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Tony Alexander picks house prices outside of Auckland to rise 10% to 20% this year forcing the RBNZ to introduce tougher LVR restrictions south of the Bombays

Tony Alexander picks house prices outside of Auckland to rise 10% to 20% this year forcing the RBNZ to introduce tougher LVR restrictions south of the Bombays

This is the second in a series of articles that each feature the views of a different commentator on the outlook for the housing market in 2016. In this article the BNZ's Tony Alexander gazes into the crystal ball.

BNZ chief economist Tony Alexander thinks low interest rates, the continuing risk of a major share market decline,  strong population growth and a tight supply of new homes will combine to keep pushing up house prices this year, although he thinks they will rise more slowly in Auckland than elsewhere.

"One of the major factors will be low interest rates and the expectation they will remain low, That gives good affordability for owner-occupier purchasers," he said.

"For investors looking for yield, it's a world with a lot of uncertainty with what's happening with overseas economies, and the share market's highly volatile and I still believe there's a risk of a major share market decline.

"That's going to give people encouragement to invest in property," he said.

Alexander also believes that strong migration-fuelled population growth and ongoing difficulties to boost the supply of new homes will mean that demand for homes in Auckland will continue to outstrip supply.

"All this turmoil overseas can do nothing other than encourage people to shift back to New Zealand, migrants to come to New Zealand and discourage people from leaving New Zealand," he said.

"So that very strong population growth is going to continue." 

However he thinks migration will likely peak this year but doesn't see it falling back strongly.

"There's a high chance it will peak this year," he said.

"When you've got a net gain of almost 64,000 a year, that's a lot of people.

"At some stage it's going to peak and my best guess is it will peak this year.

"But will it reverse strongly or rapidly? No it won't because the usual cause of a rapid reversal is Australia looking a heck of a lot better.

"I believe the Australian economy is in reasonable shape but they are not going to have another commodity boom for a generation.

"So the migration numbers will stay high and that's positive for the housing market."

But while that will keep demand for property high, Alexander believes the supply of new homes to meet that demand is likely to be disappointing.

"It's not going to be what people were hoping for and in Auckland we are seeing evidence of the growth [in new housing] plateauing," he said.

There was an ongoing shortage of builders, and construction companies were finding it difficult to get the staff they needed, he said.

"That will take away some of the optimism which many people still have regarding supply coming forth," he said.

"Supply will remain tight and there's going to be more gnashing of teeth and a realisation in Auckland that supply is not coming forward over the next few years as had been planned and hoped for.

"And that will encourage buying in a low interest rate, high population growth environment."

'Catch up in full swing'

However investors were likely to keep looking for properties outside of Auckland, where they could achieve better yields.

"A year ago Auckland reached a point in the cycle where investors started looking for better yields and lower prices elsewhere, and that's in full flight now in regional markets and that will continue through this year," he said.

"So the story for 2016 will be the regions, not Auckland.

"I see Auckland prices still rising 5-10% and the rest of the country 10-20%. There's a catch up - it's in full swing now."

Alexander believes strongly rising prices outside of Auckland make it a "high probability" that the Reserve Bank will extend the LVR restrictions which limit bank mortgages to 70% of an Auckland residential investment property's value, to cover the rest of the country as well.

"The difficulty for the Reserve Bank is that interest rates are no longer a tool at their disposal given New Zealand's and global low inflation.

"They need and are now using other tools to influence the housing market," he said.

Alexander also believes property buyers from China, who were such a feature of the housing market until a few months ago, particularly in Auckland, will eventually return.

"I think they will definitely come back," he said.

"I don't think any of us have enough information to say when, but if you stand back and look at what's happening in China: investing in the share market - not many of them did that and most of them now will be deciding not to.

"They'll be looking for for somewhere else to put their money.

"Their economy's slowing down, people are looking for investments overseas.and I can't help but think more of them will be thinking of getting assets out of China.

"So those buyers will come back.

"Will it happen before the end of this year?"

"I don't know," he said.

(You can see the first article in this series, covering the views of Westpac chief economist Dominick Stephens, here).


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Somehow I always get the feeling that this guy's comments convey a smugness based on an understanding that his ass and his employer's are covered should the unthinkable happen. I'm not an economist, nor do I have the technical chops to build models that support or challenge what he says, but my intuition (more relevant in behavioral economics) has an uneasy opprobrium that NZ has such a charmed existence when it comes to property prices.

