Tag: New Zealand

Kiwis Get Another Mega Rate Cut, As Inflation Sits In Band!

Would you prefer to be living in New Zealand or Australia? The New Zealand story on monetary policy and home prices is a million miles away from the RBA’s approach of keeping rates lower, to protect jobs even if inflation remains above target.

Across the ditch the Reserve Bank’s approach of “no regrets”, took interest rates much higher, lifted unemployment and pulled home prices lower, and because of the more aggressive action appears to have left the land of the long white cloud better placed in the months ahead.

The New Zealand Monetary Policy Committee this week agreed to lower the Official Cash Rate by 50 basis points to 3.75 percent.

The RBNZ have been cutting for a while and and house prices haven’t been rising. The 40% run up in prices over the pandemic has been followed by the sharpest price crash in generations. Even so, price-to-income ratios remain elevated relative to historical experience, especially given the current interest rate settings. Whilst median home price to median household disposable income are coming down, we are still around 10 times in Auckland, and over 8 times nationally.

So standing back, the different path between the Central Banks of Australia and New Zealand really stand out. Which begs the question, is a shorter sharper shock, or a slow grind with no clear way out the better path? And should stronger controls on mortgage lending be imposed to keep home prices under control? Oh, yes and the elephant in the room, should migration be dialled back – as in New Zealand, where Stats NZ reported that 72,000 citizens left the country while just 24,900 arrived, and the overall net loss of citizens in 2024 is the largest in a calendar year – or should migration still be pushed hard, despite the rhetoric as in Australia? Frankly to me on so many fronts New Zealand seems in better if imperfect hands than Australia!

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Kiwis Get Another Mega Rate Cut, As Inflation Sits In Band!
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Kiwis Get Another Mega Rate Cut, As Inflation Sits In Band!

Would you prefer to be living in New Zealand or Australia? The New Zealand story on monetary policy and home prices is a million miles away from the RBA’s approach of keeping rates lower, to protect jobs even if inflation remains above target.

Across the ditch the Reserve Bank’s approach of “no regrets”, took interest rates much higher, lifted unemployment and pulled home prices lower, and because of the more aggressive action appears to have left the land of the long white cloud better placed in the months ahead.

The New Zealand Monetary Policy Committee this week agreed to lower the Official Cash Rate by 50 basis points to 3.75 percent.

The RBNZ have been cutting for a while and and house prices haven’t been rising. The 40% run up in prices over the pandemic has been followed by the sharpest price crash in generations. Even so, price-to-income ratios remain elevated relative to historical experience, especially given the current interest rate settings. Whilst median home price to median household disposable income are coming down, we are still around 10 times in Auckland, and over 8 times nationally.

So standing back, the different path between the Central Banks of Australia and New Zealand really stand out. Which begs the question, is a shorter sharper shock, or a slow grind with no clear way out the better path? And should stronger controls on mortgage lending be imposed to keep home prices under control? Oh, yes and the elephant in the room, should migration be dialled back – as in New Zealand, where Stats NZ reported that 72,000 citizens left the country while just 24,900 arrived, and the overall net loss of citizens in 2024 is the largest in a calendar year – or should migration still be pushed hard, despite the rhetoric as in Australia? Frankly to me on so many fronts New Zealand seems in better if imperfect hands than Australia!

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!

The New Zealand unemployment rate continues to climb, reaching 5.1% in the December 2024 quarter, according to the latest Stats NZ figures – the highest level it’s been since 2020. It’s up from 4.8% in the September 2024 quarter.

Men accounted for 85% of the annual decrease in employment, reflecting substantial falls in the male-dominated occupation groups of technicians and trades workers, and machinery operators and drivers. Within the overall decrease in seasonally adjusted employment for men, there was also a shift from full-time to part-time work. While the number of men in full-time employment fell by 36,000 annually, the number in part-time employment grew by 9000.

While politicians throw rocks across the aisle, the one lever of interest rates at the heart of monetary policy is deeply flawed.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!
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Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!

The New Zealand unemployment rate continues to climb, reaching 5.1% in the December 2024 quarter, according to the latest Stats NZ figures – the highest level it’s been since 2020. It’s up from 4.8% in the September 2024 quarter.

Men accounted for 85% of the annual decrease in employment, reflecting substantial falls in the male-dominated occupation groups of technicians and trades workers, and machinery operators and drivers. Within the overall decrease in seasonally adjusted employment for men, there was also a shift from full-time to part-time work. While the number of men in full-time employment fell by 36,000 annually, the number in part-time employment grew by 9000.

