Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
Kiwibank cut tow fixed rates, the most interesting being their one year to 4.95%. More here. Heartland Bank raised its interest rate for reverse mortgages to 7.50%.
TERM DEPOSIT RATE CHANGES
There have been a range of term deposit rate rises from many institutions, including TSB, First CU, Christian Savings, WBS and the Police Credit Union.
MORE SELLERS THAN BUYERS
Buyers are taking control of housing markets nationwide as asking prices drop. The number of homes for sale has more than doubled year-on-year, with the national average asking price declining by -$87,000 from its peak. It will get tougher from here. There is now 27 weeks of inventory available for sale at the current sales-rate and that is up from 23 weeks in June, and up from just 8 weeks in July 2021. It is especially tough in Northland and Wairarapa.
TOPPING OUT?
Almost 1000 new homes a week were being consented in June, almost 51,000 for the year to June. That was part of $31.5 bln of new building work consented in the same year. The number of consents for houses is declining, those for townhouses rising. Auckland and Canterbury accounted for 73% of all annual building consent growth in the past year. Wellington just 11%. But with the broader market dynamics working against the housing market (inflation, labour shortages, higher interest rates, declining demand), this may be a high-water mark for house building.
A PHONE AS A CONTACTLESS MERCHANT TERMINAL
BNZ has launched BNZ Pay, a mobile app for retailers that transforms an Android mobile phone into a contactless payment terminal. Enabled by new Tap-on-Phone technology, the app is the first of its kind in New Zealand and will provide the lowest cost solution in the market for enabling contactless card acceptance. It is especially useful for small and micro businesses because fees are said to average 1.1% for all contactless cards.
ANZ & ASB DEFENDING CLASS ACTION CASES
ANZ and ASB have acknowledged class action cases filed against them last year will proceed as opt-out representative action. The cases relate to Credit Contracts and Consumer Finance Act disclosure requirements. ANZ says the High Court has ruled the proceedings will go ahead as an opt-out representative action brought by one representative plaintiff on behalf of customers who entered into a home loan or personal loan with ANZ NZ between 6 June 2015 and 28 May 2016 and requested a variation to that loan during that period. ASB says the proceedings against it are an opt-out representative action brought by four plaintiffs on behalf of customers who had a home loan or personal loan with ASB between 6 June 2015 and 18 June 2019 and who requested a variation to their loan during that time period. Both banks are defending the proceedings.
KEY EXPORT SECTOR SUDDENLY VERY GRUMPY
Farmers aren't positive about the future of their industry, but are much more sanguine about their own personal prospects although more expect profitability to decline. The six-monthly Fed Farmers confidence survey found from more than 1200 farmers who responded to the July survey. A net 48% of them considered current economic conditions to be bad, down 56 points from January when almost 8% of them considered conditions to be good. Climate Change Policy & ETS; Regulation & Compliance Costs; Input Costs; and Debt, Interest, Banks are the current top concerns. And with raised awareness of Foot and Mouth Disease in Indonesia and Malaysia, biosecurity has rocketed up the list of top concerns that farmers want the Government to confront.
SMALL, UNCOMPETITIVE, & CLOSING
Fonterra has today announced it will be closing its small milk powder plant at its Brightwater site near Nelson in April 2023. However, milk collection and associated activities will continue at Brightwater as Fonterra moves its small milk transfer activities there from Tuamarina, Marlborough.
JULY STRONG FOR THE NZX50
Despite F&P Healthcare (FPH, #1) falling -2.8% last week, the overall NZX50 capitalisation rose +2.0% over the week to be up +6.1% for the month. Last week's big gainers were Mainfreight (MFT, #4) up +9.2% and enough to move up past EBOS (EBO, #5). Skellerup (SKL, #30) was up +7.9% in the week. Also moving up were the listed property sectors. The general property sector was up +2.6% for the week with Precinct (PCT, #13) and Vital Healthcare (VHP, #23) up more than +4% each. The Retirement/Rest-home sector rose +3.8% for the week largely on the back of Summerset's +5.8% rise (SUM, #14). And the energy sector had a good one too, up +3.0% with Vector (VCT, #25) up +5.7%.
