New Zealand Economy

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NZ housing reforms knock wind out of market

Over the past month we have witnessed two fundamental reforms to New Zealand’s property market. First, the Reserve Bank of New Zealand (RBNZ) reintroduced loan-to-value ratio (LVR) mortgage restrictions, which from 1 March 2021 required both investors and owner-occupiers to stump-up bigger deposits: Second, and more importantly, the New Zealand Government on 23 March announced

22

Time Australia coerced NZ on China

As Australia’s relationship with China has shifted to a more realistic footing in the past twelve months, New Zealand has been practising a very studied strategic ambiguity. This reached an ugly head several months ago when Trade Minister Damien O’Connor advised Australia to grovel a lot more. Today we had another example of NZ’s double

2

NZ mortgage debt-to-income ratios soar

New data from the Reserve Bank of New Zealand (RBNZ) reveals that the proportion of new mortgages taken out with debt-to-income (DTI) ratios above five soared in the December quarter, with all borrower groups rising: Auckland home buyers in general are far more leveraged than New Zealanders as a whole. Nearly two thirds (64.8%) of

9

Westpac may divorce New Zealand

Late last year, the Reserve Bank of New Zealand (REINZ) announced plans to increase tier one capital requirements for all systematically important banks to 16% of risk weighted assets, up from 13.5%. New Zealand’s big four Australian-owned banks were, therefore, placed directly in the REINZ’s cross-hairs given they comprise nearly 90% of the nation’s banking

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Westpac: NZ investor tax reforms will crash property prices

New Zealand’s Ardern Labour Government yesterday announced sweeping property tax reforms targeted at investors, namely: extending the term of the Bright Line Test for taxing capital gains on investment property from five years to 10 years; and fully removing the tax deductibility of mortgage interest payments on residential investment properties. The reforms came out of

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NZ government whacks housing speculators with massive tax changes

The New Zealand Government has taken direct aim at property investors, extending the term of the Bright Line Test for taxing capital gains on housing and fully removing the tax deductibility of mortgage interest payments on residential investment properties. The measures are expected to come into effect this weekend. Moreover, the Government will extend the

8

Trans-Tasman travel bubble back on!

The one-again, off-again Trans-Tasman Travel Bubble is on again, with officials from both New Zealand and Australia hinting that it could be in place by mid-April, thus allowing unrestricted two-way travel between both nations. New Zealand Deputy Prime Minister Grant Robertson made the declaration yesterday, which was supported by Tourism Minister Dan Teehan: “We were

9

NZ house prices tipped to soar 25%

Less than a month ago, the Reserve Bank of New Zealand (RBNZ) projected that New Zealand house price growth would peak at 22% mid-year, which would be the strongest growth since 2003: Now the government-owned Kiwibank has upped the ante, forecasting that New Zealand house prices would peak at 25% by mid-2021: We had expected

9

Is Jacinda Ardern a “housing revolutionary”

Morgan Stanley’s chief global strategist wrote an article in the Financial Times (republished in The AFR) suggesting New Zealand Prime Minister, Jacinda Ardern, is a revolutionary for ordering the Reserve Bank of New Zealand (RBNZ) to add stabilising home prices to its remit: Housing bubbles are the worst… When prices fall, it can take years

14

Kiwis escape to Australia for affordable housing

You know New Zealand housing is deranged when there is talk of Kiwis escaping to Australia for affordable housing. But that’s exactly what commentators think could happen given the extreme price growth being experienced in New Zealand, which saw median prices surge 27% year on year in February, according to the Real Estate Institute of

8

Auckland’s median house price soared $100k in February

New Zealand Prime Minister Jacinda Ardern’s promise to ‘fix’ housing affordability has taken another hit with the nation’s median house price rising another $50,000 in February, with Auckland’s surging by $100,000, according to the Real Estate Institute of New Zealand (REINZ). Price growth was strong across the nation, as summarised in the below table: Price

10

New Zealand house prices go vertical

CoreLogic has released its New Zealand dwelling value results for February, which shows that price momentum continued to gather steam. Dwelling values nationally surged by 2.6% over February to be up a whopping 7.6% over the quarter and by 14.5% year-on-year. As shown in the next chart, quarterly value growth is running at its hottest