Many so called economist been posting comments from last two years, that house price will go down!! As I said it won't go down, it might stay stable or go up.

I'm inclined to disagree with you

I won't bore you with my resume .. for the last 20 years I have specialised in "behavioural economics" and probability theory of human behaviour specifically in the global financial sphere ...

Nearly all probability texts relate to mathematical statistical probabilities

Until 6-7 years ago the only published text relating to probability of human behaviour was several chapters in one of Carl Gustav Jung's 20 odd books ... only the one ... my partner is a trained Jungian Analyst ... in Human Behaviour

What Alexander says is largely true .. his problem is his language and presentation ... yes it sounds smug

If I were to sub-edit his treatise I would rephrase it in the following manner
Where Alexander claims that various situations will or won't occur I would preface them instead with .. there is a high probability risk that situation "a" will/wont occur

If you read the article again, substituting Alexander's beliefs as high probability risks, it contains a great deal of truth

Greg Ninness unfortunately records Alexanders views as stated beliefs in the following manner
Alexander believes .....
Alexander strongly believes ...
Such-and-such will happen
Such-and-such won't happen

Question Greg .. Did Tony actually use those words, that phraseology. or is that what you heard?

I think you misunderstood what I was trying to say. I have no doubt that TA's models are based on Bayesian probabilities or else he would be nothing but a charlatan. Re my own personal intuition, that is non-probability based as I don't have the method or means to quantify it. I'm not trying to promote behavioral economics as a more superior option than modelling for forecasts.

What I am saying is that I "intuitively believe" that projects of <10% in AK and 10-20% in AK don't gel with what I would "expect" in an environment that NZ is positioned within. Can I quantitatively prove that? No I can't. However, it goes without saying, particularly in NZ and Australia, TA's projections would likely be accepted by the majority and few "what ifs" would be raised.

New Zealand Finance Minister Bill English said the nation’s central bank shares some of the blame for slower economic growth this year after raising rates too high in 2014.

“It’s one of the factors, along with dairy prices, that probably led to a much flatter 2015 than we had expected,” English said in a Bloomberg Television interview Thursday. “In retrospect, they lifted them a bit far” and “had to go back,” he said, adding “it could be quite a while before we’re raising rates in New Zealand” again. Read more

So I guess they (RBNZ) must now shoulder the blame for shelter asset values rising beyond GDP growth support underpinning the ability to service the debt ridden economy.

A decision can only be judged based on the information that was available at the time it was made. I didn't hear Bill saying back then "whoa guys, you're a bit quick with the hiking", and I don't believe he's criticising them here. He's simply noting that, retrospectively, rates were raised too soon (not that the decision to raise them was wrong).

I suspect he realises that it was actually his decision to balance the budget too soon that was the real culprit. In retrospect it looks like he should have run a deficit for longer, or better still run a bigger deficit, whilst interest rates were low, and then only balanced the books after full employment was reached and wage inflation had actually begun.

National voters don't want a deficit. They, and National realize the private sector is more adept a creating growth.We don't need full employment based on another 200,000 Government employees sitting around and been funded from money borrowed off shore.

The RBNZ stuffed up, it crystal ball gazed inflation and failed badly making the wrong call; it should have waited for signs of inflation before hiking rates. Wheeler needs to fall on his sword.

Well while National voters may not want deficit spending that would seem to show their ignorance of how economics would seem to work in the real world. ie firstly interestingly running a surplus is actually counter-productive it slows growth acting like austerity in effect the govn takes money out of the economy while having a small deficit it seems helps growth. Second that spending can and does stimulate growth and it doesnt seem to matter too much who does it as long as its done.

I agree on your take of the RB, I have yet to see any good honest justification for holding rates this high.

I agree. I dont know if we need/needed to spend much more though but very much be just less hell bent on getting to balance quickly while the economy is clearly weak. We certainly can borrow cheaply for 10 and 20 year bonds this making building/repairing a few schools good value. It also keeps ppl working while the private sector is not, otherwise we would be paying the workers WINZ anyway.

I sometimes wonder if BE & JK think they'll get brownie points for the next election from getting the Govn back to balance quickly.