While politicians throw rocks across the aisle, the one lever of interest rates at the heart of monetary policy is deeply flawed.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

Go to the Walk The World Universe at https://walktheworld.com.au/

Kiwis Hold Their Breath On Property, And Rates.

We are crossing the ditch to New Zealand today to look at the latest home price data from the REINZ, and the latest inflation data from the RBNZ.

The New Zealand property market experienced a relatively quiet month in December 2024. Actually, sales increased by 1.8% nationwide compared to December 2023, rising from 5,420 to 5,518 but the median price for New Zealand decreased slightly by 0.6% to $775,000 year-on-year. Month-on-month, the national median price fell 1.8% from $789,000. Auckland prices were down 4.3% over the past year, and Wellington was down 5.4%.

National inventory levels have risen, increasing by 18.5% year-on-year to 29,478. However, inventory levels have decreased by 13.3% compared to the previous month, down from 33,984. Nationally, the days to sell rose 6 days year on year to 42 days.

The latest data from the RBNZ showed inflation slowed, though locally grown inflation was still sticky. Ahead, we can expect further rate cuts this year, as inflation tracks in line the RBNZ expectation, though external factors like exchange rates are in play, increasing uncertainty.

Whether the RBNZ will need to push the OCR below circa 3.25% neutral levels or have the OCR move higher remains to be seen, with monetary policy settings for 2025 and beyond highly conditional on the (still-uncertain) economic outlook.

This uncertainty flows back directly into the property market, and despite the lower rates ahead, the broader uncertainties and financial pressures many households are feeling will continue to hold the property market in a zone of uncertainty, especially given weaker demand as migration rates continue to ease. There is no easy upside breakout in property prices here.

http://www.martinnorth.com/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Kiwis Hold Their Breath On Property, And Rates.
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Kiwis Hold Their Breath On Property, And Rates.

We are crossing the ditch to New Zealand today to look at the latest home price data from the REINZ, and the latest inflation data from the RBNZ.

The New Zealand property market experienced a relatively quiet month in December 2024. Actually, sales increased by 1.8% nationwide compared to December 2023, rising from 5,420 to 5,518 but the median price for New Zealand decreased slightly by 0.6% to $775,000 year-on-year. Month-on-month, the national median price fell 1.8% from $789,000. Auckland prices were down 4.3% over the past year, and Wellington was down 5.4%.

National inventory levels have risen, increasing by 18.5% year-on-year to 29,478. However, inventory levels have decreased by 13.3% compared to the previous month, down from 33,984. Nationally, the days to sell rose 6 days year on year to 42 days.

The latest data from the RBNZ showed inflation slowed, though locally grown inflation was still sticky. Ahead, we can expect further rate cuts this year, as inflation tracks in line the RBNZ expectation, though external factors like exchange rates are in play, increasing uncertainty.

Whether the RBNZ will need to push the OCR below circa 3.25% neutral levels or have the OCR move higher remains to be seen, with monetary policy settings for 2025 and beyond highly conditional on the (still-uncertain) economic outlook.

This uncertainty flows back directly into the property market, and despite the lower rates ahead, the broader uncertainties and financial pressures many households are feeling will continue to hold the property market in a zone of uncertainty, especially given weaker demand as migration rates continue to ease. There is no easy upside breakout in property prices here.

http://www.martinnorth.com/

Too Late! Kiwis Get Another Large Rate Cut, With More To Come…

Poor Kiwi’s have been hit by some of the highest interest rates in the western world, thanks to the aggressive OCR hikes from their Central Bank, as high migration stoked inflation, but still saw a recession. Then the RBNZ turns turtle and started to cut rates, as migration started to fall, along with home prices, and now they have another rate cut to contend with, as the economy remains weak, and international factors could push inflation higher again.

All up New Zealand’s economy has stalled, unemployment is rising and house prices are falling as the prolonged period of high borrowing costs curbs demand. Economists say inflation is now slowing rapidly, and some have warned it may undershoot the 2% midpoint of the RBNZ’s 1-3% target range. It’s a mess, and an object lesson in the impacts of long and variable lags.

This week, New Zealand’s central bank cut interest rates by half a percentage point, stepping up the pace of easing as policymakers become more concerned about the economic slowdown.

The Reserve Bank’s Monetary Policy Committee lowered the Official Cash Rate to 4.75% from 5.25% Wednesday in Wellington. It is the RBNZ’s second straight reduction after it began its easing cycle with a quarter-point cut in August. The decision was a policy review, which is not accompanied by fresh economic forecasts or a press conference.

