New Zealand Economy

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

16

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

35

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

1

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,

8

Fitch warns on NZ property bubble

Fresh from Fitch this morning: Fitch Ratings-Sydney/Singapore-08 April 2013: Fitch Ratings says that challenges are increasing for New Zealand’s major banks with strong asset growth and fierce price competition potentially leading to asset bubbles. This in turn may impact bank financial strength and place negative pressure on Viability Ratings (VR). In a report published today,

17

RBNZ: fix housing supply & temper credit

By Leith van Onselen The Reserve Bank of New Zealand (RBNZ) yesterday gave a speech (below) entitled Perspectives on housing, which provided a useful overview of some of the factors driving New Zealand’s housing market and monetary/prudential policy. Below are some key extracts. On housing and the New Zealand economy: The RBNZ notes that New

17

NZ mortgage war heats up

By Leith van Onselen The competition for mortgage lending is heating up in New Zealand. Last month, government-owned KiwiBank announced that it would drop its six month fixed mortgage rate to just 4.79%, which is reportedly the lowest mortgage rate offered by a New Zealand bank for “many decades”. And today, ASB (owned by the

3

HSBC sees New Zealand improving

HSBC is out with a quick note on the latest NZ GDP figures, although according to them they are “so late that they are mostly history”: New Zealand’s GDP was weaker than expected, rising by only +0.2% in Q3 (market had +0.4%). Downward revisions meant y-o-y growth slowed to +2.0% (market had +2.5%). Growth was held back

16

NZ growth slows

New Zealand’s GDP stats came out this morning and have undershot expectations. Economic activity, as measured by gross domestic product (GDP), was up 0.2 percent in the September 2012 quarter, Statistics New Zealand said today. This growth follows revised growth of 0.3 percent in the June 2012 quarter. The main movements by industry this quarter were: construction (up 4.5 percent),

18

NZ’s economic omen for Oz

By Leith van Onselen Please find below an interesting economics research note from the Bank of New Zealand (BNZ) on the growing economic imbalances developing in the New Zealand economy, which is encapsulated by the -11% fall in exports over the past year and the 33% increase in home sales. The note provides a stark

8

RBNZ moves to prevent asset bubbles

By Leith van Onselen In April last year, outgoing Reserve Bank of New Zealand (RBNZ) governor, Alan Bollard, muted introducing ‘maco-prudential’ tools to prevent the formation of future asset price bubbles: “[New Zealand needs] to keep preparing for how we might deal with credit and asset price booms when they recur in the future,” Bollard

2

NZ growth weak, misses forecast

The New Zealand 4Q GDP results were released this morning and looks weak at first glance: The New Zealand economy, as measured by gross domestic product (GDP), grew by 0.3 percent in the December 2011 quarter, Statistics New Zealand said today. This latest result follows economic growth of 0.7 percent in the September 2011 quarter. The

43

An influx of bros

Following on from the recent release of ABS Data on the “Australian Bogan Exodus“, here’s an article from NZ’s leading financial news and opinion blog, interest.co.nz that got me thinking: The exodus of people from New Zealand to live permanently or long-term in Australia continued in February, with net departures across the ditch hitting a new