Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
Banks rushed our matching -50 bps floating rate cuts following the OCR decision. Details here. Westpac also cut some fixed rates. All rates are here. Update: ANZ has cut fixed rates, and their new 2 year is now 4.99%.
TERM DEPOSIT/SAVINGS RATE CHANGES
A number of banks also cut their savings account interest rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here. Update: ANZ has cut its TD rate card rather hard..
RBNZ / OCR RESULT
A full review of today's -50 bps OCR cut are here.
VOLUMES UP, PRICES DOWN
The REINZ reported that the number of sales transactions were up in January but house prices tumbled. In fact, Auckland's median price dropped -$51,000 in January, and the national median was down -$30,000 from December. The trend is consistent with the recent reports about asking prices. Vendors are increasingly motivated in a falling market.
DAIRY AUCTION RESULTS
The full dairy auction overnight saw overall prices slip -0.55% from the prior full event two weeks ago.
BOTH TRACKS PROGRESSING
Fonterra is pushing ahead with its multi-billion dollar consumer brands divestment. Today they said if it decides to list its consumer brands on the share market, the spun-off company will be called Mainland Group.
BACK ON TOP
The combination a higher farmgate prices, and lobbying that has the Government wrapped around their little finger has farmers feeling more optimistic than they have been for 10 years. A Federated Farmers survey shows 'a significant shift in the mood of rural New Zealand'.
SEEKING FAVOURS
Pressing their new-found influence, Federated Farmers is going after the Reserve Bank. They say the central bank is ‘punishing rural NZ’. They want Finance Minister Nicola Willis to force the Reserve Bank to loosen its capital requirement rules to make rural lending more affordable. (She will probably be compliant. After all, if she prevaricates, both ACT and NZ First will make that same pitch to farmers, and the National Party can ill-afford to lose rural seats. Good public policy will come second, and is unlikely be defended politically by National.)
WINNING OF COSTS TOO
And on the farm expenses front, things are looking rosy as well, with overall farm expenses actually down -0.1% in December from the same quarter a year ago. And low inflationary pressure is across the board for sheep, beef, dairy and horticulture farmers.
TRACTOR SALES STAY VERY LOW
But despite all those wins, farmers haven't yet opened their wallets. In January only 154 new tractors were registered and well below the ten-year average for a January of 194.
NZX UPDATE
The NZX50 is up +0.3% in 3pm trade, up +1.4% over the past week, but unchanged over the past month. There are 40 gainers today, led by Fletcher Building (+4.1%), Chorus (+2.1%), Ryman (+1.6%), and Meridian (+1.4%). Going the other way, there are 43 decliners, led by EBOS (-4.6%), SkyCity (-2.0%), Intratil (-1.1%), and Vector (-1.0%).
FBU'S STRUGGLES GO ON & ON
Fletcher Building has reported another 'challenging' half-year, and -$134 mln loss. The company says 'macroeconomic pressures' are expected to persist and economic activity to remain subdued at 'below mid-cycle levels' for the remainder of the financial year
PPI UP +3.0%
Input prices for producers were rising at a +3.0% rate in December, down from almost +5.0% in September, but up from +1.9% a year ago. The productive sector is still facing inflationary pressures, and at some point they will flow through to consumers - either in higher prices, or unprofitable companies needing restructuring or liquidation. The capital goods price index is particularly interesting for Q4-2024. It is up only +1.6% from a year ago and down from +3.7% in December 2023. But the costs of residential housing as a sub-component of this , was up +14.0%, a faster rise than a year ago. But with market prices for housing now falling, this is clearly not sustainable.
VISA NZ FILES FIRST FINANCIAL STATEMENTS IN A DECADE
Visa (Worldwide) New Zealand Ltd, which provides marketing support and software development support services for global cards and payments behemoth Visa Group, has posted its first financial statements to the NZ Companies Office in 10 years. For the September 2024 year, they show revenue of almost $103 million, tax of $2.3m, profit of $9m, assets of $124m and liabilities of $89m. In the Sep 2014 year, revenue was $3.2m, tax $185,664, profit $288,267, assets $4m and liabilities $3.5m. NZ payments are processed in Singapore where the revenue is also booked.