ASB’s inflation forecast suggests a risk that inflation undershoots the 2% midpoint of the 1% – 3% inflation target. The fallout of aggressive monetary policy will stay with Kiwi’s for a long time. And the road remains bumpy at best. No wonder the number of New Zealand citizens leaving is up significantly!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Too Late! Kiwis Get Another Large Rate Cut, With More To Come...
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Too Late! Kiwis Get Another Large Rate Cut, With More To Come…

Poor Kiwi’s have been hit by some of the highest interest rates in the western world, thanks to the aggressive OCR hikes from their Central Bank, as high migration stoked inflation, but still saw a recession. Then the RBNZ turns turtle and started to cut rates, as migration started to fall, along with home prices, and now they have another rate cut to contend with, as the economy remains weak, and international factors could push inflation higher again.

All up New Zealand’s economy has stalled, unemployment is rising and house prices are falling as the prolonged period of high borrowing costs curbs demand. Economists say inflation is now slowing rapidly, and some have warned it may undershoot the 2% midpoint of the RBNZ’s 1-3% target range. It’s a mess, and an object lesson in the impacts of long and variable lags.

This week, New Zealand’s central bank cut interest rates by half a percentage point, stepping up the pace of easing as policymakers become more concerned about the economic slowdown.

The Reserve Bank’s Monetary Policy Committee lowered the Official Cash Rate to 4.75% from 5.25% Wednesday in Wellington. It is the RBNZ’s second straight reduction after it began its easing cycle with a quarter-point cut in August. The decision was a policy review, which is not accompanied by fresh economic forecasts or a press conference.

ASB’s inflation forecast suggests a risk that inflation undershoots the 2% midpoint of the 1% – 3% inflation target. The fallout of aggressive monetary policy will stay with Kiwi’s for a long time. And the road remains bumpy at best. No wonder the number of New Zealand citizens leaving is up significantly!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Will Kiwis Say “Hello” To Deflation?

Compared to the weak RBA rate of 4.35%, the Reserve Bank of New Zealand, lifted earlier and higher, and has begun to cut rates as the New Zealand economy slipped into recession. Next week we will get the next RBNZ rate decision, and a new survey has show that although New Zealand business sentiment is improving a window has opened to allow a cut interest rates of 50 basis points. The RBNZ has forecast around 2.5% of rate cuts over a 2.5 year period.

The contrast with Australia is interesting, because the RBA has left rates at a lower rate trying to preserve the gains in employment, whereas the RBNZ lifted more aggressively and tipped the New Zealand economy into a recession. Neither outcome is great, showing the problem with blunt monetary policy tools.

In addition, the latest New Zealand migration stats reveals a sharp moderation in net overseas migration, a critical factor working against economic growth. And worse, a large number of citizens are emigrating from New Zealand, replaced by poorer migrants from developing nations according to Stats NZ. As a result, annual New Zealand’s population growth is slowing, which will moderate demand. And of course New Zealand’s economy is stuck in a protracted per capita recession and unemployment is rising fast.

All up, clearly more rate cuts are coming, and a period of falling prices – deflation – could well be on the cards. As a result, the RBNZ will need to front load those future rate cuts, so 50 basis points next week are highly likely.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Will Kiwis Say “Hello” To Deflation?
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Will Kiwis Say “Hello” To Deflation?

Compared to the weak RBA rate of 4.35%, the Reserve Bank of New Zealand, lifted earlier and higher, and has begun to cut rates as the New Zealand economy slipped into recession. Next week we will get the next RBNZ rate decision, and a new survey has show that although New Zealand business sentiment is improving a window has opened to allow a cut interest rates of 50 basis points. The RBNZ has forecast around 2.5% of rate cuts over a 2.5 year period.

The contrast with Australia is interesting, because the RBA has left rates at a lower rate trying to preserve the gains in employment, whereas the RBNZ lifted more aggressively and tipped the New Zealand economy into a recession. Neither outcome is great, showing the problem with blunt monetary policy tools.

In addition, the latest New Zealand migration stats reveals a sharp moderation in net overseas migration, a critical factor working against economic growth. And worse, a large number of citizens are emigrating from New Zealand, replaced by poorer migrants from developing nations according to Stats NZ. As a result, annual New Zealand’s population growth is slowing, which will moderate demand. And of course New Zealand’s economy is stuck in a protracted per capita recession and unemployment is rising fast.

All up, clearly more rate cuts are coming, and a period of falling prices – deflation – could well be on the cards. As a result, the RBNZ will need to front load those future rate cuts, so 50 basis points next week are highly likely.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/