Is he just saying what he should? His bosses presumably want to lend more to push house prices up so they can lend still more.

The assumption about Chinese money is that we did something to deter it, when in reality there is a purge going on in China as they seek to stop capital flight turning into a rout. The Chinese currency is highly overvalued and there are no opportunities in China - it is descending into chaos. Why else would the authorities feel so threatened and desperate as to need to purge all dissent? If you are scared by a local Hong Kong bookshop then you must be very vulnerable indeed. Is a military coup brewing? An authoritarian state relies on the secret police and the army remaining loyal to the very few people at the top.

Tony does not mention unemployment. If and when unemployment rises above 8.5% then house prices will decline. At that point house pricing ceases to be a function of supply issues but becomes a function of inabilty to make the mortgage payments. Hopefully that won't happen anytime soon but unemployment is edging upwards and could suddenly jump. Instability elsewhere affects New Zealand pretty fast.

+10, very succinct and accurate description of whats going on, well done.
Indeed, when unemployment rises, and people cant service that big mortgage- that's when we will see house prices really begin to fall, as the number of buyers is overwhelmed by the number of sellers.
Margins calls suck, especially when its your house on the line.

Yeah right.... Do you have any idea who is buying Auckland property?

It is always amusing to read what economists write because their perspectives are usually disconnected from reality and are based on theoretical models which are short on data and poor in analysis.

NZ was the last major land mass to be discovered and exploited, and its isolation discouraged settlement. Now there is a stampede to NZ, as most other countries that have become overpopulated and depleted of resources circle the drain -economically, socially and environmentally- and then start going under. The stampede to NZ is likely to increase until collapse of the global financial system makes international movement impossible.

Auckland does not produce anything other than waste and pollution, and its attractiveness as a destination is likely to wane rapidly once the current Ponzi financial system starts to really falter.

"I believe the Australian economy is in reasonable shape but they are not going to have another commodity boom for a generation."

All the scientific evidence indicates we are the last generation: the rate of planetary overheating is increasing rapidly, and the geochemical systems and biological systems that made life-as-we-know-it possible no longer exist, due to overpopulation, overdevelopment and overconsumption.

2016 is going to be a very 'interesting' year.

I had not considered your point about NZ being the last discovered land mass.

I agree with what you have said here, ponzi financial system indeed.

You did however loose me with your last paragraph of Malthusian inspiration (which has been debated and debunked during the last 200 years. ).

Last paragraph is spot on. Not debunked, just the timing was a little off. Humanity seems to be the planet's cancer.

Indeed so.

The post-glacial period of climate stability that allowed agriculture and civilisation to thrive (over a period of at least 18,000 years) corresponded with a fairly stable atmospheric CO2 concentration of about 280ppm, through to around the year 1750.

It is now around 402ppm, 182ppm above normal in just 265 or so years, and rising at the fastest rate ever recorded, around 3ppm per annum.

That does correspond with accelerating planetary meltdown, I'm afraid.

And nothing will be done to alter the trajectory because the present economic system is entirely dependent on burning fossil fuels, making cement and making steel etc.

The world population growth rate has been declining for 50+ years. That is consistently year on year, which is a process that plots very well as a Seneca Curve. What ever the cause, it is happening right in front of your eyes.

"The greatest shortcoming of the human race is our inability to understand the exponential function." - Prof. Al Bartlett

Even a growth rate of 0.1% eventually forms a hockey stick and 'goes vertical' on a graph.

Even though the growth rate is lower now than in the past, the absolute number of additional humans keeps increasing. We are currently adding around 200,000 humans a day.

Unlike the planetary meltdown graph, the human population graph will not continue on the present trajectory because oil depletion and abrupt climate change will cause mass starvation at some point in the not-too-distant future.

Except for the fact the "absolute number of additional humans keeps increasing" stopped increasing in the 1990's when we hit peak baby... Malthusians - wrong for 200 years and still flogging the dead horse.

World population broke through 6 billion in 1999, and then broke through 7 billion in 2011. Currently it is 7.4 billion, which is around 6.4 billion more than the population prior to the Industrial Revolution.

'Malthusians - wrong for 200 years and still flogging the dead horse.'

