New Zealand Economy

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

4

RBNZ cleared to introduce debt-to-income mortgage curbs

Recent data from the Reserve Bank of New Zealand (RBNZ), collated by Interest.co.nz, showed that Kiwis leveraged big time into property ahead of the Ardern Government’s investor tax reforms (announced in late March). The proportion of new mortgages taken out with debt-to-income (DTI) ratios above five soared over the March quarter, with all borrower groups

7

NZ property market powers past Ardern’s investor tax reforms

In March two key reforms came into effect designed to take the steam out of New Zealand’s fast inflating property market. First, the Reserve Bank of New Zealand (RBNZ) reintroduced loan-to-value ratio (LVR) mortgage restrictions, which from 1 March 2021 required both investors and owner-occupiers to hold bigger deposits: Second, and more importantly, the New Zealand

3

Trans-Tasman bubble boosts international travel

The introduction of the trans-Tasman travel bubble on 18 April 2021 has boosted international travel, according to new provisional travel statistics from the ABS. Arrivals of non-Australian citizens doubled in May to 71,060 from 35,210 in April: This was driven by a 32,000 increase in arrivals from New Zealand: In a similar vein, departures of

36

Memo to hospitality industry: it’s a “labour market”

For months we have witnessed Australia’s hospitality industry whine over labour shortages and lobby the federal government to give it easier access to foreign workers. At the same time the hospitality industry contradictorily called for an extension of JobKeeper and has lobbied to freeze the minimum wage. We are seeing the same shenanigans over the

7

Lending growth in all the wrong places

Interest.co.nz’s David Hargreaves has posted the below stunning chart showing that Kiwis have leveraged 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 – continues to fall: While the mortgage borrowing has been mounting and mounting, business lending

33

Ardern Labour shows the way on immigration reform

Earlier this month, the Ardern Labour Government of New Zealand 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

5

Kiwis leverage big into property

New data from the Reserve Bank of New Zealand, collated by Interest.co.nz, shows that Kiwis leveraged big time into property ahead of the Ardern Government’s investor tax reforms (announced in late March). The proportion of new mortgages taken out with debt-to-income (DTI) ratios above five soared in the March quarter, with all borrower groups rising:

43

Jacinda Ardern slams door on wage crushing immigration

A fortnight ago, Jacinda Ardern’s Labour Government tasked the New Zealand 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