SWAP RATES HOLD
Wholesale swap rates are likely to be unchanged, but keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged at 3.81%. The Australian 10 year bond yield is up +7 bps at 4.57%. The China 10 year bond rate is unchanged at 1.71%. The NZ Government 10 year bond rate is up +3 bps at 4.73% while today's RBNZ fix was at 4.73% and up +4 bps. The UST 10yr yield is now just on 4.50% and up +1 bp from yesterday. Their 2yr is also up +1 bps at 4.27%, so that positive curve is still at +24 bps.
EQUITIES MIXED AGAIN
The NZX50 is up +0.1% in late Wednesday trade. And the ASX200 is down -0.6% in afternoon trade. Tokyo is down -0.3% in early Wednesday trade. Hong Kong is down -0.4%, but Shanghai is up +0.5% its open. Singapore has opened up +0.4%. Wall Street was up +0.2% on the S&P500 in Tuesday trade.
OIL FIRMER
The oil price is up +US$1 from yesterday, now just on US$72/bbl in the US, and at over US$76/bbl for the international Brent price.
CARBON PRICE DIPS
The carbon price is still within its range, but today is down -50c at NZ$62.50/NZU. The next release of units at the official auction is on March 19, 2025. But that auction's floor price is $68/NZU, so it is heading for a failure. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD UP
In early Asian trade, gold is up +US$43 from this time yesterday, still at US$2938/oz.
NZD SOFT
The Kiwi dollar has fallen -20 bps from this time yesterday, now at 56.9 USc. Against the Aussie we are down -50 bps at 89.6 AUc. Against the euro we are down -10 bps at 54.5 euro cents. This all means the TWI-5 is just under 67 and down -20 bps.
BITCOIN LITTLE-CHANGED AGAIN
The bitcoin price is down -0.7% from this time yesterday, now at US$95,613. Volatility of the past 24 hours has still been modest at just on +/- 1.8%.
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110 Comments
I would treat that view with some caution here, the US pulling out of Nato (or is it? maybe just asking them to fund themselves) is such a cunning plan, if they have to gear up to defend themselves what kit are they going to purchase.... that's correct US kit. I doubt they will buy russian or chinese kit....
Its such a cunning plan you could pin a tail on it.
did you see the ETF for European arms stocks it went hockey stick as JD Vance opened his mouth .... but they are too far behind us for first round purchases.
Not sure a m.g. can sink ships or destroy infrastructure 100s of km away.... but by all means spend millions to build (and train pilots) aircraft so they can launch weapons that cost 100s of thousands (or millions) a time to (perhaps) destroy a multitude of cheap and nasty drones.
You wouldn't be targeting drones, you'd be targeting your enemies supplies, transport links, command centres, troop concentrations, etc.
But instead of doing a handful every week or two, you'd be doing hundreds a day. While moving your front forward.
These drones are an accessory to a static front. They're also fairly new, invariably there will be a counter to these cheap suicide drones.
Oh right, it was all part of the plan.
And yet after spunking away $15 billion a gap infested barrier a record number of immigrants flooded into the country across the border. So many in fact that Trump stood and won on a platform of stopping the illegals.
Only required the one brain cell to understand that was an epic failure and waste of taxpayer money, some people did get very rich though so...
Who rolled out the welcome mat?
https://www.theguardian.com/us-news/article/2024/may/23/senate-democrat…
Remember all the excitement back in October 2024, 248 comments. "Off to the races 🥂", "Be quick", Why are there less than 100 comments today with the 50bps cut? Where’s the energy from the property investors?
https://www.interest.co.nz/economy/130158/reserve-bank-delivers-double-…
they are either angry at NAct for not restarting the Ponzi, angry at Orr for lifting and making the recession....
bargaining, how could they have played this better.... as the year goes on it will move into
Despair, i now do not have the spare 1,2 or 3 mil in my retirement fund.
you are not just dealing with a housing market ... Its my Bloody house dennis!
Luxy is going to wear it, not by people voting Labour but possibly moving to NZ First Act or just not voting....
No Rookie Investor ever blames themselves do they....
Pardon spelling and grammar, 2 IPAs deep
Government has realised that restarting the Ponzi is now impossible. So their best strategy is to make the house price crash sound like it was their intent all along and take all the credit for making housing affordable again.
It's a good story to spin. Shame for all the 50+ year olds whose pensions relied on property prices.. but they did make the age old key mistake to trust the politicians..
Trump and Musk are setting the pace now.. we have to follow.