Repeating a statement never makes it true, though propagandists use the technique of constant repetition to attempt to mislead people. Malthusians have been right all along, and overpopulation has now severely altered the composition of the Earth for the worse -the so-called Anthropocene.

Since most of the current human population is kept alive via industrial agriculture, population must collapse soon because industrial agriculture is unsustainable; it consumes natural capital and is dependent on massive energy inputs which are unsustainable; all the easy oil is gone; all the best phosphate deposits were consumed decades ago; agricultural land has been degraded and polluted; aquifers are depleted; the atmosphere is increasingly polluted with CO2 and other greenhouse gases ( much of which come from industrial agriculture), and those gases are causing abrupt climate change.

The combination of energy depletion, mineral depletion and abrupt climate change will terminate industrial agriculture some time in the next two decades. A global financial-economic-political crisis would terminate it faster.

is that why there is an oversupply of oil currently and record low oil prices? People running out of room to store the stuff. Only in undeveloped countries is pop still increasing.

So you only can look at the next 10minutes?

Check your data, point, a) the critical part of what is happening however is the demographic is getting older. b) we eat globally so even if some countries are declining population the global pressure on agriculture and water is still increasing. c) Energy use and food per capita is still increasing in the developed world (ignoring recessions).

Overproduction has occurred due to record prices in the late 2000's which occurred following conventional (cheap) oil 'peaking'. Unconventional (expensive) oils were brought online in response to these record prices, much of this production was financed by junk bonds / debt. The rush to 'cash in' has created a bubble and temporary overproduction leading to the current price collapse.

Now a significant proportion of world oil production is uneconomical at current oil price. Companies are going bust and CAPEX is currently being slashed. What do you think this mean for future production and oil price? Cheap oil forever?

Half of US shale drillers may go bankrupt

Junk-Debt Investors Fight for Scraps as U.S. Shale Rout Deepens

Also, New Zealand's population is increasing. Australia's population is increasing. UK population is increasing. USA population is increasing. Canada's population is increasing. I thought these countries were counted as 'developed'?

Which developed country would you like to cherry pick?

NZ 5million by 2030.

Oops found 1, Japan.....

Apart from outliers like American Samoa, Albania, Dominica just about all the rest all are increasing and projected to increase to 2050.

In absolute number there aren't increasing numbers of babies being born. People are simply living longer - all the things doomsters said were going to kill them (for 200 years and counting) didn't happen. I think the average global age is about 28.5 years so big families, on average, are a thing of the past. Time for doomster to dream up a new threat.

That is sort of correct, there is now a decrease in the increasing rate. So we are still increasing the numbers of babies just not as fast.

The argument that it has happened in the last 200 years so wont happen in the next 20 (or even 200 years is simply a silly one. Lets see some real justification for your position rather than in effect prayer.

There is no increasing rate - think about it in absolute terms. There isn't going to 140 million babies born in a single year ever again. Look at the average age of the global population - you really think 28 yr old mean population have the ability to bang out six kids and have the time to monitor facebook?

The key thing to think about is they project 9billion by 2050, ergo more babies are being born than ppl are dying. However by 2050 there will be little oil left.

renewable energy is storming ahead, I think there's a better chance we'll end up leaving up-tapped oil in the ground by choice, only drawing on it for back up energy supply by 2050.

a) our problem is liquid transport fuel and not renewable electrical supply, though we only produce 70% of our present demand with no allowance to charge numerous EVs (say).

b) EROEI, energy return on energy invested, all biofuels have an EROEI of 1.5 to 1 or worse (probably 0.8 to 1 for ethanol). Our modern industrial economy needs 8 to 1 or better to function, so no biofuel today gets to 8 to 1 or better, zilch, nada, none. This means no biofuel can support the economy we have. On top of that to make a biofuel we have to not produce food, not a happy thought for the developing world.

You've already answered the problem Steven. Humans aren't some unique animal species that can outrun basic ecological principals (they can bs their way along with magical economies though). At some point there will be either triggers that slow breeding, or collapse of populations. If there are 9b people in 2050, it'll be because humans managed to tap enough of the required resources to support 9b people. Otherwise the number will be something different.

Indeed, I think we'll be lucky if we have 2billion by 2050. Since that is 35 years away that is a huge thing for our children and grand children to see.

