idle Kiwis to handle those roles.
The person who doesn't work leads a very unhappy life with little self-esteem, sense of worth and feeling of being part of wider society.
The person on minimum wage continues to work hard to make ends meet.
The super wealthy continue to extract more than their fair share of the wealth the minimum wage earners generate for them.
How do those in power keep the rest if us under their thumb historically? Brainwash public, prevent or discourage education (or in this case diluting via low skilled immigration) then have everyone seeing those at the top thinking if they work hard enough that one day they will get there. Classic example is the USA with their ultra wealthy - living in a society ruled by corporations selling them the dream that they can one day get to the 1% while actively influencing policy to dissuade this from happening.
Why would a specialist come here when we have overpriced housing, poor education system and increased crime. It makes me laugh when I hear people discuss competing with Australia on salaries. We will never compete there. People come to NZ for the lifestyle, safety, environment, education. But we have flushed that down the toilet. A new strategy is needed and getting housing to an affordable level needs to be part of that.
It looks like Labour have painted us in to the same corner as National did.
A torrent of migrants is encouraged to try to create growth, while keeping wages down by easing labour supply which, while theoretically reducing inflation, also puts upward pressure on the price of real estate - the price of which is further increased by government's self-imposed, ever-more-restrictive planning and building rules that tighten home supply.
There's also a wildly risk-averse bureaucracy and sclerotic building industry slowing the adoptions of creative building solutions proven by decades of use overseas, thereby making homes more expensive and slower to build.
And as the icing on the cake: our already buckling, neglected, underdeveloped infrastructure is going to be ever more overloaded and it's management is becoming so politicised that the knowledge and expertise that might get us something workable are getting sidelined by doctrine.
Have I missed anything off the "you have to be kidding me?" shopping list of woe?
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.