A GOOD MODEST/MODERATE EXPANSION
The first of the two Australian factory PMIs was released today, and it shows little change with a good moderate expansion continuing. The other local version recorded a decline to a more modest expansion.
FALLING
And Australian house prices are losing altitude quickly. The CoreLogic home value index, covering the eight major capital cities, fell -1.4% in July, following a -0.8% slip in June and a -0.3% dip in May. The July fall is the largest monthly decline since 1983, and both Sydney and Melbourne are leading the way down.
NOT AS BAD, BUT NOT GOOD EITHER
Defying the Chinese official version which has its factory PMI slip into a contraction, the private Caixin PMI fell but not into contraction. The fall was more than expected. There were softer increases in output and new orders, employment fell at a quicker pace as firms cut back, and input cost inflation slowed notably, with prices charged falling again.
LATVIA GETS TURNED OFF
In Europe, Latvia became the latest in a string of European countries to be cut off from its supply of Russian natural gas from Gazprom. But the Latvians say they are still buying Russian gas from unnamed 'others'.
SWAP RATES HOLD
Wholesale swap rates were probably little-changed today. The 90 day bank bill rate was up +3 bps to 3.17%. The Australian 10 year bond yield is now at 3.10% and up +3 bps from this morning. The China 10 year bond rate is now at 2.75% and now its lowest since the start of 2022. The NZ Government 10 year bond rate is little-changed at 3.41%, and matching the earlier RBNZ fix for this bond which was up +1 bps to 3.41%. The UST 10 year is now at 2.66% and down -3 bps from this time Friday but little-changed today.
EQUITIES UP MODESTLY
The NZX50 is up +0.3% in late trade today, boosted by Intratil's +6.6% daily gain (IFT, #6). A rise by F&P Healthcare (FPH, #1) is helping too. These are offsetting a big slump by Pacific Edge (PEB, #36) which is down -40% today, and by EBOS (EBO, #5) which is down -1.5% today. The ASX200 is up +0.4% in early afternoon trade. Tokyo is up +0.5% in early Monday trade, Hong Kong is down -0.2% and Shanghai is up a minor +0.1% so far.
GOLD SLIPS
In early Asian trade, gold has fallen -US$4 from this morning, now at US$1,763/oz.
NZD FIRMS MARGINALLY
The Kiwi dollar has firmed marginally today to 63 USc. Against the AUD we are up 90.1 AUc. Against the euro we are at 61.6 euro cents. That means our TWI-5 is now at just on 71.2.
BITCOIN SLIPS
Bitcoin is now at US$23,418 and down-1.3% from where we opened this morning. Volatility over the past 24 hours has been modest at just under +/-2%.
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25 Comments
The housing market is destined to remain flaccid for a long time to come.
How longs long?
Nats get in 2023
2024 sees migration taps open, along with a bunch of other stimulus.
Assumes the wider world doesn't totally pooh the bed in the time being.
That isn't sustainable though, because infrastructure is already stretched. I am not sure government spending is even keeping up with inflation, let along population growth. At some point int he future, someone will have to pay the piper. I had hoped NZ would change for the better due to Covid, but it looks like we are going back to the past, and ignoring the climate crisis.
Why would Covid be the environment that brings about huge systemic change?
Governments world over have struggled to make decent decisions in short timeframes, and are bleeding cash like nobody's business. Expecting fundamental frameworks to change also is pretty ambitious.
It does however create a great democratic environment for change down the track.
The skilled professionals are migrating in the other direction.
It will be a long time before the unskilled workers that are willing to move here from less developed countries are willing and able to cough up for an Auckland rot box.
1 AKL rot box = $600pw / extended family of 10 = lets give NZ a try the brochures look good and we can always hold out until we can get into Oz.
