We are ending 2022 in far better shape than where we started.
The most striking 'win' in 2022 has been the very high levels of employment. Even more unlikely has been the rise and rise of wages.
Not to be outdone, those relying on interest on their investments have benefited from a surge in deposit interest rates.
Even the value of economic activity looks like it is on the upswing, in 'real', inflation-adjusted terms.
Who would have thought? Certainly not most of those making predictions at the start of the year.
All this happened as house prices started to fall. Most commenters thought this would induce a recession as the 'wealth effect' generated pessimism.
Yes we got 'pessimism', but not that you would know from the economic data. It was "talking-yourself-into-it" type pessimism.
For the pessimists, the oddest thing is falling house prices did not tank the economy.
Internationally, globalisation reversed. China, 2021's big winner, stumbled. The US changed it leadership the prior year via democracy - and rebuilt its strength.
Autocrats from Putin to Orban to Ergodan to Xi all seemed to make a mess of the empires they surveyed, all the while telling the world what a great job they are doing. They honed their skills painting lipstick on a pig.
The resilience of democracy shone though in Australia too.
Sure, there are conspiracy theory folks still pushing their 'faith-based' narratives, but they now seem even more divorced from facts and reality. The energy has gone out of their "I did my research" fantasies, no matter how many other like-minded people they teamed up with down their favourite rabbit-hole. Made-up fictions are hard to sustain.
Reading the 2022 predictions is instructive. I suspect that many of those who participated in this forum last year who got it so wrong will be scarce this year.
But it is New Year's eve, so time to think ahead. And forget about the past year or two as much as we can.
How do you think our economy (housing, agriculture, tourism, education, to name the key sectors in decreasing size) will fare in 2023? Both tourism and the education sector never really recovered in 2022; will they rise next year now our borders are re-opening? or are they toast for a long time yet?
Who will be the winners in 2023?
2023 is election year again, so that should get your predictive juices flowing too. It seems like a clear favourite has emerged, but (apart from 2020) these contests are usually very close and hinge on the late twists of the campaign. Is one party peaking too soon?
It is time to test your prediction skills and bravely record them here in the Comment stream below. (Sign up here.)
And of course there is the small matter of bragging rights on your 2022 predictions. How good were they? Here is a quick link to last year's set.
This article is to encourage you to record your 2023 predictions. And our 2022 Interesties are here.
Your predictions can be on any topic that has an impact on the New Zealand economy: anything, including property, interest rates, exchange rates, the RBNZ, insurance, rural issues, the dairy payout, our migration issues, our relationship with China, the big international economic influences, even the shifting international power balance, and the like. But please try to ground them in the economy. (For example fashion, sporting or celebrity comments are not relevant, but climate change issues certainly are.)
You will need to be logged in to comment and respect our commenting policies (and respond to others' differing views in a respectful and civil way).
Over to you.
277 Comments
I'll give a hot take prediction.
Labour will cling to power next election by rapidly throwing out a bunch of unpopular MPs after scapegoating them, throw out tons of money to people (inflation income complimentary payments or whatever), coalition with the greens and maintain a minority government. They have continued to prove that centre left governments create booms by spending.
The Gnats have nothing to offer for anyone who doesn't own a home and has no real policy, since all policy they output will be based on what wins in polls rather than resolving any of the core issues that voters are upset about.
Immigration will continue at a high pace, but it is likely to not be enough to save the housing market.
Generational transition of boomers out of the leadership of the workforce with older Millennials taking over continues on.
Housing market continues to fall, but at a slower rate. Institutions simply deny the falls are happening at the realised prices of the market, prices reach 2017/2018 RV by the end of the year.
Labour’s MPs will continue to break ranks not only on racial agendas but also purely on self interest & survival as the prospect of losing power accelerates. The Greens had the mini palace revolution a bit later than I predicted and hosed it down sufficiently well. But as Labour’s prospects plummet and with that the long cherished cabinet seats, then the discontent and ambition of the bulk of the party will roar out of left field unbridled. PM Ardern is on record condemning by elections as a waste of money. Therefore if she remains as MP for Mt Albert, but Labour loses the election, she will need to remain in parliament opposition, or else publicly deny her own words. Therefore look for a shift to the list, which though in itself, would then signal a lack of confidence in being re-elected. The Labour Party is a house divided and discordant, and will not be able to convince the electorate that it can cobble together a coalition government, with the Greens & the Maori Party included in cabinet, and present a stable government when Labour can’t even keep its own house in order in the first place.