It will be an interesting dynamic, lots of the young who would have benefited the most from house falls left when National said they were basically going to try to re-inflate the Ponzi, so the majority of people left are the ones that voted for them to re-inflate it. Tend to agree with IT Guy, in their anger they'll shift to the parties that stoke anger: ACT and NZF.
Note the limited condemnation of Destiny Church savages beating up 16 year old teenagers and librarians from Seymour and ACT.
As some of us were pointing out at the time it’s possible that house prices remain flat or continue to fall as interest rates drop - in reflection of just how bad the economy is getting. These 50bps cuts in OCR appear to be keeping prices steady - but nowhere near enough to lift prices. What happens when they stop dropping? Flat for a very long time as the economy slowly recovers?
what price metric provides the support?
yield = no
affordability = no
It seems to me that the sellers are chasing a limited number of buyers down, and that there is no volume on the bid in the foreseeable distance, in fact the bid is probably going to keep backing away.... its probably a mirage, fabricated by real estate agents to get the listing, who immediately try to manipulate the seller to meet the market auction > PBN > price > different agent rinse and repeat
Could have summarized this before posting. I'll do it for you:
Maccy B takes a look at the Aotearoa Ponzi in all its recent fragility.
New Zealand’s housing bubble has burst after recording one of the world’s largest house price increases during the pandemic.
According to the Real Estate Institute of New Zealand, real inflation-adjusted national home values have collapsed to their pre-pandemic level.
Classic head and shoulder formation, back to 2012-15 prices to find a bottom.
I am seeing that on the sites that developers purchased, at the time everyone in that suburb valued there pooperty as if 8 townhouses where on every site in the suburb, (not sure where 8 times the suburb population was ever going to come from) and that the people bought the suburb because they wanted a 600sq m backyard to play in...
I saw this in Glendowie , at the peak 4k a sq m for any site, 4.3k if a corner site (more density could be approved)
but that suburb was what it is as people had exec homes and pools etc etc, it was never going to be all 3 story townhouses.
nevertheless there was a brief window where you could take advantage of the developers stupidity...
now we have to find what they are really worth I think that suburb goes back to a much lower price point, interior 1.5-2mil and the stuff with sea views is now orphaned there are not enough 3.5-5.5 buyers to buy all that sea view, and now you can get Takapun etc sea views cheaper,,, its going to be a slippery slide down from here across Auckland as one by one owners realise that 2021 prices where delusional.
Classic head and shoulder formation
Touche. I think it's just me who thinks that the psychological impacts of all this are likely to be much worse than people think. Lord Orr and his army of PhDs don't seem to make any attempt to measure this. And I'm not even sure the banks do, at least not to share with the public via their beloved media.
If my reckons are right, it means that spa pool sales are low and kitchen renos are being shelved. People reaching for the lower priced wine on the supermarket shelves. And Fiji winter holidays plans are not being discussed.
My Masters was in assessing the validity of metrics used for financial time series predictions (limited to a specific scope but widely applicable).
When I enquired of the RBNZ regarding roles utilizing this (cold call, pre-Covid) the response I got back was (paraphrased) "that's not a skillset we need or are interested in". I wasn't cut up about it, but it did make me think...
When I enquired of the RBNZ regarding roles utilizing this (cold call, pre-Covid) the response I got back was (paraphrased) "that's not a skillset we need or are interested in".
Nudge theory, behavioral economics, etc is not really taken seriously by the NZ govt and its mates. The UK govt even has a dedicated Nudge Unit.
The Behavioural Insights Team (BIT), commonly known as the "Nudge Unit," is a pioneering organization that applies behavioral science to public policy and government services. Established in 2010 within the UK Cabinet Office under Prime Minister David Cameron's government, the Nudge Unit was created to find innovative ways to enable people to make better choices for themselves and society.
Lord Orr and his army of PhDs don't seem to make any attempt to measure this. And I'm not even sure the banks do, at least not to share with the public via their beloved media.
I would say that they do not measure it because they know what it will show and it provides plausible deniability. Doesn't mean they do not understand it or believe in it's power.
Exactly - Shiller in his book ‘Irrational Exuberance’ covered this topic extremely well, particularly around the US GFC housing bust.
