New Zealand Economy

25

IMF: New Zealand’s housing bust threatens economy

A cross-country analysis shows that New Zealand’s residential housing market is by far the most expensive in the English-speaking world, measuring at 4.8 times the size of the economy: Capital Economics also estimated that New Zealand’s consumer spending growth is the second most sensitive to changes in house prices, behind Hong Kong: Given household consumption is

12

Immigration won’t rescue plunging New Zealand housing market

I reported yesterday how the Ardern Government in New Zealand announced some tweaking to the immigration system that will ensure Kiwi businesses have easy access to migrant workers. These changes will also give easy access to permanent residency, thus ensuring that New Zealand’s population continues to grow. For all intents and purposes, the Ardern Government’s

5

Ardern maintains New Zealand’s wage-crushing immigration policy

In May last year, New Zealand’s Ardern Government vowed to end low-skilled, wage crushing migration via a “once-in-a generation” reset for New Zealand’s immigration system. It flagged a significantly smaller migration intake post-Covid that focuses on highly skilled, highly paid and productive migrants that fill genuine skills shortages. This means abolishing the current low-skilled system,

23

New Zealand house prices are crashing

The Reserve Bank of New Zealand (RBNZ) last week released its half-yearly Financial Stability Report (FSR), which noted that house prices nationally had already fallen more than 4% since November 2021 after having risen a whopping 48% over the prior two years: The RBNZ also noted that New Zealand house prices “remain above sustainable levels

15

New Zealand falls out of love with Jacinda Ardern

The latest Roy Morgan polling had the potential National/Act NZ opposition well ahead of the incumbent Ardern Labour/Greens government in April. On primary vote, National is leading Labour 37.5% to 33.5%, with Act (10.0%) also catching the Greens (10.5%): This means that on a coalition basis, National/Act is leading Labour/Greens by 49.0% to 44.0%: There

19

New Zealand’s housing system eats it’s young

Last month I penned an article showing how New Zealand’s housing market has swallowed the economy, accounting for a record high share of the nation’s gross domestic product (GDP) and household income: Separate data from Capital Economics also showed that New Zealand’s consumer spending growth is especially sensitive to changes in house prices, meaning that if

9

“Buyers market” signals sharp New Zealand house price falls

CoreLogic’s Quarterly Property Market & Economic Update notes that the “long-awaited slowdown in NZ’s residential property market has finally arrived” with the “first few months of 2022 genuinely weak”. The slowdown is evidenced by property sales volumes falling to decade lows, driven by “higher mortgage rates and reduced credit availability”. CoreLogic also notes that the

8

Jacinda Ardern’s “immigration reset” another policy lie

In May last year, New Zealand’s Ardern Government vowed to end low-skilled, wage crushing migration via a “once-in-a generation” reset for New Zealand’s immigration system. It flagged a significantly smaller migration intake post-Covid that focuses on highly skilled, highly paid and productive migrants that fill genuine skills shortages. This means abolishing the current low-skilled system,

14

Kiwi mortgage mugs brace for interest rate pain

Yesterday, the Reserve Bank of New Zealand (RBNZ) shocked economists with a 0.50% increase in the Official Cash Rate (OCR) to 1.50%. The RBNZ described the over-sized hike as “bringing forward” monetary tightening, stating it “remained comfortable” with OCR outlook outlined in its February Monetary Policy Statement (MPS). The MPS sees the OCR rising to 2.2%

11

Colossal New Zealand housing bubble engulfs economy

A cross-country analysis of dwelling values across the English-speaking world shows that New Zealand’s housing market is by far the most overvalued. The next chart plots aggregate dwelling values against national gross domestic product (GDP) and shows that New Zealand’s housing market is 4.8 times the size of the economy, easily beating second placed Australia