The Nats can sit back and observe Labour’s passage down the slippery slope easily enough. However Luxon needs more political finesse & maturity. As well the extraordinarily inept selection process for the Tauranga by election indicates the old bad habits of conceit & carelessness are not that deeply buried. The Hamilton by election formed a greatly improved presentation to the electorate but Luxon must convince the electorate that the terrible antics of some inappropriate identities in the past, are completely gone and that includes ensuring that some of the let’s say relics, for instance Collins and Brownlie remain quiet and very much in the background, if anywhere at all.
London-to-a-brick that the Gnats are better prepared to hit the ground running as an efficient & effective government after the 2023 election than Labour was after 2017 ...
... 5 years in , and they're still blaming the Gnats for stuff ... like , come on , 5 years ... Labour are still an incoherent rabble ...
Ardern was also on record for saying " no new taxes " ... immediately before Robbo brought in a raft load of them : so , telling porkies doesn't seem to bother her ...
... remember the " Podium of Strewth " moment when she said that her government was the sole source of all truth ... ummm... yeah , it was a bare faced lie ... as was much of what they've said since ...
It was also... a decade ago? And it's still the sole point we ever hear about despite the frankly abundant instances of this government doing it over and over and over again. Water, governance, transport, ATAP... you name it. Yet all we hear about in response is 'BUT JOHN KEY SAID GST WOULDN'T GO UP'.
OK. You have credit for doing one thing Labour said they wouldn't do. Now explain the other dozen.
1. Labour will come back with a very thin majority. Greens will get more Ministries.
2. NZX will increase by 12% by Dec 2023.
3. OCR will start coming down by Q3.
4. ORR may resign.
5. China will make a play for Taiwan
6. India will broker a deal between Ukraine and Russia.
7. Trump will be banished from standing for any office.
8. Kamala Harris will become President in 2023.
9. Musk will sell Twitter or will be forced to.
10. GM and Ford's EVs will be dominant in the US market.
11. Inflation will start easing from Q3.
12. NZD wil get 0.70 USD by Dec 2023.
13. General Election in UK.
14. Oh yeah, the Wedding will take place, at last.
I'm afraid my crystal ball is broken it would seem. But I'm glad I figured that out fairly early on.
I scored myself 8 / 20 for 2022 - I guess its not so bad. I was right on inflation, Tesla, ETH vs BTC, and a few other things. But wildly off on others (like end of year prices for various things).
I'm going to assume a similar score-card for 2023 but here we go with 17 guesses (I will try and think of three more to edit the post):
1) National wins the election (with ACT). Ardern resigns after the election (but not before). Labour will poll as low as 23%.
2) Inflation has peaked and will go downwards to around 3-4% by the end of the year. No rate cuts but a long pause.
3) 1 year fixed term mortgage will peak at around 6.5% (i.e. we are nearly there). TDs peak at 5.5%.
4) For global assets, bottom takes place in a few months. Rising gradually from there but not easy.
5) By end of 2023, Ukraine is the clear victor in the war, but some pockets remain. Putin is gone one way or the other.
6) ETH continues to outpace Bitcoin - it won't flip it this year but there will be talk of that.
7) Coin base and Tesla will be up this year.
8) 2023 will be (again) a cooler year than the one before.
9) Crypto markets struggle but manage to erase the "FTX" fall and then a bit more. That puts bitcoin at around the $25k level. ETH to $1.5 to $2k.
10) Prediction markets will predict Trump as next President by end of year.
11) NZ property market bottoms and starts to recover. A bit down in price (0-5% fall before inflation) - but bolstered at the end of the year by the National victory.
12) Defi continues to grow with a substantial increase in TVL. I am thinking 50B plus TVL.
13) The "monkey pictures" NFT market remains dead-ish. But large companies are going to be using NFTs for all types of things - loyalty points, collectibles etc. The key will be cheap or free NFTs. Nobody is paying $300k for a picture of a rock!
14) A big election issue will be the plight of first home owners underwater as mortgagee sales will ramp up.
15) The biggest theme of new technology and everything will be AI. Expect this to be the case for the next decade. Hard to tell how this works for an investor (maybe Chat-GBT can tell me?)
16) Best investment "class" will be commodities. Bolstered as the economy starts to come online and gold and silver have a surge towards the end of the year. Energy stocks too.
17) NZ First makes it back (just) but sits on the sidelines. TOP has a surprise surge getting to around 3.5%. This is all at the expense of Labour.
Interested to know what was so bad about my predictions (apart from interest rates), or is this just a nasty little troll? They were mostly very good:
- Central forecast of house prices to fall 5-10% in 2022, secondary one of 10-15% (secondary prediction was closer)
- share market to have a poor year throughout 2022 (correct)
- Residential construction to start falling away late 2022 (it’s started to fall away but a little more delayed than I thought)
Feel free to point out the many errors that you allude to.
