New Zealand Economy

23

Kiwis flood home from Australia (members)

By Leith van Onselen Yesterday, Statistics New Zealand released its permanent & long-term migration figures, which revealed that New Zealand net migration is booming and Kiwis are returning home from Australia: In the June 2014 year, permanent and long-term (PLT) migrant arrivals numbered 100,800 (up 14 percent from 2013), the first time more than 100,000

0

NZ CAD falls on export reliance

by Chris Becker NZ just printed its current account deficit (CAD) for the March quarter, which fell by almost half from the last quarter, all on the back of agricultural exports. It is still elevated as measured by a percentage of GDP – some 2.8% although this is down from 3.9% in the previous 12

3

RBNZ jawbones on currency and rate hike forecast

by Chris Becker Following the rise in the official cash rate in New Zealand yesterday, the RBNZ has come out again in talking its currency down, focusing on falling commodity prices not just the interest rate differential with the other major currencies. From Bloomberg: The Reserve Bank of New Zealand believes currency traders are mispricing

6

RBNZ hikes rates to 3.25%

by Chris Becker As reported earlier in Macro Morning, the Reserve Bank of New Zealand (RBNZ) has hiked its official cash rate 0.25% to 3.25%: The main reasons indicated are house price inflation and very decent GDP prints (mainly due to reconstruction in Christchurch, not necessarily an indicator of a strong underlying economy) Sound familiar?

32

NZ PM defends the population ponzi

By Leith van Onselen New Zealand Prime Minister, John Key, has lept to the defence of New Zealand’s high immigration intake, refusing to concede that it has placed upward pressure on house prices or interest rates. From Interest.co.nz: Key denied the current rise in migration was responsible for higher interest rates. “No, I don’t think

17

Housing slowdown risks derailing NZ economy

By Leith van Onselen The New Zealand Institute of Economic Research (NZIER) has today released its Quarterly Predictions report, which sees dangers ahead for the New Zealand economy on account of the slowing housing market: The New Zealand economy has been recovering from the recession. But slumping house sales are a significant risk to our

6

RBNZ shows APRA the way on macroprudential

By Leith van Onselen While the Australian Prudential Regulatory Authority (APRA) continues to act concerned over the re-emergence of risky lending, and has released a draft Prudential Practice Guide 223 Residential Mortgage Lending, its counterpart across the pond, the Reserve Bank of New Zealand (RBNZ), continues to enjoy success from its cap on high loan-to-value

17

NZ housing market loses steam

By Leith van Onselen New Zealand’s housing market is showing further signs of slowing, with the Reserve Bank of New Zealand’s (RBNZ) latest survey of households showing the lowest percentage of people expecting house price gains since 2012. From Interest.co.nz: …in the past three months the net percentage of people expecting house price gains in

28

NZ Government takes backwards step on housing

By Leith van Onselen After making good progress on housing policy, New Zealand’s Prime Minister, John Key, has taken the retrograde step of claiming that housing affordability is not that big a problem after all. From Interest.co.nz: Prime Minister John Key has rejected suggestions that housing is much less affordable for first home buyers in

7

RBNZ warns on debt, housing values and China

By Leith van Onselen The marvelous Reserve Bank of New Zealand (RBNZ) has released its bi-annual Financial Stability Report, which in true RBNZ fashion contains some blunt assessments about risks facing the New Zealand financial system and broader economy. While acknowledging that the financial system is currently sound, the RBNZ remains concerned about New Zealand’s

7

Is macroprudential working in New Zealand?

By Leith van Onselen The Real Estate Institute of New Zealand (REINZ) has released its April house price results, which registered a modest increase in values nationally, with prices also hitting a new record. In the month of April, the national stratified median price rose by 0.1% to $447,500. Prices rose by 2.0% in Auckland

6

RBNZ threatens currency intervention

By Leith van Onselen While Australia’s Reserve Bank has taken a back seat, and let the Australian dollar run, the Reserve Bank of Australia (RBNZ) has today warned markets that it could intervene and sell NZ dollars if the currency remains high. Speaking at the DairyNZ conference in Hamilton this morning, RBNZ governor, Graeme Wheeler,

