Those following my channel will know of the modelling which shows the strong link between credit availability and home prices. We know that when credit is tight, and the rate of change in credit is negative, home prices fall. And we are seeing this in spades now in New Zealand.
So today I want to explore some markers in New Zealand, and why property will fall further and faster.
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
New Zealand Credit Falls Off A Cliff – Home Prices Will Follow! [Podcast]
Those following my channel will know of the modelling which shows the strong link between credit availability and home prices. We know that when credit is tight, and the rate of change in credit is negative, home prices fall. And we are seeing this in spades now in New Zealand.
So today I want to explore some markers in New Zealand, and why property will fall further and faster.
Go to the Walk The World Universe at https://walktheworld.com.au/
The New Zealand consumers price index increased 6.9 percent in the March 2022 quarter compared with the March 2021 quarter, the largest movement since a 7.6 percent annual increase in the year to the June 1990 quarter, Stats NZ said today.
The 6.9 percent increase follows an annual increase of 5.9 percent in the December 2021 quarter, the previous largest annual movement since the 7.6 percent increase in the June 1990 quarter.
The main driver for the 6.9 percent annual inflation to the March 2022 quarter was the housing and household utilities group, influenced by rising prices for construction and rentals for housing.
Prices for the construction of new dwellings increased 18 percent in the March 2022 quarter compared with the March 2021 quarter, the largest increase recorded since the series began in 1985.
Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house.
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Caveat Emptor! Note: this is NOT financial or property advice!!
The New Zealand Reserve Bank’s Monetary Policy Committee dropped a 50 basis point hike today by lifting the official cash rate to 1.5% from 1% Wednesday in Wellington, the first time it has delivered an increase of that magnitude since 2000, its biggest hike in 22 years.
SO the question is, does the 50 basis point hike represent a stitch in time, or a nail in the coffin of the property market?
The move wrong-footed 15 of 20 economists who expected a quarter-point adjustment. However, investors had assigned it a 70% probability.
“The Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations,” the RBNZ said. “It is appropriate to continue to tighten monetary conditions at pace.”
Go to the Walk The World Universe at https://walktheworld.com.au/
The New Zealand Reserve Bank’s Monetary Policy Committee dropped a 50 basis point hike today by lifting the official cash rate to 1.5% from 1% Wednesday in Wellington, the first time it has delivered an increase of that magnitude since 2000, its biggest hike in 22 years.
So the question is, does the 50 basis point hike represent a stitch in time, or a nail in the coffin of the property market?
The move wrong-footed 15 of 20 economists who expected a quarter-point adjustment. However, investors had assigned it a 70% probability.
“The Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations,” the RBNZ said. “It is appropriate to continue to tighten monetary conditions at pace.”
Go to the Walk The World Universe at https://walktheworld.com.au/
There was a significant piece in The Conversation by Claire Dale, Research Fellow At The University of Auckland – titled The coming storm for New Zealand’s future retirees: still renting and not enough savings to avoid poverty
A large number of New Zealanders are facing a perfect storm at retirement, with minimal savings and no house, raising the risk that thousands will enter old age in poverty.
According to the latest retirement expenditure guidelines from Massey University, a two-person retiree household living an urban “choices” lifestyle, which includes some luxuries, would need to have saved NZ$809,000. In the provinces, a couple would need to have saved $511,000.
New Zealanders have traditionally relied on owning a home to support themselves during their retirement years. But many of the New Zealanders now aged between 50 and 65 – a cohort of almost half a million people – will go into retirement as renters after skyrocketing house prices over the last three decades put home ownership out of reach.
At the same time, this generation were already working adults when the Labour government introduced KiwiSaver in 2007, and are less likely to have a significant savings cushion.
Go to the Walk The World Universe at https://walktheworld.com.au/
A quick look at the current state of play in New Zealand, as the IMF recommends higher rates, and the Treasury figures the losses from the RBNZ’s programmes. Plus house prices and credit eases. Lots of negative indicators….
Go to the Walk The World Universe at https://walktheworld.com.au/
Today we look at the CBA’s outlook on interest rates, and mortgage stress, as well as the latest from New Zealand on home price and sales growth as both slow.
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.
The number of residential property sales across New Zealand decreased by 29.4% annually, from 9,573 in December 2020 to 6,755 in December 2021 according to REINZ. The number of properties sold was also down 21.4% month-on-month.
For New Zealand excluding Auckland, the number of properties sold in December 2021 decreased 26.6% annually from 6,048 to 4,442. While in Auckland, the number of properties sold decreased 34.4% annually — from 3,525 in December 2020 to 2,313 in December 2021. Month-on-month, there was a 26.6% decrease.
We look at the latest numbers.
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.
We just got the results of the Reserve Bank New Zealand Stress Tests, and this year the RBNZ undertook both its regular solvency stress test, challenging the resilience of banks’ capital to a severe downturn, and also put the spotlight on banks’ liquidity and funding resilience through a liquidity stress test ahead of next year’s review of the RBNZ’s liquidity policy. The solvency stress test included the five largest banks – ANZ NZ, ASB, BNZ Westpac and Kiwibank – and the liquidity stress test featured those five plus Co-operative Bank, Rabobank NZ, Heartland, SBS and TSB.
Large banks fared worse than the smaller banks. However, banks were able to identify actions that, if effective, would considerably improve the outcome.
Now the banks is at pains to highlight the stress test scenarios are hypothetical and don’t represent its view of the most likely future path for financial stability risks. And the RBNZ doesn’t release individual banks’ stress test results. Unlike the results from the Federal Reserve in the US, where individual banks results are disclosed. In this respect New Zealand is following the opaque strategy APRA also executes, which is a pity. Not least because in New Zealand, Bank Deposit Bail-In is a thing via the Open Banking Resolution, and the RBNZ has warned people to do due diligence on the individual banks – so why don’t they disclose the detail we ask?
Go to the Walk The World Universe at https://walktheworld.com.au/