Last year's prediction:
by Squishy | 31st Dec 21, 9:36pm
The S&P500 index will be lower at the end of 2022 than where it starts.
The S&P500 hasn't been under its 200 day MA this year. There have been four times this has happened since 1981 and in three of those that index declined the following year. In fact the last time the index was under its 200 day MA was April 2020.
Started at 4797, ended at 3849. Well done if you stepped out of the market.
This years prediction:
The unemployment rate in New Zealand will not exceed 4.2% in 2023.
Even if there is a recession, which is nowhere near a foregone conclusion, our population age demographics will keep unemployment rates ultra-low.
... I predict that Grant Robertson will emerge as a big winner in 2023 ... after the general election ... taking over the leadership of the Labour Party after a bitterly contested battle with Chris Hipkins ( who will thence resign from parliament ) ...
Robbo will then lead Labour in opposition for 15 years until 2038 ... sadly for him he'll be ousted just weeks before Labour finally win an election again , whilst in hospital for a triple bypass heart op ... at which time the surgeons will reveal to the nation the answer to the age old question , " who ate all the Lamingtons " ...
- House prices ( HPI) to be down nationally between 7-12% by end of 2023 (from January 2023)
- House prices (HPI) in Auckland to be down 5-7% over same period
- NZSX50 to have a mediocre first half of 2023, down about 3-5% in first half of year and to finish 2023 about where it started
- CPI to be hitting an annual range of 3.5-4% by May 2023
- Unemployment to be around 4.5 - 4.75% by end of 2023, but with notable increases in construction, design, trade and hospitality sectors
- The OCR to be cut at least once before the end of 2023
- Net migration circa 15-20k
I'll start with my prediction of last year for 2022:
by Yvil | 31st Dec 21, 2:50pm
For me, the overriding issue for 2022 both for NZ and worldwide is Inflation. Of course there are many other important aspects such as GDP, employment, housing, asset values and many more but IMO they will all mostly depend on inflation and the central banks' response to said inflation.
For 2023 I believe there will be a stronger slowdown than many think and that the "soft landing" will be much harder than anticipated but this will not happen until the second half of 2023, I think most underestimate the lag between policies (such as interest rate hikes) and their effect on the economy.
Yvil, I agree with you on the delayed reaction to interest rate policy. Those yet to roll over fixed rate mortgages throughout the year is one contributor, its going to hurt. I also think the landing will be much harder than most anticipate. I will add that I think interest rates will also stay higher for longer as inflation proves more stubborn to tame despite the ensuing slowdown.
Ditto with Squishy on your foresight. Before making this comment, I considered all aspects of Health and Safety. In good faith, I trust your head will still fit safely through your front door :)
1. National/ACT win the election in a landslide.
2. JA quits just before or just after the election.
3. Crypto is toast.
4. NZ goes into a recession by May
5. Elon gives up on Twitter
6. The Ukraine war ends.
7. Zelensky falls out of a window.
8. The world continues to go down the toilet
9. Trump drops out of the 2024 election.
10. Climate change moves up a gear.
Why do prime ministers resign when they lose an election? Honestly do Labour have someone clearly better (and I write as one of the minority who preferred Andrew Little)? Would National have been better if Bill English had stayed put - it is hard to imagine that they could have been worse? Leader of the opposition is probably the most important job in a democracy. Thankfully we have Seymour but he would be a more effective opposition if he was an ex-PM.
Many seem to have a fixation on this. I'm not sure if being a corporate raider makes you a better politician. The understanding business line is a crock. Your average corporate beauracrat would put on a poor showing in a small business arena, and has little understanding of what's required to run one.
Feels like 2023 may be the year a decade of delusional post GFC thinking hits reality.
Combination of the slowdown (or reversal) of globalisation, demographic shifts (lower birth rates and retiring boomers), as well as the upfront costs of transitioning away from fossil fuels (and increasing impacts of climate change) will all alter the idea inflation can remain low and stable, while "economic growth" is always propped up by low rates and QE.
With growth slowing, unemployment rising and central banks unable to come the rescue there seems a high likelihood of some sort of event triggering a financial event of some sort. It could be a bank (Credit Suisse), a bond crisis (like UK) or a private debt market such as corporate bonds or housing. Either way many industries and investment decisions have been predicated on low interest rates, and that could be severely tested in a recessionary environment.
How governments and central banks respond is anyone's guess. Will they try and inflate away the debt? Prioritse fighting inflation over short term economic growth? Restart economic growth with infrastructure investment? Who knows.