8

Trans-Tasman travel bubble dealt fatal blow

The Trans-Tasman Travel bubble, which promised to allow unrestricted two-way travel between Australia and New Zealand, has been dealt a fatal blow with Queensland, New South Wales and Victoria each imposing new restrictions on Auckland arrivals following new community virus transmissions across the city. Overnight, New South Wales and Victoria reclassified Auckland as a virus

7

How RBNZ ignited the property market

New evidence has arisen suggesting that the Reserve Bank of New Zealand (RBNZ) has played a direct role in inflating New Zealand’s housing market, which is experiencing its strongest price growth since 2004. Over the weekend, Interest.co.nz revealed that the Treasury department recommended finance minister Grant Robertson advise the RBNZ to restrict the newly created

35

Immigration “the biggest single driver of housing demand”

It seems like an obvious and non-controversial statement: in developed nations with low birth rates, immigration is the key driver of household formation and structural housing demand. Immigration should, therefore, be front-and-centre of policy makers’ minds when attempting to solve shortages in housing and/or affordability concerns. Strangely, however, policy makers and commentators tend to ignore

8

NZ first home buyers shut out as investors take over

New Zealand Prime Minister Jacinda Ardern’s 2017 election promise to ‘fix’ the nation’s housing affordability crisis has taken another hit, with investors increasingly crowding-out first home buyers (FHB). The evidence is provided in CoreLogic’s latest update, which shows that the share of purchases by investors surged to a record high 30% in January, whereas FHB’s

1

NZ declared “red zone” as Auckland thrown into lockdown

The plan for a Trans-Tasman Travel Bubble allowing quarantine-free travel between Australia and New Zealand has hit another snag with Australia declaring New Zealand a “red zone” after new community transmissions were recorded in its largest city of Auckland. Auckland was placed into an “alert level 3” three-day hard lockdown overnight after three new community

8

Trans-Tasman travel bubble put on ice again

The promised Trans-Tasman Travel bubble, which was supposed to enable unrestricted two-way travel between Australia and New Zealand, has drifted further into the never-never. New Zealand Prime Minister Jacinda Ardern yesterday put the proposal on ice in response to Australia’s knee-jerk response over a recent single community transmission in Auckland: On Tuesday in Wellington, she

5

RBNZ tightens LVR clamps on “speculative” property market

The Reserve Bank of New Zealand (RBNZ) yesterday performed a stunning U-turn, reintroducing loan-to-value (LVR) mortgage restrictions just 10 months after such restrictions were lifted to aid the nation’s COVID-19 response. Under the changes, most investors will need 40% deposits and most owner-occupiers 20% deposits; although there are explicit carve-outs for new residential construction: The

7

New Zealand unemployment dives to 4.9%

New Zealand unemployment has confounded even the most bullish expectations, falling to just 4.9% in the December quarter, according to Statistics New Zealand. This compares to consensus forecasts of 5.6%: Key facts In the December 2020 quarter, compared with the September 2020 quarter: Unemployment rate fell to 4.9 percent. Underutilisation rate fell to 11.9 percent.

13

New Zealand’s “deranged” housing market

The Spinoff has published the below “deranged” chart on New Zealand’s housing market showing how for two decades, under both National and Labour governments, housing costs have risen far faster than wages: Labour is in a real bind here, because while 2020’s extraordinary 20% year-on-year price rise is an unmitigated disaster for anyone trying to

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Jacinda Ardern sells Pacific freedom for few yuan more

Via the ABC: The Federal Government is fuming after New Zealand’s Trade Minister suggested Australia could mend ties with China by showing its government more “respect.” China and Australia are mired in several disputes and Beijing has targeted multiple Australian exports with sanctions, although the campaign of economic punishment has not escalated further so far

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Jacinda Ardern lacks the courage to fix housing

As we know, New Zealand Prime Minister, Jacinda Ardern, was elected in 2017 on a platform of fixing New Zealand’s chronic housing crisis. However, Ardern’s Labour Party failed dismally on housing in its first term, failing to deliver on key election promises. Labour’s promised ‘KiwiBuild’ program to build 100,000 public houses descended into a farce,

14

NZ property market experiencing “perfect storm” and “unprecedented” price gains

ANZ Research has released a new report on the New Zealand property market, which claims that a “perfect storm” has developed that has driven “unprecedented gains”: Record Breaker House prices rose 2.9% in December, following similar stellar rises in October and November. This saw a quarterly gain of 7.7% for Q4 (figure 1) – the