A review of things you need to know before you sign off on Thursday; house value growth peters out, construction activity wanes, commodity prices up, huge NZGB demand, swaps stable, NZD firmer, & more

Aussie households and businesses in aggregate strengthened their balance sheets between 2020 and 2023 because Govt deficit spending was high and the country had a very positive current account balance. 

We don't know how much housing may have gone up even more over there if there wasn't a capital gains tax. Most of the time ours are at a higher price to income level.

And regardless it generates revenue that allows them to do more things - lower GST, lower fuel tax, tax free threshold etc, which help everyone.

Australias housing didn't go up as much as NZs during the bubble of 2020-2022. Since then their interest rates have not increased as much as NZs.. 

Aussie has the same problem as all fiat currencies...something has to backstop all the debt.

The majority of Singapore apartments also have a tiny, often windowless room for the foreign (often Filipino) servant, who gets paid peanuts to work for their Singaporean bosses.

I lived in Singapore for over five years, and HDB (what you're referring to) is not state housing in New Zealand terms. It has some similarities, so people in the West get confused and think it's state housing.

The government subsidizes HDBs (around 85% of housing here) in the form of cheaper land (compared to the government selling the same plot to developers who would build private housing). The government hires developers to build houses and then (mostly) private companies to manage the estates. They are usually sold with 99-year leases, so effectively you're buying a long-term lease in a government-owned building. There are some restrictions on who can and cannot buy these, but to simplify, each family has the right to buy one and rent it out if they like, but they can't buy multiple HDBs and become landlords. You can also resell your HDB apartment to the next person after what's called the Minimum Occupation Period (usually five years after the construction).

In the long term, it allows wealth to be recycled across generations and encourages each generation to be smart with money, unlike in New Zealand, where a relatively small number of land-rich people keep getting richer by subdivising land forever to newcomers if feels.

To compare with social housing in New Zealand, where people rent monthly with rent heavily subsidized by taxpayers. You could argue that it's similar; however, land in Singapore today can easily reach $1 billion per plot ($250 million on the cheaper end of the spectrum). I would not say that taxpayers subsidize building of HDBs—it's just that the land is 'sold cheaper' to first-home buyers, unlike direct subsidies we have in New Zealand with Kiwibuild and rent allowances.

Knowing you, I think that might have needed a /sarc?

Crown / iwi ownership of land is the perfect solution for NZ. Snap us out of our settler mentality and get us focused on real enterprise.

The first settlers in the Wairarapa leased land from local Maori and the arrangement worked well for a while. Then the NZ Land Company marched over the hill and put an end to it - peasants work on the land, the gentry own it and extract rent. That's the way.

Doesn’t have to be ‘either /or’. Government leasehold housing is an excellent potential option for some of the population, including potentially some FHBs.

Yes, sorry, I was referring to the slight retreat between 2023Q4 and 2024Q1 and the higher mortgage rates we have seen over the last 6 months or so.

Interesting. I am doing similar work at the moment in a very different sector. I think there is a huge disparity between the really big players who dominate sales in NZ and have a lot of market power, and the fragile SMEs who are struggling to pass on cost increases to their customers (or are price takers - eg selling into world markets or local monopsonies). The data out tomorrow really tells you the story of the big players.

LMAO

FOMO (fear of missing out) on the part of buyers remains almost completely absent while a net 55% of agents now feel that prices are falling in their area of operation.

mean while wingman iceman dickheadman all say how prices are rising...  do you guys know what he means when he says net?

Reality is  a nasty surprise to some...   you can pretend all you want, but this summer is going to be a meat grinder for pooperty prices

and wait there is more...... ginzu knives everywhere...

One other point worth noting from the survey is that only a net 5% of agents this month said that they are seeing more first-home buyers in the market. This is down from 21% last month and a recent peak of 55% in January and before that 66% in August.

no one is interested in buying your shiteboxes at these prices

Unless you’re one of the rare few O/Os converting their unsold house to a rental where the rent will cover the outgoings because you weren’t a stupid O/O that borrowed against the house at the stupidity peak in 2021 to upgrade the cars, boat, and have overseas holidays. 

 

we will be fine with the rent price suggested by the prop mgr.  might have to top up $100 every month but that’s not unmanageable.

bonus is that as its been O/O for 10 years we can claim interest deductibility so swings and roundabouts. 

Hahaha yeah nah. Only in the dreams of a dyed in the wool DGM as part of a scenario to say that imported inflation would be rampant and interest rates HFL

Speaking of wool, the sheep farmers are experiencing massive deflation of income, live animal prices are down 2/3rds on 12 months ago... temporary blip, lets hope