The UK bond "crisis" was all of the pensions funds making. The UK government doesn't even need to issue debt as it is a sovereign currency issuer and all of its spending creates new pounds. Government debt is just our savings of the governments currency which it chooses to hold in the form of bonds.
https://www.levyinstitute.org/publications/can-taxes-and-bonds-finance-…
2023 predictions
Q1 & 2 story will be builders going broke, moving to Australia, and leaving half-finished homes and financially devastated homeowners in their wake.
Q3 will be social housing waiting lists heading to the moon as investors give up and sell. Interest rates flatline and start to retreat, but only a little.
Q4 will be rents catching up with inflation, buoyed by increases in welfare and student allowances out by whoever won the election. Unless Luxon says something silly about abortion I think National will win and at some point Labour are going to fully realize the gig is up and go into some form of ideological meltdown.
Other:
1. I think National will reverse the interest deductibility changes and it will do absolutely nothing to house prices. The next property boom is 5 years of deleveraging away.
2. ComCom will continue to do nothing useful.
3. What excess rental supply there is will get hoovered up by mid year through a mix of housing being lost to AirBNB and social providers, building plummeting, people coming back etc. Prices wont change but rents will as they become the last to surf the inflation wave, supported by increased election bribes by a desperate Labour party. Risk to this is a surge in net departures.
4. Putin won't survive the year. I think he will be either assassinated or executed.
5. There will be another oil shock (death throes of the war) but it will be brief
6. We are going to see some big bankruptcies.
7. Flight costs will trend downwards overall as capacity returns.
8. Population will increase by more than planned as more Chinese opt out of central control.
9. Interest rates level off by winter, come back a bit but not much. This is based on the yield curves. I'm in the inflation growth has peaked camp.
Nice work. Some mixed views on where net migration might be headed? I also think it’s quite hard to pick, but on balance I see a net 15-20k gain as the immigration floodgates have been opened and excepting a few sectors labour remains in demand.
However as you suggest there could also be quite a lot of departures, especially to Aus.
Valid points...
by Nifty1 | 31st Dec 21, 5:07pm
I think one of the big housing issues at the start of the year is going to be CCCFA, it's going to be interesting if govt will flake to the mounting opposition... Housing is in RBNZ's & Government's hands- I feel like if they want they can cause a correction - you can see this through the CCCFA changes & increasing rates. What will the public want though and how will the polling look like if the market swings the other direction? Could they risk pushing it too hard and the economy looses all momentum...
CCCFA was a massive issue at the start of the year & Labour back tracked on it - changes coming into full effect 2023.
Housing remains in the RBNZs & Govts hands, a correction is underway... the pressure is mounting and polls aren't looking good. The economy is starting to stall...
Why Zoltan Pozsar's Bretton Woods 3 is SO WRONG [Eurodollar University, Ep. 217]
Zoltan Pozsar says a commodity-based, China-led monetary order—Bretton Woods III—is upon us, resulting in the decline of the US dollar and escalating repudiation of US Treasuries. This is not going to happen! China doesn't want it; neither do exporters nor commodity producers.
I don't do predictions but I'm partial to scenarios:
1. If the property ponzi in NZ continues to unwind and / or collapse (yes it is possible), consumer spending is going to get wrecked starting with all the 'nice to have' goods and services (I believe this is quite possibly happening but I don't have any hard evidence so best to leave it as a 'reckon'). Bubble businesses - craft beer, coconut youghurt, grooming - will start to suffer or go under. Mainstream beer and wine brands might experience a renaissance as their marketers tap into the power of their relative affordability.
Needless to say, the relationship between the negative wealth effect and the ponzi is cruical. Both feed off each other so the risk for a self-reinforcing downward spiral is high, even though it's not talked about in any great depth.
2. BTC will surprise. I prefer to stay away from price predictions but it could go well below USD10K but not sure it will stay there too long. On the other side, Tim Draper is still talking USD250K in 2023. Consensus suggests that the probability of this happening is low. Regardless, accumulation will be steady and possibly explosive.
Fortunes will be made on altcoins but the media will not be aware of it as much as in 2021.
3. The woke agenda will start getting serious push back. Those who base their lives around things like pronouns will become increasingly irrelevant. That does not mean people will be generally more sensitive to gender, identity, etc. It means that people will tire of petty culture conflct.
4. The tech world will start to dismantle and splinter more, particularly in the world of social media. Google will continue to be dominant but people will realize it's not the be all and end all.
Key issue is a skill and labour shortage. It’s a worldwide issue and we aren’t as attractive as other places.
At the same time we are running a large trade deficit which will carry on for while given the weakness in China.
My thoughts and rationale would be
1. The skills shortage and our relative international attractiveness will continue to drive up wages. We should be happy to pay more for frontline health workers.