6

RBNZ hikes, gets hawkish

By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) has once again hiked the official cash rate (OCR) by 0.25% to 3.00% on the back of growing strength in the New Zealand economy. From the Statement: New Zealand’s economic expansion has considerable momentum, with GDP estimated to have grown by 3.5 percent in

19

RBNZ slams the population ponzi

By Leith van Onselen The Reserve Bank of New Zealand’s (RBNZ) Michael Reddell has written an interesting paper questioning the merits of New Zealand’s high immigration program, which appears to have crowded-out (through higher interest rates and a high average real exchange rate) other productive investment, lowering living standards in the process: Over the last

20

NZ Government sets housing affordability target

By Leith van Onselen New Zealand’s Housing Minister, Nick Smith, has set an ambitious target to improve the affordability of New Zealand housing back to its long-run average of four times household incomes. From Interest.co.nz: “The target that I’ve given to my ministry goes back to those long term affordability measures – which is the

24

NZ house prices hit record as buyers strike

By Leith van Onselen The Real Estate Institute of New Zealand (REINZ) has released its March house price results, which registered a significant bounce in values nationally, with prices also hitting a new record. In the month of March, the national stratified median price rose by 3.4% to nearly $427,000. Prices rose by 0.4% in

14

NZ Treasury weary of high immigration

By Leith van Onselen The New Zealand Treasury has released a new research paper questioning the merits of high immigration, and recommending a reduced immigration intake in the event that the economy is unable to adequately cope with population pressures: Reviewing the literature, the balance of evidence suggests that while past immigration has, at times,

8

RBNZ: LVR caps lop 2.5% off Kiwi house prices

By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) has released its quarterly bulletin, which contains a frank assessment of its macroprudential caps on high loan-to-value ratio (LVR) mortgage lending. Its conclusion? That the LVR caps have probably reduced New Zealand house prices by around 2.5%: It will be some months before the

39

Greenies are to blame for high house prices

By Leith van Onselen After last month taking the fight to Auckland’s entrenched anti-sprawl “NIMBYs” (Not In My Backyard) and “BANANAs” (Build Absolutely Nothing Anywhere Near Anyone) groups in a speech at an Auckland Chamber of Commerce and Massey University luncheon, and earlier this month attacking town planners for restricting the growth of housing supply,

25

NZ’s English ramps-up housing supply-side attack

By Leith van Onselen After last week taking the fight to Auckland’s entrenched anti-sprawl “NIMBYs” (Not In My Backyard) and “BANANAs” (Build Absolutely Nothing Anywhere Near Anyone) groups in a speech at an Auckland Chamber of Commerce and Massey University luncheon, New Zealand’s Deputy Prime Minister and Finance Minister, Bill English, has today attacked town

18

NZ leaders put OZ elites to shame on housing

By Leith van Onselen New Zealand continues to leave Australia for dead when it comes to housing policy. Unlike the Reserve Bank of Australia (RBA) and the Australian Prudential Regulatory Authority (APRA), which continue to hose down concerns about risks building in the Australian housing market, New Zealand’s central bank and prudential regulator, the Reserve

11

RBNZ smashes high LVR mortgage lending

By Leith van Onselen The Reserve Bank of New Zealand’s (RBNZ) macroprudential caps on high loan-to-value ratio (LVR) mortgage lending, introduced in October last year, continue to work their magic, with the share of 80%-plus LVR mortgages issued by New Zealand’s banks registering another fall (see next table). According to Interest.co.nz: As of October 1,

8

NZ home ownership rate slumps

By Leith van Onselen Statistics New Zealand last week released the results from the 2013 Census, which revealed another fall in the country’s home ownership rate (see below chart). According to the Census, the share of New Zealand households owning or paying-off a home fell to 64.8% in 2013, from 66.9% at the 2006 Census,

7

S&P warns on New Zealand housing

By Leith van Onselen Ratings agency, Standard & Poors (S&P), has again warned that New Zealand’s housing market is vulnerable to a sharp correction, especially if there is an external economic shock. While S&P does not expect a big increase in credit losses, it does “consider the stand-alone credit profiles of all banks and credit