New Zealand Economy

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NZ spills milk in China shock

From  Bloxo: This weekend New Zealand’s trade minister announced that some of its exported dairy products have potentially been contaminated with bacteria that cause botulism. The trade minister noted that they understand that exports to Australia, China, Malaysia, Saudi Arabia, Thailand and Vietnam have been affected. As dairy products account for around 25% of New

8

NZ: Rising house prices to force rate hikes

By Leith van Onselen Two bank economic reports have been released today anticipating ongoing strong house price growth in New Zealand irrespective of whether the Reserve Bank of New Zealand (RBNZ) implements loan-to-value ratio speed limits, which will force the RBNZ to raise interest rates from 50-year lows. First up is HSBC’s Paul Bloxham: New

7

Is the NZ housing market faltering?

By Leith van Onselen UBS has today released a short note arguing that the recent slowdown in growth of New Zealand housing finance commitments is unlikely to stem growth in house prices or prevent the Reserve Bank of New Zealand’s (RBNZ) from implementing loan-to-value ratio (LVR) speed limits on new lending: As we wait for

15

RBNZ to impose tight controls on high LVR lending

By Leith van Onselen From Interest.co.nz’s Bernard Hickey today comes news that New Zealand’s central bank and prudential regulator, the Reserve Bank of New Zealand (RBNZ), is about to implement speed limit controls on high loan-to-value (LVR) mortgage lending: Two banking sources have told me the Reserve Bank advised them informally on Friday that it

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NZ Finance Minister argues to free-up land supply

By Leith van Onselen New Zealand’s Finance Minister, Bill English, has today firmly argued against urban containment policies that are contributing to the current blowoff in the Auckland house price bubble. From Interest.co.nz: Finance Minister Bill English has spoken out against “compact cities” saying that they drive up house prices. In a speech to the

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Economists still blind on the housing supply-side

By Leith van Onselen Interest.co.nz has today posted an interesting article quoting Westpac Bank economists on the Auckland housing market, where the stratified median house prices hit a record $634,000 in June (see next chart). From Interest.co.nz: The rapidly heating Auckland housing market is being driven primarily by buyers’ expectation of capital gains – not

23

Kiwis raid retirement accounts for housing

By Leith van Onselen The New Zealand housing market appears to be getting out of control. Amid rapid price growth, particularly in supply restricted Auckland and Christchurch:     Increasing mortgage debt: Rising average mortgage size: And near record low inventory: Young Kiwis are now raiding their retirement accounts – known as Kiwisaver – in

4

RBNZ signals loan limits are nigh

From the RBNZ: The current overheated housing market is a threat to future financial stability and the Reserve Bank is seriously considering the use of macro-prudential tools to help moderate house price inflation pressures. Macro-prudential policy is intended to be used as needed, to reduce significant but transitory risks affecting the broad financial system. “With

25

Tensions build over RBNZ LVR limits

By Leith van Onselen Tensions are building between the New Zealand National Government and the Reserve Bank of New Zealand (RBNZ) over the RBNZ’s plan to implement limits on high loan-to-value ratio (LVR) lending in a bid to allow it greater flexibility to lower interest rates and take pressure off the overvalued kiwi dollar without

13

RBNZ warns on housing risks

By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) today released its June Statement of Monetary Policy (SoMP) following its decision to leave the official cash rate (OCR) on hold at 2.5% (see next chart). The SoMP contains quite a lot of discussion on the New Zealand housing market and the likelihood of

4

RBNZ targets high LVR lending

By Leith van Onselen Following last week’s Memorandum of Understanding between the Reserve Bank of New Zealand (RBNZ) and the New Zealand Government, the RBNZ has today outlined how it will use macro-prudential policy tools to target high loan-to-value (LVR) mortgage lending – i.e. mortgages where the deposit or equity in the property is less

4

S&P downgrades NZ banks

By Leith van Onselen Back in March, Standard and Poors (S&P) released a report warning about the increasing risk of a New Zealand property crash and noting that Australia’s Big Four banks, which own New Zealand’s Big Four, would be on the hook in the event that they needed to be bailed-out (my emphasis): In

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RBNZ readies macroprudential arsenal

From Banking Day: The Reserve Bank of New Zealand has agreed a memorandum of understanding with Finance Minister Bill English that will give the bank the power to limit low equity mortgages as soon as July. …”These new tools…can promote financial stability by helping to build capital buffers and reduce incentives for speculative behaviour, which can contribute

9

Unlike Australia, NZ Budget tackles housing affordability

By Leith van Onselen While the major political parties continue to ignore Australia’s highly unaffordable housing, the 2013 New Zealand Budget, released earlier today, announced a variety of measures aimed at boosting supply and improving overall housing affordability. Measures announced included: Introduction of the Housing Accords and Special Housing Areas Bill, which will enable the

3

IMF warns on NZ housing market

By Leith van Onselen New Zealand house prices surged again in April, with the national stratified median price hitting a record $412,500, but prices in New Zealand’s biggest city – Auckland – falling slightly from last month’s record to $595,500 (see next chart). House price growth across New Zealand is accelerating (see next chart). Nationally,