2. As a result inflation will stay high and interest costs will need to stay at current levels for another year.
3. Our trade deficit will weaken our currency even with high interest rates. This will drive imported inflation.
4. House prices move sideways for several years due to interest rates but rents might pick up as students and immigration flows increase.
5. Not worth commenting on the political prediction but we all think it’s time to try someone else even if they are no better.
Given that, I think that digital off-shoring will continue where possible in traditional areas like I.T., and will challenge other areas like tutoring, financial advice, health advice, counselling, the list will grow.
Boundaries will be challenged by digital nomads decamping to rural NZ, or Bali, or wherever.
We are ex Brits who came to NZ 20 years ago, we went back for a month in October (the first time in 5 years) we could not believe the cost of living in UK. There is no way I would go back. We were there during the PM leadership/finance minister issues and have to admit it makes Jacinda look professional.
Combination of problems, their currency value is now crap, the food in the UK is crap. I have seen the price of decent food in the UK and its absolute horrendous. My Cousin says he can no longer afford to eat out or even get fish n chips so don't tell me its expensive here. When a bit of deep fried cod costs like 10 quid.....
I’m not really a prediction type person but I will give my current thinking in terms of odds:
- soft landing: 50%. Reserve banks get on top of inflation and we see either small growth or a small contraction in 2023.
- hard landing: 30%. Reserve banks can’t contain inflation and have to keep raising the OCR until it really hurts.
- a good year: 20%. Labour have provided very good economic growth before when the naysayers thought otherwise. Maybe the reserve bank gets inflation under control and we get good growth.
Predictions...
~ Big overshoot from RBNZ. 1 n 2 year rates hit 8% by mid year and stay there for year end.
~ National ACT power sharing deal after Nats don't get a majority. JA resigns after the loss.
~ Auckland and Wellington continue to lead the residential market down. I`d go a further 10% in 2023 but the real losers will be in the new build areas in commuter zones.
~ Nats reverse the 10 year bright line test and put it back to 2 years. I don't think they will touch the foreign buyer ban.
~ Nats kill 3 Waters
~ Nats kill the Ute tax
~ Winston Peters retires after failing to win a seat again
~ England win the Ashes. Not really :)
Well done Labour you have done a fantastic job.
That's coming from someone that was blue for 50 years.
Not going back any time soon.
Very,Very high chance they will be in government this time next year they have my vote.
Kiwi,s need to be more optimistic of how well we are doing we are the lucky country.
What happens to it at the other end of its cycle though? Straight into a river or the sea. Our environment is nothing to be proud of.
https://www.stuff.co.nz/national/health/130877930/christchurch-bay-deem…
Which I'm sure will improve immensely under central government control, but probably only in the same way they're improving the safety of our drinking water: by redefining "safe".
https://www.newshub.co.nz/home/new-zealand/2022/03/greenpeace-slams-nz-…
He is right and wrong. As a Nationals/ACT supporter I believe in personal responsibility, I work hard, manage my resources properly and accumulate wealth when they govern. Under Labour, the same occurs except it seems easier to accumulate wealth as they spray money about which anyone with half a brain can take advantage of. So either way smarter people do well. However poor people are worse off under Labour, they don’t see the loop holes, and can’t take advantage and so it’s a lose lose for them always under labour. I actually care about these people, and as soon as Labour were elected, I thought oh dear, the poor, the vulnerable, are going to be buggered under Labour, the will be poorer and will be lots of crime. The gap between rich and poor will widen. That has come to pass. It hasn’t affected me at all (I didn’t get mugged, burgled or murdered, but it could happen), as I don’t let the politics of nitwits effect me, and most of my business is international, so the worse New Zealand does, the better it gets.
1) Immigration, international students and tourism uptick but not enough to offset downside risk.
2) Labour shortage continues upward pressure on wages and inflation. The RBNZ hike once more by 25bps in February and rub that out by year end 2023 signalling the bottom of the housing market retreat.
3) Housing has done 60% of it’s declines but more to come due to the OCR, it will be more predicable and stable but still down until election time. 7-9% Auckland city, 5-6% rest of he country (nominal).
4) National / ACT will get in but not by as much as speculated. The first year or tow will be wasted reversing policy rather than making a difference.
5) Share markets will remain subdued. China will weigh the global economy down. Investors will need to wait until 2024 when a global recovery, infused by a resolution in Ukraine will signal the start of a strong rally.
6) NZ out in the semis. Northern hemisphere final in the RWC. First female British Lions series will be launched and will be well received.
7) Inflation will drop but will still be 3-4% by year end 2023. Under control but not in the required range so a small drop in OCR will happen (25-50bps) more as a signal of optimism than a change in landscape.