Same could happen here - and noticing how listings are climbing and prices dropping, we could little walking into a capitulation phase of a housing bubble that is bursting. Ie it forms a nasty feedback loop if everyone tries to rush for the exists at once (when they realise their home or investment property isn’t worth anywhere near what that anticipated it was worth)
And the fact J.C. rushes into supporting your assertion should likewise make you circumspect
My comment is more about the psychological effects of the Ponzi not working as expected. But hey, if Lord Orr and Granny aren't talking about it, then people don't really think about such things.
Its like pulling birds Chris... its a confidence game even ugly guys can pull off. But once you lose your confidence all sorts of doubts creep in.
Now go get yourself a beer or a gin and tonic, its been a big day with HPI and OCR.
maybe its worthy of a vindaloo and naan bread celebration.
As Kraken pointed out he is now 50k richer, 96k after finance, another 50k and he will provide the Fiji holiday bookings
its never the end of the world, just a reallocation of wealth
‘Classic head and shoulder formation, back to 2012-15 prices to find a bottom’
Haha I had this exact thought pop into my mind when viewing the first chart.
What is more interesting is that prior to 1990 house prices were more or less flat for 100 years -ie they went up at or around the rate of inflation/wage growth. Since 1990 it’s been relative low inflation and incredibly high house price appreciation - something that is unsustainable when houses are priced using the discounted future cash flows of incomes/rents/general inflation. 40 years of falling rates allowed this to happen from 20% to ZIRP. Now if rates bounce along relatively flat - how do we get house price growth at 7% pa if the discount rate of future cash flows is steady and not reducing? To me it appears mathematically impossible but I never anticipated just how crazy our central bankers and politicians would become in 2020 when they threw everything - including young people under bus - to push house prices up another 30-40% during a pandemic with excessively low rates and war time like deficit spending. The consequences of which we’ve seen (people leaving as housing is too expensive relative to our productivity or quality of economy - you can’t just keep protecting over priced houses with fiscal and monetary policy forever while dismissing that the country is getting worse to the point where it becomes unliveable for younger generations…so they leave ).
Agree, 2021 prices where delusional. Wellington City Council area just re-valued Average valuations down 25%;
https://www.rnz.co.nz/news/national/540873/average-wellington-house-pri…
Financial crisis coming out of Japan? Norinchukin CEO has resigned.
If we already apply the approx 20% discount on the real price that the bank could fetch in the market to the approx JPY35.6 trillion of securities left in its portfolio, the unrealized losses instead are JPY7.12 trillion.
Considering that the bank only has JPY4 trillion of net assets left, it is becoming harder and harder for the BOJ and the Japanese govt to hide the fact that the second largest bank in the country is more and more insolvent and in desperate need of a bailout to stay in business.
https://www.bloomberg.com/news/articles/2025-02-18/norinchukin-ceo-oku-…
be careful though a naked NZDJPY short is exposed to a possible collapse in yen... best to have either an option as a stop loss or trade view by puts, then there is the view that japan has huge savings invested offshore , if repatriated quickly causes jpn to get a lot stronger, its a high risk trade, during the GFC is saw NZDJPY move 8 big figures in a few hours
I lost 70k in 8 hours and by luck or good judgement doubled up at the bottom and the 50% bounce saved my ass.
Leveraged FX trading is one hell of a drug
Interesting engagement with Chinese marketing expert talking about Massey University's marketing strategy. Apparently, Massey is trying to connect with potential Chinese student on all the wrong channels like Facebook, Instagram, etc. Not on platforms like Red Note, the biggest platforms for young people and international students in China.
The content this is being communicated in China about Massey is all negative stuff—people talking about bad experiences, doubts about the university, and all sorts of things that don’t exactly scream "great place to study."
Wonder if Joyce, Scomo, Willis, Mahuta, etc are talking about this at their conference. Or perhaps they've already retreated to the hotel bar.
how do you rate a university?
Provided the course comes with a pathway to residence then I don't see a distinction between them.
Then it just comes down to a simple cost benefit analysis of the course cost and attendance requirements (that will be a drain on potential work hours).
As NZ Universities slide further and further down the world rankings, and as they all double down on their Degrees in Mandatory Maori, they will be of less and less interest to overseas students. The only reason you would pay $100k to come study here is because you couldnt get a work or student visa in any other country.
Heck, they are becoming of less and less interest to domestic NZ students. Anyone who actually wants a genuine career is better off picking up stumps and heading for Australia. One piece of advice though, you should get your kids there before Year 12 in NZ as Australian ATAR results are from a combined Year 12 & 13 (or Year 11 and 12 as they call them in Australia).