"A global financial-economic-political crisis would terminate it faster." that will come first, or happen faster with the right trigger.

Just looking at the mess I am hard pushed not to conclude its 2016, but then I bailed out of shares 6 years ago so my timing is lousy.

AFKTT - dream on. "Abrupt climate change" even the IPCC dont believe in that any more. Do you know anything about modern agriculture? Have you read the AR5?

"Then, in about 1940, acreage and yield decoupled in the United States. Since then American farmers have quintupled corn while using the same or even less land".

"A recent meta-analysis by Wilhelm Klümper and Matin Qaim of 147 original studies of recent trends in high-yield farming for soy, maize, and cotton, funded by the German government and the European Union, found a 37 percent decline in chemical pesticide use while crop yields rose 22 percent. This is the story of precision agriculture, in which we use more bits, not more kilowatts or gallons."

'Do you know anything about modern agriculture?'

Actually I spent time as the Chief Chemist at a fertiliser factory. I also spend several years teaching biology. And have written five books which included sections on modern agriculture.

But what would I know compared to an armchair critic?

Every step -tilling, sowing, fertilising, spraying, irrigating, harvesting, (drying,) processing, transporting- in industrial agriculture is dependent on energy inputs, usually in the form of petrol, diesel and natural gas..

Urea, the major nitrogen fertiliser, is made from natural gas, a derivative of the oil industry. Production of urea is unsustainable. Other essential nutrients are mined, processed and transported using diesel, and are also unsustainable

It is all totally unsustainable (including the NZ dairy sector).

I have observed over many years that those who argue the most are usually the ones who know the least..

I’m no arm chair critic mate- I’ve farmed and forested in boreal, tropic and temperate zones. I don’t have as much time in the lab or the classroom. I prefer more hands on. I'm not an advocate of monoculture - there are better ways to do things.

You are just stating the bleeding obvious - yes of course agriculture uses energy – but the fact is less and less energy is being used per unit of production. If it was unsustainable it would be using more per unit production. Precision agriculture is taking off, supply chains are improving by the day. The world is awash with natural gas – the US start exporting next week, Australia started last week so don't fret about urea.

“Crucially, rising yields have not required more tons of fertilizer or other inputs. The inputs to agriculture have plateaued and then fallen — not just cropland but nitrogen, phosphates, potash, and even water (Figure 2).”

Who knows what tomorrow will bring. Right now farmers are getting it more right than they are wrong no matter what the armchair critics pontificate. The planet it greening and in countries like the US and Europe the area of forests increasing.

"Recent reversal in loss of global terrestrial biomass. From 2003 onwards, forest in Russia and China expanded and tropical deforestation declined. Increased ABC associated with wetter conditions in the savannahs of northern Australia and southern Africa reversed global ABC loss, leading to an overall gain, consistent with trends in the global carbon sink reported in recent studies."

I take it you haven't bothered to read the AR5 and its comment on abrupt anthropogenic climate change. The only abrupt climate change we should be worried about is the next, overdue, ice age.

'The only abrupt climate change we should be worried about is the next, overdue, ice age.'

You seem to be completely clueless.

Arctic ice is currently at a record low, and the Arctic amplification indicates the Arctic Sea will be ice-free within 5 years, and possibly ice-free as early as August 2016, with 2015 being the hottest year ever and 2016 predicted to be even hotter. .

How could there not be an accelerating planetary meltdown when atmospheric CO2 is increasing by greater amounts every year?.(was about 0.7ppm per annum in 1958 and is now about 3ppm per annum)

UNIPCC is noted for continuous failure to provide accurate analysis or strategies for amelioration since the 1990s, or, to put it more bluntly, fraud.

Not clueless, not at all, dedicated libertarian / right wing type hell bent on supplying mis-information on the subject.

Thought you'd side step on the ag. IPCC is fraudulent - you are way off the spectrum on the rabid green front mate!

Failing to see your CO2 link. It warmed far faster 1910-1940 with 1/7 of the emitted industrial CO2. This decade to date isn't even warming as fast as last decade even with your extra CO2 "correlation".

Northern H sea ice is looking pretty boring of late and certainly not following industrial CO2 emissions. Steven even posted a similar chart the other day.

You seem to have a habit of mis-quoting posts.