1. Fossil fuel shortages in NZ. Diesel mainly.
2. Economy to tank due to 1. above with Q3 GDP -2.5%.
3. Robbo will blame 2. above due to 9 years of neglect from 2008-17.
4. Everyone laughs.
5. Change of govt with Peters not being queen maker as Robbo will be leading Labour
Ok here goes...
1. Economists will have another dreadful year, with every data point being released continuing to surprise them. TA will move full time to Australia to escape the backlash as rates spike higher...
2. A covid scare, the suckers not done yet - more vaccines also need to be sold. There will be another push for everyone to get vaccinated given waning immunity... Lock downs will be strongly suggested from lunatics like Baker but the public wont take it. Masks will be a regular sighting for a period of time.
3. CBDC will be more mainstream, there will be more talks around the benefits of needing it. Your average Joe Blogg will be taking about it.
4. Towards mid-end of year, RBNZ will loosen policy around low deposit lending & relax LVR rules. Rates will spike early in the year, before slightly coming back towards to end of the year. Short term rates will be higher than long term rates... House prices will flat line.
5. Labour won't win the election, Jacinda will stand down to spend time with family - shortly after have a new job at UN. The wedding still won't happen, ask the Nanny. Luxon will make an idiot of himself, prove completely out of touch and also stand down.
CDBC will be more mainstream, there will be more talks around the benefits of needing it. Your average Joe Blogg will be taking about it.
NZ is light years behind in this conversation. But those conversations are good. People might even start understanding the difference between the ol' rat poision and crypto.
My prediction is that the current account deficit will increase further than the 7.8% what it now is due higher import requirements (mainly fuel). Exports growth will continue but below the growth of imports. (We have really shoot ourselves in the foot by allowing Marsden Point to close!) The OBEGAL for the current year will show a deficit bigger than 10 Billion mainly due to a less tax revenue than forecasted. I predict that the new Nats government will reign in spending as one of the first things to do but it will not lower the government deficit enough. Therefore far more pressure on government bond auctions with foreign investors demanding increasing premiums and higher interest rates for longer. The NZD will remain in a band of 0.60 - 0.62 USD but will drop against other currencies.
Received a 2023 forecast from Michael B... REA
Most real estate agents will be setting goals for a promising year ahead and real estate will be a hot topic.
During the last 24 hours, I have been swamped with email inquiries from the new lead-in property in Parnell.
Definitely a heads-up for a good start to the New Year.
by Miguel | 15th Jun 20, 11:34am It's actually a much larger drop than i'd have expected... a large increase in forced sales... this could be the start of a bigger correction than I initially expected... I can't see much in the short term that will put upwards pressure on prices.
by Miguel | 15th Jun 20, 11:13am The sad part is the people about to be hardest hit are those FHB who bought in the last couple of years.
Am not alone then.
Construction will begin to slow due to financing seizing up as well as inflation taking hold.
Totally correct in 2022
Miguel, 10/10 to you for making such an insightful prediction! Now that bank swap rates are returning to levels last seen in 2008, who knows where prices will bottom out. Perhaps they might even return to levels last seen in 2008. Inflation in essentials outside of housing has largely soaked up any wage increases so its hard to justify a SUSTAINABLE near term floor in house prices on the basis of increased wages alone.
There will be many wishing they had actually banked those (flash in the pan) gains of 2021! Its too late now.
"And lets not forget about the sweet capital gains in 2020"
This rings more like a memorial service lol! These gains? they mean nada if unbanked. Its a distant and sad memory for the majority of speculators (you included) who missed the boat. You are on record as having made several purchases in 2020/2021 yourself. Lets be honest, in November 2021 you would have labeled any predicted falls of those now witnessed as "fantasy". There's nothing to be gained by moving goal posts in broad daylight. One could easily argue that those who bought in 2020 are stuck with a fast depreciating asset that they're paying interest on and are missing out on 5.5% term deposits! Miguel has come up trumps here.
Dear Sir,
You have been calling us leaving repeated messages for a 20 percent fall in house prices for the last 6 years since 2017.
We apologise to inform you that order is out of stock and cannot be filled.
More to the point, you would have been a lot more agreeable for the multiple incremental gains that we have distributed to those with the cajones to buy a home
Thank you
Adrian Orr
Oh-okay, so now you've moved the goal posts back to 2017. I've been bearish on this unsustainable fantasy of yours for years and this (the only ammo you have) is being eroded by the day. You are nearly at the point of self infliction - lol! My gains are banked and still gaining. Can you say the same?
Wasn't it you (in Nov-21) that said everyone wins on property? According to you, these "winners" who bought in 2020/21 have all banked their gains......unbelievable 🤡
I wont make any predictions for the NZ economy. To many half wits pulling the levers to even begin to guess where it could go! However the elephant in the room is our balance of payments, There does not seem to be anyone taking this seriously. It is a massive problem.
