Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Housing NZ raised its 5yr fixed rate by +10 bps.
TERM DEPOSIT RATE CHANGES
Westpac has cut a range of term deposit rates by -5 bps.
DAIRY PRICES LOOKING FIRM
The rise and rise of dairy prices recently in the dairy auction has been confirmed today by USDA Oceania monitoring - only more so. The next auction is on Wednesday, February 20 (next week) and the derivatives trading is currently suggesting that WMP may rise even further then, perhaps another strong +7% rise.
UPDATED MIGRATION DATA
Lots of migration data revisions today as StatsNZ's new system settles in. December's migration gain was bigger than December 2017 but the annual trend is still down. Overall they now say we gained +48,300 permanent migrants in the 12/16 system in 2018. Here is our charting of the data, with both (old and new) series.
NORTHERN FACTORIES QUIET
January factory PMI data was lower, and not only due to holiday reasons; there were some concerning underlying trends as well. New orders were weaker than expected and stocks are higher and growing. Perhaps it is too soon to be concerned, but it is the Auckland factory community that seems to be the region of most concern.
WESTPAC TO MOVE ON
Westpac has announced that it is to end naming rights sponsorship of the Cake Tin stadium in Wellington. Given the hijacking by the general public of the name, they have been very tolerant and supportive over the 20 years they have had these rights.
"CANNOT BE TRUSTED"
In Australia, consumer groups have walked out of a mortgage broker forum. They have quit en masse, citing a lack of progress and willingness to change. The forum was initiated by the mortgage-broking industry. "Mortgage broking lobbyists continue to swarm on Parliament House in an attempt to derail crucial recommendations from the Royal Commission Final Report, showing the sector cannot be trusted to stand up for everyday home owners when it comes to reform," the groups said in a statement.
SWAP RATES DROP
Wholesale swap rates have sunk again today following the ugly US retail sales data, NZ in a sympathy trend. The 2yr and 5yr rates at about -2 bps lower, the ten year almost -3 bps lower. The UST 10yr yield is down by -4 bps to 2.65% for the same reason. Their 2-10 curve is down to just over +15 bps. The Aussie Govt 10yr is down another -4 bps at 2.09%, the China Govt 10yr is up +1 bp at 3.11%, while the NZ Govt 10 yr is down -3 bps to 2.22% and extending the bull move. The 90 day bank bill rate is up +2 bps to 1.91%.
BITCOIN LITTLE CHANGED
The bitcoin price has hardly moved today, still at $3,564.
NZD HIGHER
The NZD is a little softer today, now at 68.1 USc. But we are firmer against the Aussie at 96.2 AUc, and little-changed at 60.4 euro cents. That has the TWI-5 dipping to 72.8.
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28 Comments
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Peak to trough,peak to peak. Never buy an Auckland house in a year ending 7.
The Auckland median peaked in March 17 at 900,000. 22 months later its current trough is 800,000
In December 07, the median peaked at 465,000,trough at 420,000 8 months later and reached a new high 23 months later.
In November 1997, the peak was 245000, trough at 225000, 11 months later and new high 29 months later.
The current decline is the longest in terms of setting a new low., the largest decline so far in percentage terms. The previous two declines saw national recessions..
"Never buy an Auckland house in a year ending 7"
Or maybe never listen to Cowpat's advice?
So by Cowpat's own figures
Don't buy a house in 2007 for $465k that is today worth $800k and make $335k after tax
Or don't buy a house in 1997 for $245k that is now worth $800k and make $555k after tax
Outstanding advice!
How do you make $335k, after tax?
Tax doesn't come into it if it's your own home. It's just the same home with a different $ figure attached to its 'value'. "If you buy and sell in the same market you are neither better or worse off" is the usual RE jargon. And if it was an investment, well, you should have paid tax!( But most people lie, don't they?!) Or to put it another way, they used to, but the IRD is going to cast a more informed eye over property transactions from now on! Lie about your 'intentions' at your peril. The costs and penalties are going to be significant)
There's no lying involved at all, what I said is absolutely true you bought a house in 2007 for $465k, it's now worth $800k (not my figures but Cowpats) you've made $335k no tax, nobody said you had to sell that house but if you wanted to sell it now, 11 years later and it it's an investment, you will pay NO tax. That is how it is, I do know from experience what I'm talking about.
Actually in your post you said $335k AFTER tax, the point he picked up on. Not NO tax. The implication is that you paid tax. Actually, if you bought with an intention of selling (which would be true of many purchases in the heddie heights, and certainly negatively geared interest only loans) then you do have a tax obligation.
11 years later you pay no tax? Not true! There is NO TIME LIMIT as to when a property that is bought for investment purposes is taxable. If you've held it for 1, 11 or 110 years and you sell it for capital gain - it's taxable! (unless you lie about 'intent' on sale, of course! Oh, and hope that any retrospective audit doesn't pick it up.)
Very nicely, thank you. I transferred ~40% of my pay straight into another account each pay day and that money went into various investments. Any extra left in my main account would be sent over too. It's very easy to recreate the forced mortgage principle payments if you want to.
Not that I'm anti-house, I still have the house I lived in in the UK and am now buying one in NZ, but the idea that property is the only way to get ahead financially is simply not true except for those who completely lack self-control.
you're only better off if you sell the property and decide not to buy again or to downsize. A valuation does not equal money.
Actually, if you had invested the exact same amount that was the difference between the rent and the interest payments, rates, insurance and maintenance in another asset class, say an active managed fund, you'd have generated a similar or better return - Mary Holm has run the numbers in her columns before.
"Mary Holm has run the numbers in her columns before" Good on Mary,
In real life, we don't tend to save unless we have to and a mortgage is a great way to be forced to save. Mary's beautiful saving on the side never happens because there's always coffees, cigarettes, booze, holidays, clothes, cars and other stuff to spend your money on.
Anyone listen to John Rhys-Davies this morning?
https://www.radionz.co.nz/national/programmes/ninetonoon/audio/20186826…
It pays not to be gay, Asian, black etc in Christchurch. What a redneck town.
https://i.stuff.co.nz/national/110529813/north-canterbury-man-says-he-w…
"Nearly 100 suburbs around Australia are no longer members of the "million-dollar club" after steep drops in house and unit prices.
Suburbs in southwest Sydney and Melbourne's inner ring have been impacted the most after falls of almost 10 per cent in Sydney since its peak in September 2017 and 4 per cent in Melbourne since April 2018, according to realestate.com.au."
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
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