Here are some replies,

a) You said at one stage no storms? well guess what now we are seeing some records set,

or maybe,

"Sandra is the 30th Category 3+ tropical cyclone of the year in the Northern Hemisphere, far exceeded the previous record of 23 such storms in 1997 and 2004."


b) satellites are best? um not really,

c) Artic sea ice, still projected to continue the decline and seems to be accelerating, despite your cherry picking of the odd graph.

"Arctic sea ice extent averaged for December 2015 was the fourth lowest in the satellite record. Through 2015, the linear rate of decline for December extent is 3.4% per decade, or -44,200 square kilometers (-17,000 miles) per year."

2015 in review

The year will be remembered for three major events in sea ice extent: the lowest Arctic maximum in the satellite record, the fourth lowest Arctic minimum in the satellite record, and a return to average levels for Antarctic sea ice extent after more than two years of record and near-record highs.

This was your link the other day. Scary. Arctic sea ice the same now as 2005 - run for the hills!

Currently doing some research for an essay on this. Looking at the "green revolution" I get a multiplier effect of the above of somewhere between 3 and 5?

Dr Bartlett as a professor of math comments on the Human species inability to understand the expotential function.

As an example predicting China's problems is in the longer term easy. Why? because with a 10% growth rate per annum its economy and output has to double every 7 years. That means it has to sell its output to a new world population every 7 years. In 14 years it is 4 times and in 21 years its 8 times, hence its not hard to look at that and say China cannot keep doing it.

So the developed world's population is 2 billion v 5 billion in the developing world. In 7 years it has to sell to 4 billion and in 14 years? oopsie. To do that also means the developing nations have to grow at a commensurate pace in order to afford to buy china's output.

In terms of Malthsian, it has indeed been debated and the delay has indeed been kicked down the road however until about now as we have been expanding into this one planet and have expanded technology and capability as we had that space and hence the untapped resources. As an example the fish stocks of the world have halved since the 1970s it isnt hard to figure out that effectively global fish stocks are going to collapse well inside the next 50 years. All the technology we can come up with isnt going to change that, just cause it to be consumed and hence collapse quicker.

Oh good grief! Stay on Zero Hedge, 'afewknoethetruth!'

math too much for you?


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Good article.
Things will be far more worse than in 08. There will be no stopping it by dropping interest rates or going NIRP.
Get out of debt now, cause deflation amplifies debt and makes it far worse than it is now.
Sure, governments will be printing and inflating the M2 money supply, but bonds, stocks, commodities and real estate will be deflating like crazy, wiping out trillions in wealth around the world.

Yep, got out 6 years ago, too early as it turns out but better early than late. Of course the "get out of debt" is private debt but that cannot be done with Govn debt and what petrifies me ie Govn bailing out the private debt, the banks and making everyone including our children pay for that. Which of course with peak oil etc is not possible, ergo it has to be defaulted on.

And in times of turmoil where do investors turn? The USD that's where.
The USD is the big boy in the room, a safe pair of hands.
Chart the USD v NZD over a 10 Year period which will include the 2008 financial nightmare.
USD cash or Blue Chip USD denominated dividend paying stocks is the place to be in my view.
That's where i am positioned at the moment.

The USA may be the big boy in the room, I just doubt they are a safe pair of hands.

Yes. But in all fairness i said USD, not USA.
You can use ADR (American Depository Reciepts) to invest in other (Non USA) markets whilst staying in USD. Taxation situation can be tricky though.

Indeed the US (like the UK) and unlike Greece has never defaulted on its debt. On top of that I think most debt originates in USD? so its expected that the speculating/gambling money will run back tot he USA and hence the USD to everything else will appreciate. That is the theory of course ie for me it just suggests the US will be the last man standing but will keel over and default anyway.

so many rear view mirror players.. if you can search my past posts Im on record here saying to buy USD heavily when 1 NZD could buy 0.85 USD. Not much more than a year ago I made this call. Already 30% up. If anything taking some off the table to fund a few more palmy properties; Uni cities are defensive plays (PN the north islands only true uni city based on % population that are students), esp when accomodation is cheapest around, unemployment elsewhere leads to people going to uni and liking the relatively low rents in PN while they upskill. Happened in 08. Aussie exit hurts places like PN but no mining booms over there for a long time, and IS getting uncormfortably close to our aussie mate will see net migration into NZ, NZ uni cities in particular, keep pumping even during moderate global slow downs.