One prediction I will make. The UN will NEVER give Adhern a top job! Helen Clarke couldn't get there and her intellect is light years ahead of our current moth! The UN is mostly controlled by a voting block African males and they wont want a bar of Adhern.
Your post reminds me of the morons that were always moaning about John Keys! I cannot take anyone seriously who does not have a basic understanding or care for the correct spelling or pronunciation of a Prime Minister’s surname. You sir have truly outdone yourself, twice in one post :)
..." jeprodise " ... is a classic Ardernism ... she often pronounces " t " as " d " in the middle of long words ... which is fine , kind of cute , in fact ...
Except ... why did the media hound Simon Bridges ( as leader of the Gnats ) over his diction ... whereas the PM gets away scot free ....
... just saying ...
Last years predictions and self-ratings....
- Political
Labour to keep fluffing it, Luxon to miss the mark, polls end the year slightly more in Nat's favour than currently, with Labour and Act down
5/10
- Economy
Goes flat but avoids full noise recession, consumers less fluffy due to housing market dropping 15-20%.
4/10
- Interest rates
RBNZ to lose it's mettle on increases and keep it flat after 1 more increase, driven by inflation slowdown, and unemployment increasing slightly.
2/10
- Stockmarket
Rough ride through the year, ending pretty much where it is now, no significant new listings on NZX50
4/10
- Covid
At the end of the year, predict we'll be living with restrictions around travel into NZ, masks and large events.
1/10
NOW FOR 2023 PREDICTIONS (perhaps ignore after last years results!)
- Political
Labour/Greens/Maori party to form a coalition and lead after the election - National loses momentum when their policies start coming out, and don't appeal to middle NZ, AND Labour takes the wind out of their sales with a tax-free threshold, making the election a debate about who needs the tax cuts (voters less selfish than Nats realise)
- Economy
Recession here and abroad. Unemployment to end year around 6.5%, and will still be travelling in the wrong direction. Building industry to go tits up as noone is starting any builds, and plenty are getting finished. Multiple big construction company failures (Williams Corp & Du Val by August).
- Interest rates
RBNZ to go 75bps at first meeting, go no further as the wheels start falling off, end the year with OCR at 3%.
- Stock market
NZX50 ending year 5% above current rates, as bond yields fall, another year of no significant new listings.
- Property
Accelarating declines. Another 14% off the Index, Residential property still won't add up as an investment.
- Inflation
Ending the year at 2%, Tradeable inflation to fall off a cliff, non-tradeable to be above band, as usual.
Fine, I'll make a serious prediction. From today's interest.co.nz article:
The picture changed significantly in 2022. While financialisation continued, the [Global Balance Sheet] shrank relative to [global] GDP for the first time in decades.
That is monetary deflation by definition; less money chasing the same amount of goods and services.
My prediction is that in 2023, deflation willl rear its ugly head on a global scale.
Predictions:
I feel that something at some point during the year has to break. Something quite big, but not quite a Lehman brother’s moment.
I can’t see how interest rates can be raised so quickly without something breaking somewhere.
After that thing breaks actual fear will start, but employment won’t plummet like other recessions cushioning the blow.
After the fast moving nature of all this plays out and central banks seem a bit frozen, we will start to have real conversations about how different policy is needed to control economy’s as ocr and the likes are too slow to react and not board enough.
I think Europe. There will be so many over leveraged positions everywhere around the world, but I would put my money there.
Exactly what, who , how or when is impossible to tell.
edit to this post: I actually think Japan could be where something breaks. It’s had zero % interest rates for 40 years and now that’s likely to change. After 40 years I wonder how many businesses have leveraged just assuming 0% will always be the case.
It's difficult to make predictions where there are a few major unknowns - but here we go...
