New Zealand Economy

7

Treasury: Soaring home prices reduces inequality!

The New Zealand Treasury has released one of the most bizarre pieces of economic modelling I have ever seen: claiming that house price growth actually reduced inequality: The research “surprisingly” found a 10% increase in house prices decreases wealth inequality across the population. This is because the wealth of the wealthiest is mostly comprised of non-housing

19

Productivity Commission: Pre-COVID immigration unsustainable

Earlier this year, the New Zealand Government tasked the Productivity Commission (PC)  with undertaking a system-wide review of the nation’s immigration program, with particular focus on the “impact of immigration on the labour market, housing and associated infrastructure, and the natural environment”. The goal of the inquiry is to “enable New Zealand to strategically optimise

18

Jacinda Ardern kowtows to China on TPP trade pact

China has officially sought to join the 11 member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). It is also agitating against Taiwan’s inclusion in the pact. Taipei Economic and Cultural Office in Australia representative Elliott Charng told a parliamentary inquiry in Canberra last month that Taiwan’s membership of the CPTPP would be of mutual

5

RBNZ begs Kiwis to stop pumping property

New Zealand’s housing market experienced another extraordinary rise in values in October, with values rising 2.1% over the month to be up 28.8% year-on-year, according to CoreLogic. All major markets also experienced extraordinary growth: Much like Australia, the rise in prices has come off the back of FOMO (“fear of missing out”) and a dearth

1

Immigration collapse delivers record low NZ unemployment, rising wages

From Statistics New Zealand: Key labour market measures showed an increasingly tight labour market, with unemployment and underutilisation near record lows, employment at an all-time high, and wage growth strong, Stats NZ said today. The seasonally adjusted unemployment and underutilisation rates fell to 3.4 and 9.2 percent, respectively, in the September 2021 quarter, while the

19

When will Aucklanders turn pitchforks on Jacinda Ardern?

Like Australia, New Zealand’s COVID vaccination efforts have been spectacular. As shown in the table below, 88% of the eligible (12+) population has received at least one vaccine dose, with 75% full vaccinated: This has moved New Zealand from global vaccination laggard towards leader: Auckland – New Zealand’s largest city of 1.7 million people –

17

NZ launches housing densification policy

Today, the Ardern Labour Government, supported by the opposition National Party, proposed a major building densification law change that will see up to 105,500 extra homes built over the next 5-8 years across New Zealand: The Government, with the support of National, is proposing to urgently change the Resource Management Act (RMA) to enable more

9

When will Aucklanders turn on Jacinda Ardern?

Like Australia, New Zealand’s COVID vaccination efforts have been spectacular. As shown in the table below, 85% of the eligible (16+) population has received at least one vaccine dose, with 66% full vaccinated: This has moved New Zealand from global vaccination laggard towards leader: Auckland – New Zealand’s largest city of 1.7 million people –

13

RBNZ hikes cash rate to 0.5%

The Reserve Bank of New Zealand (RBNZ) today lifted the cash rate from 0.25% to 0.5%, representing the first hike in seven years. Below is the statement: The Monetary Policy Committee agreed to increase the Official Cash Rate (OCR) to 0.50 per cent. Consistent with their assessment at the time of the August Statement, it

7

New Zealand officially abandons COVID elimination

Auckland has been in a lockdown since 18 August. Last week, New Zealand Prime Minister Jacinda Ardern stated that the government was still aiming to eliminate the virus. However, after ongoing double-digit new cases (see above chart), Ardern officially abandoned her elimination strategy, easing restrictions in locked-down Auckland. NZ Prime Minister Jacinda Ardern said the

11

So much for Jacinda Ardern’s “immigration reset”

Back in May, 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, which has

26

New Zealand drops sledge hammer on property investors

On 23 March, the New Zealand Ardern Government announced major property tax reforms targeted at investors, specifically: 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. Yesterday, the Ardern

6

RBNZ tightens macro-prudential screws. RBA delays

The Reserve Bank of New Zealand (RBNZ) today announced that it will tighten lending rules for mortgages from 1 November, but expects banks to comply with the “spirit” of the new rules immediately. Specifically, the new rules will see banks now restricted to just 10% of the new lending for mortgages that make up over

6

NZ housing swallows economy

New Zealand’s average house price has hit $1 million for the first time: New figures from OneRoof and its data partner Valocity show the typical cost of a property around the country increased 4.9% in the last three months and 27% since September 2020. The doubling of the national average property value in less than

25

New Zealand’s COVID outbreak worsens

The New Zealand Ministry of Health today reported another 62 new cases of COVID-19 in the community bringing the total number of locally acquired cases to 210: The total number of community cases in Auckland is now 198 and 12 in Wellington. Auckland’s lockdown was recently extended for a further week until 11:59pm on Tuesday

20

New Zealand’s COVID outbreak swells

The New Zealand Ministry of Health today reported another 41 new cases of COVID-19 in the community bringing the total number of locally acquired cases to 148: The total number of community cases in Auckland is now 137 and 11 in Wellington. Yesterday, Auckland’s lockdown was extended for a further week until 11:59pm on Tuesday

25

Immigration collapse driving up wages

Another day, another story about how the collapse in immigration is driving up wages and conditions for domestic workers that no longer have to compete for jobs with foreigners. This time the empirical evidence is from New Zealand, which in the years leading up to COVID ran a similar mass immigration policy to Australia: Skilled

14

Jacinda Ardern told to reopen immigration to lower wage costs

Anyone still arguing that immigration has no impact on wages only has to look over the pond to New Zealand, where Jacinda Ardern’s government is being lobbied to reboot immigration to relieve rising wage costs: “The dairy, horticulture, housing, services, health and broader public sector have all reported acute staff shortages, and called on the government

7

RBNZ: House prices “unsustainable”. Tightens macroprudential

Via the RBNZ this morning: The Reserve Bank of New Zealand – Te Pūtea Matua – will soon begin consulting on ways to tighten mortgage lending standards, Deputy Governor and General Manager for Financial Stability Geoff Bascand says. The action follows the signing of an updated Memorandum of Understanding (MoU) on macro-prudential policy with the Minister

4

Lending still in all the wrong places

Interest.co.nz’s David Hargreaves has posted the below chart showing that Kiwis continue to leverage big time into non-productive housing lending, whereas consumer lending has also rebounded hard. By contrast, lending to productive areas of the economy – businesses and agriculture – remains stuck in negative: The latest increase [in housing lending] means that the annual