Maybe pretend for a second that the life people complain about NZ, is highly desirable for billions of people.
You only need a fraction of a percent of those people to afford it.
You only need a fraction of a percent of those people to afford it.
Disagree. The 1%ers can and do live much better than in NZ or Auckland suburb. You've been drinking the Kool Aid.
I'm not talking about the uber uber wealthy, although many of those also seem to enjoy moving to NZ, along with many other places.
I'm just pointing out that the average kiwi wanting to climb the ladder may not consider the large amount of people below them that'd happily trade places. But that's how human minds work, people usually are caught up in what others have that they don't, than the other way round.
One look at the cost of living here and they will nope back to somewhere more affordable.
Latvia is still buying Russian gas from “unnamed others.” For someone amateurishly fond of history, this is a note striking quite some resonance. Centuries on centuries of warfare, invasion, occupation, to and fro, Swedes, Russians, French, Germans, Russians again, all lived & fought out on top of a near Arctic climate and regardless, the wheels of intrigue and survival still resolutely turn. Where there is a will, there is always a way. Very difficult for the West to get even the faintest glimmer of the historical complexities at play here that are only imaginable.
The French, Germans, Swedes and even Latvians are part of "The West".
The Latvians too? True too! But since when?
It is nuanced. Latvians aren't Cold War West.
They’re not part of the West, but nothing stops them from believing that they are.
“HW Richardson's big hydrogen play”
An article behind the NZ Herald paywall.
Allied Petroleum and Allied Concrete have a plan to fuel their trucks with a hydrogen/ diesel mix and they have trialled a truck on the road. It’s the most viable hydrogen strategy for NZ Transport I have seen.
That's not a very high bar.
My circles - including physics and engineering people up to/at Professor level - have crunched the EROEI of hydrogen.
It's a dead end. https://oilprice.com/Energy/Energy-General/The-Energy-Mix-that-will-hel…
They're flogging a dead horse. Or - possibly - virtue-signalling so they can can-kick.....
I haven’t heard much about EROI recently, mostly the world is obsessed with emissions, ask the farmers which term they recognise.
If the company concerned is prepared to invest their own money it probably is of advantage to them and probably to New Zealand.
Truck, meet petrol station, sounds a good plan to me, it happens every day, now, and if it reduces truck emissions, even better.
You're spinning.
Spot it a mile off. Apparently nobody talks about something, therefore it doesn't exist? Spare me.
And it's NOTHING to do with 'investing'. Investing assumes a return. Poweringdown (I've known this for years) cannot support 'investment' across the board, so probably won't support niche investment either.
Emission are not the problem. You are not alone in peddling the hype, though: https://www.resilience.org/stories/2022-07-28/making-waves-electric-shi…
And EROEI doesn't go away because nobody wants to discuss it. Nor did the Titanic sinking; physics is funny like that.
My limited understanding is that electricity that is currently such low value we almost have to pay a foreign company to use it to make aluminium will now be used to power trucks without emissions. Sounds like a win to me.
The nzherald article here smells like an advertorial, but NZ Post has taken delivery of a hydrogen truck, compliments of a nice govt subsidy. Sould be doing deliveries next month.
Hyundai NZ chief executive Andy Sinclair said it's possible that 10 per cent of his heavy vehicle sales will be hydrogen within three years.
https://www.nzherald.co.nz/business/hyundai-nz-reveals-its-first-hydrog…
Kind of reminds me of like 30 years ago when high mileage cars tried to switch to LPG. Could be just another expensive mistake.
Could be. But there were a lot of naysayers about hybrids and electric passenger cars and they seem to now be the future.
I think it is pragmatic decision making by a group that knows what they are doing, in contrast to the government efforts for example.
It feels like a Rocket Lab effort to me.
It is a government effort. NZ Post is owned by the govt, and the governement is providing a direct subsidy from it's 'decarbonising transport slush fund'
If we saw private companies spending their own money, that would be something.
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