Tony is way too conservative in his estimates ... Where is all the fleeing stock market capital going to land? (Hint- The Antipodes)
Prices will be up 30% over the next 18 months.... Big daddy and your landlord are going to be creaming it! Good on them for having the vision! I wish I'd listened rather than pooh-poohing them!

This from the Guardian- sell your shares now -

I thought Big Daddy had said he no longer held residential property?

I gather you mean the geographical antipodes to U.S.A. and UK? Rather than the antipodes from our viewpoint?


Good grief, are you watching the markets right now....carnage and you think buying a house down here is a good investment? Time for anther swim, its getting hot.

We rely on overseas funds mostly.
Our overseas customers are feeling the pinch. It will get tighter.
No matter what they printed, it was debt they got.
And some even got a lot more population than they bargained for.
And non-productive people at that.
The fact that we have produced nothing really new but inflated houses, with overseas funds is nothing to be proud of.
It is the same overseas.
If we had purchased it all with cash, fine. We and they didn't. Most borrowed heavily. The top tier won that round as they got subsidised. and still do..
Ask yourself why nearly every MP is a party to that little scheme..
Then they tried to pass the parcel on to other nations and immigrants.
Rates go up accordingly. As is their want. Council that is.
I do believe we have created a problem, not a solution. Steal from one to pay another.

Social Engineering and Fractional Reserve Banking aside, there is not a lot of growth going on. Facebook maybe. but not much else. Even Apple was forecast to lose.

In fact most commodities are dropping as a consequence of the excess. And now comes the true cost.

The simple fact is that our economissed friends should get a real job to see what is really transpiring. So should all Bankers and Politicians with their fingers crossed and a thumb up the proverbial.

The real economy is rocky, debt ridden and losing all sense of reality.

Built on trust that every thing will always rise and debt to give that illusion..

Several Farmers of my acquaintance are trying to sell on a falling market, with the banks urging them on to sell, after urging them on to borrow.

Everyone believes their house will go up, forever. Because their neighbors did for a while as interest rates were forced down, people borrowed more and the treadmill was formed.

Some call it getting on the ladder. But they are wrong today.

More people, less income, more debt, and a cut of the Pie...for those in the know.

Deflating the bubble, is child's play. Living with the problems, everyone's.

Ask Gold Munny Sacked...who will them......Again?

Anyone who believes in infinite economic growth on a finite planet is either a madman, or an economist

Royal Bank of Scotland spokesman has been saying that there is nothing to invest in apart from bonds.He couldn't have heard of the Auckland house market.

he is pretty much right, there is a big flight to safety on at the moment. it will be a worry to the banks i wont not be surprised to see credit dry up for leverged buyers

I was gonna record it all for posterity. Buy a simple camera, that records motion.

Might leave it a while as prices may drop among other things, poor people.

Netflix, never made a profit? what about all the others that the gamblers hope will make a profit in the future? oh maybe downgraded.

Amazon? the world's biggest retailer?

our homemade Xero????

All the above share something in common, they are charging too little to make a profit and the only way to make a profit in line with what the parasites want (ie large) is to substantially increase charges.

NB tell me why this isnt just another aligned with the BDI plunging signal? that all is well in the world...yes really.

Actually, Amazon could make a bucketload of cash whenever it wants, to a lesser extent so can Netflix, Xero? not so much. Remember for most tech companies the goal is NOT to make a profit for tax reasons (see national newspapesr et..)

Amazon do make profits, netflix will make profits eventually
Xero not sure one can not understand that model as they get more clients they get more staff so does not seem to fit economy of scale

Indeed Ok, maybe but the valuations of the shares expect what level of profit? to give a decent return?

Xero has yet to demonstrate that doubling (or even double that!) its present client base can indeed generate profits for what ppl have paid for the shares? So I seriously wonder that the shares are trading as a ponzi scheme, ie on selling to a bigger fool but we can throw the likes of netflix etc also into this.

However Amazon made losses for first 7 years, longer term goals of market dominance rather than immediate profit.

how would it make a bucket full of cash?

I'd also just not believe that Amazon's ultimate goal is not to be comfortably profitable.