Mhmm. That doesn't sound compliant with the commenting guidelines.
Far too many New Zealand children are leaving school barely able to read or write but no worries a headful of 'indigenous' culture will set them up for success in life?
Pro tip. It's even more useless when they jump on that plane to flee to Australia.
Interestingly, (but not to me), swap rates didn't react to comments from the RBNZ that the OCR is likely to fall further in the next year.
So why not?
I anticipate lots - and lots - of misinformed nonsense of where the OCR is going.
I expect the RBNZ will contribute to this "misinformed nonsense".
That is the RBNZ's raison d'être after all. And why so many comment.
by JimboJones | 18th Feb 25, 8:58am
Wont be long until the 1yr starts with a 4
Might be sooner than I thought!
The NZ Herald looks deeper at the ages of those leaving NZ - and its record numbers of 25-46 year olds.
A deep dive reveals that while the number of migrant departures for 25-year-olds is at a record level, the variance with previous years is not that great. There was a total 4628 migrant departures by 25-year-olds in 2024. But we saw more than 4000 25-year-olds leave in 2010, 2011, 2012, 2017 and 2018.
What was more shocking to me was that for those in their late 20s, 30s and 40s, the annual numbers of departures were much higher than the historical precedent. In fact, the total number of migrant departures by age runs at record levels right through to 46.
So the numbers are higher for younger Kiwi departures, but they always are. What’s unusual about the last year is the increase in older people choosing to move their lives offshore.
The trend is clear and the result for the economy is that we are losing people who are in the prime of their lives and should be more settled.
- better super
- salary sacrifice
- better opportunities as NZ is a backwater for international companies (No one gets promoted to Auckland)
- better healthcare
- better public transport
- closer to holiday destinations cheaprr air fares
- in most cases better salaries
- more stable gubermint not focused on racial fixups
- closer to kids, they went years ago
- better police and less crime
- better theme parks
- cheaper food (no gst)
- so so so many reasons
- cheaper petrol
Can you name 10 better countries to live in? Keep in mind:
- We are 23rd for GDP per capita (with many of those ahead of us being tiny or tax havens). https://en.m.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_…
- We are 5th in terms of median wealth: https://www.visualcapitalist.com/ranked-top-20-countries-by-average-vs-…
- Second highest min wage: https://worldpopulationreview.com/country-rankings/minimum-wage-by-coun…
We are 5th in terms of median wealth:
Which is quite damning. Why? Because the UBS report shows median wealth of Aotearoa is USD202,525.
But the median house price is USD429,429 or approx 1.1x greater than the median wealth.
Now considering that our assets are overwhelmingly in the Ponzi, we're actually far less wealthy than we think.
I'd say that NZ may just squeeze into the top 10 based on safety, but if you look at other core needs it's pretty low
- Health system
- Education system (through to University)
- Cost of living
I've said it before, I love NZ but it's the intangibles that I love. I'm sacrificing some of those more objective values for the intangibles I personally value. But it's hard to say that NZ would be too ten on a global scale on objective measures.
I have relatives just back from six months in Boston, helping with grandkids, and they are pleased to be back in NZ. NZ is definitely one of the better places to live unless you are very rich, which makes most places pleasant, or are seeking excitement and adventure. Australia is fine too because it is similar to NZ.
we are losing people who are in the prime of their lives and should be more settled
I suppose being able to secure housing has no part to play in 'settling down'...
No way they should be more settled - we've had decades of high inflation in the largest value item people purchase. Land with a house on it for multiple reason such as low interest rates and high immigration. You have a generation of school and uni leavers whose goal is to get qualified and move somewhere fairer. Great work those who own more than one house and wanted to employ 'cheap to them overseas workers (while all taxpayers pay for a wage top-up in the form of permanent residence).
Checking the B&T auction results today makes me think prices have returned to 2019- 2020 levels, basically just before COVID and that is for properties that are presentable and desirable. For less presentable houses you are looking at 2016 - 2018 prices. Of course low ball offers are passed in. I will keep an eye on those and see how they go. Some mortgagee sales got quite low prices with significant losses for the vendors. Some houses are very untidy and if not a mortgagee sale you would still only get a low bid unless it's a large section with development potential.
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