Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
The latest from the REINZ shows home prices continue to ease, and they are getting into troublesome territory. That said, the REINZ still managed to spruik property, nevertheless.
https://www.reinz.co.nz/residential-property-data-gallery
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The Reserve Bank of NZ lifted the cash rate another 0.5% to tackle inflation – and is taking a different tack to the RBA, where home prices are falling faster. Expect high rates and more falls ahead, in both countries.
Go to the Walk The World Universe at https://walktheworld.com.au/
The Reserve Bank of NZ lifted the cash rate another 0.5% to tackle inflation – and is taking a different tack to the RBA, where home prices are falling faster. Expect high rates and more falls ahead, in both countries.
Go to the Walk The World Universe at https://walktheworld.com.au/
In New Zealand, the tightening rate cycle which is currently in full swing – with more to come, is crushing the housing market, as illustrated by the August 2022 QV House Price Index for August which was released today. The average house value in New Zealand had fallen by some $89,917 to the end of August (down 8.5%) compared with the January peak – which is a rate of some $424 of lost value per day. “It looks as though it’s going to get tougher before it gets any easier for sellers. First-home buyers will continue to struggle for finance with tight credit conditions and affordability constraints. Plus, there’s still plenty of new homes in the pipeline, which will add further to oversupply, putting further downward pressure on prices.”
Go to the Walk The World Universe at https://walktheworld.com.au/
Economists, by nature or nurture, are like living and breathing versions of the Picasso paintings that show both sides of a solitary image. So well-known is their use of the phrase “on one hand … but on the other hand,” that President Harry Truman once famously asked for a one-armed economist to provide him with economic counsel.
With that caveat, New Zealand is I think a Petrie dish for how tight monetary policy plays out. The Reserve Bank of New Zealand started lifting rates earlier than other central banks last year and are set on more rises ahead.
Now according to a Reuters poll, New Zealand’s house prices are forecast to fall 10% this year and 5% next as aggressive interest rate hikes take some heat out of a blazing housing market, but not enough to solve the ongoing affordability crisis. And while the Reserve Bank in New Zealand does need to take home price movements into consideration when making interest rate calls, it seems to me that the objective of snuffing out inflation is number one, two and three, and to that end, if higher unemployment, or lower home prices are a necessary consequence then so be it.
Today’s post is brought to you by Ribbon Property Consultants. If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you. Buying property, is both challenging and adversarial. The vendor has a professional on their side. Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest. Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
I recently discussed the creation of Kiwi Bank, a National Bank In New Zealand with one of its architects Hon Matt Robson. Kiwibank was set up 20 years ago at the behest of the late left-wing politician Jim Anderton, who believed the country should have its own national bank.
It now has more than a million customers but remains a minnow compared to its big four Australian rivals, ASB, BNZ, ANZ and Westpac. Home loans are Kiwibank’s biggest business where it has a market share of 6.5% to 7%. It doesn’t have the skill or capacity to handle accounts for larger businesses, the Government or the agri sector. It has a 2% to 4% share of the business market, which is mostly home loans secured against a business owner’s residence. Kiwibank recently posted a record profit, but it was still less than one tenth of the ASB profit posted just a few days earlier.
Now its just been announced By The Minister of Finance Grant Robertson, that the Government is borrowing $2.1 billion to buy Kiwibank’s parent company to keep the bank in Kiwi ownership after two of its existing Crown-owned shareholders wanted out. The Crown will take over Kiwi Group Holdings, which owns Kiwibank and NZ Home Loans, under an agreement which allowed the shareholders to sell their shares to each other or the Crown from October 31 last year. ACC, which owned 25%, and NZ Post, which owned 53%, wanted to exit their investments.
The NZ Super Fund, which owned the remaining 22%, was interested in buying some or all of NZ Post’s stake but wanted the flexibility to bring in private capital and have the option to sell to private investors in the future, which the Government rejected as it wanted to ensure Kiwi ownership. T
he Government said it did so to make sure Kiwibank remains fully New Zealand owned. The move thwarts any attempt by the NZ Super Fund to acquire all of the bank and then restructure it.
Go to the Walk The World Universe at https://walktheworld.com.au/
The Reserve Bank in New Zealand lifted the cash rate by yet another 0.5% today – and indicates more rises ahead, despite a fall in home prices. We look at the key facts from the accompanying statement.
Go to the Walk The World Universe at https://walktheworld.com.au/
New Zealand economists are firming on the Reserve Bank lifting the cash rate to 4% – considerably higher than recently expected, and the latest data on wages and employment, they say provide more of a platform to achieve this target. So more pain for many, including recent mortgage holders. Go to the Walk The World Universe at https://walktheworld.com.au/
Interesting data from Statistics New Zealand today on employment and wages today. They show that New Zealand unemployment unexpectedly rose from a record low in the second quarter but wages rose at the fastest pace in 14 years – though still well below inflation – suggesting the central bank may need to keep raising interest rates aggressively to tame inflation.
The jobless rate climbed to 3.3% from 3.2% in the first quarter, which was the lowest level since records began in 1986. Economists expected a decline to 3.1%. Employment was unchanged from the previous three months. The underutilisation rate was 9.2 percent, compared to 9.3 percent in the March 2022 quarter.
Wage inflation, measured by the labour cost index (LCI), was 3.4 percent in the year ended June 2022, the fastest since 2008 and up from 3.0 percent in the year ended March 2022, while average ordinary time hourly earnings rose 6.4 percent. While wages have lifted over the past year, annual consumer price inflation has exceeded annual wage inflation over the same period. The consumers price index (CPI) increased 7.3 percent in the year ended June 2022.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants. If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you. Buying property, is both challenging and adversarial. The vendor has a professional on their side. Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make. Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Have you noticed how everyone is now trying to pass the buck for the failed monetary policy, the disastrous results of which were magnified by the COIVD response. Politicians are pointing to the Central Bank.
Central Bankers point to conflict between Ukraine and Russia, and then also point to the COVID caused supply chain disruption (which was largely created by households and businesses suddenly being given cash to buy stuff, creating high demand as the lockdowns took a toll.
In effect no-one in authority wants to accept they helped create the problems we are now facing. And because of that reflex, we may not get to first understand the root causes which created the issues, and so how to address them correctly, and avoid similar issues down the track.
On just this theme, Bernard Hickey wrote an interesting piece on the New Zealand Site interest.co.nz titled “Reserve Bank may have lots of good company in the money-printing dog box, but that doesn’t let it or the Government off the hook on inflation”
Go to the Walk The World Universe at https://walktheworld.com.au/