- Oil prices and CPI: The oil price is the key driver of prices throughout our economy - petrol, diesel, fertilisers and plastics (and therefore food, transport etc). In fact, there is no better leading indicator of inflation in NZ than oil price (WTI Crude particularly). I suspect that the Saudis will hold the price between $70 and $85 (low enough to stifle non-OPEC development, high enough to coin it in), but we will see a fair few destabilising swings in and outside this range depending on what happens in Ukraine. My view is that NZ CPI will come down from 7% this quarter to around 5% in mid 2023 and be around 4% by year end. Rent Index will come down to just over 3% by year end
- Shock and Orr - What RBNZ do with interest rates will have almost zero impact on inflation. Our central bank is just trying to maintain its credibility amongst other people who place their faith in the false gods of reckonomics. I suspect that RBNZ will just keep our interest rates above the US Fed's given that we have a huge trade deficit and we are relying more and more on relatively attractive bond yields to support the NZD
- Recession: Govt net spending is dropping, and I think we will see more loans paid off then are taken out in Q1 2023. Tourist spend is about halfway back to normal, which is giving us a small bump, but we are stuffed here. If Govt is not spending more than it is taxing back, and banks are creating less credit money than loan payments are destroying, then this inevitably leads to a contraction. Recession in 2023 is locked in unless Govt decide to go serious on green investment (they won't because they are all mouth and no trousers)
Yes, I think Fed will go for 25 pts and that will be that for 2023 - with potential 50pts retreat later on in the year. A sustained period of high rates is bad news for NZ because:
- High rates have a much more significant impact on disposable income and therefore consumer demand in NZ, and we have mad levels of private debt. So keeping rates at nearly 5% is a recipe for a hard landing recession.
- If we take rates below the Fed to avoid recession, the market will put pressure on our bond prices - forcing RBNZ to intervene (buy bonds to protect prices and keep yields at target levels). They will NOT want to do QE again. Remember around 60% of our bonds are held by overseas investors
My predictions:
1. House prices continue a gradual downward slide, with vendors being unable to “give away” houses in winter being the focus on headlines. The Hutt to be the epicentre of the crash, with people crying about how underwater they are with their Wainuiomata townhouse purchase.
2. National and ACT to form a government, with ACT having a much greater say at the negotiating after taking out 15% of the vote.
3. National to make a U-turn on scrapping the Ute tax and bright line test. Interest deductibility to be reintroduced and will give the property market a short shot of positivity, but will die out quickly as budding landlords won’t be able to get finance
4. RBNZ will continue to crank up rates with no care of the consequences, killing consumer demand.
1. Bond yields up
2. Paradoxically markets rise nominally
3. Crime stays centre of attention
4. Change in Gov kills 3-Waters. Slightly less media coverage of ‘racial discrimination’ and the blight of colonisers stops getting centre spread. Yawn
5. Robertson declares himself a type 2 diabetic
2023
The world realises that without co-ordinated central banks the natural risk free interest rate is much higher then previously was under QE, maybe its 5-6%.
Any risky asset class that cannot make 7-9% yield, reverts in face to values in line with the new risk free rates.
Gold goes up, full your boots, it does what crypto promised, ie a store of value, and cannot be printed.
Stock markets plunge on earnings revisions.
Best asset to hold - GOLD
Worst asset to hold NZ Property - needs to revert to risk free returns (5.25% 2 year term deposits on offer today 30/12/2022) IMF says we are winning in all the wrong ways.
NZ farming has a debt crisis.....
NZ housing goes into negative equity in a big way by the end of 2023 we are back at 2018 values. 2023 is not the bottom, its lower.
Putin loses power, someone else is in command by year end.
Nats / Act win. Winnie does not make 5%.
Gold goes up, full your boots, it does what crypto promised, ie a store of value, and cannot be printed.
Going to be interesting. As you may be aware, the West has been controlling the gold price and have even outsourced the responsibility to the likes of JPM. Makes you wonder how long this can contnue. Would love to really understand the extent of rehypthecation of paper gold. If you're going to own paper gold, do it via the Perth Mint, not via the likes of JPM.
House prices will continue to slide, and despite the Reserve Bank dancing lightly on the OCR there will be increasing numbers of people struggling with their debts. This will lead to relationship stresses and breakups causing the bulk of the first wave of forced sales, which further depresses home values and leads to the second wave of forced sales as a much larger cohort find themselves in negative equity and utterly unable to even tread water.
The election will be one of a poisoned chalice, with all parties aware of the pending shtstorm and not wanting to be holding the bag and wearing the blame when it happens (regardless of blame actually being accumulated by all ruling parties over the last 15 years for failing to address the issue headon).
China's huge covid wave grants temporary immunity to the bulk of those who survive it, allowing China to quickly get back on with supplying the world with pharmaceuticals, tech gear, and general junk as before. Their construction industry will be in doldrums all year.
Trump will be increasingly recognised as a c##t, and his rabid followers will slowly start to slink back into the shadows as his reputation gets more and more tarnished.
Late 2023 Tesla will release a smaller EV suited only as a town car which will hog a depressed vehicle market where few people can afford the bigger EVs.
This will lead to relationship stresses and breakups causing the bulk of the first wave of forced sales, which further depresses home values and leads to the second wave of forced sales as a much larger cohort find themselves in negative equity and utterly unable to even tread water.
You are clever. I also suspect that marriage and relationship break-ups will take off.
After the election - ACT/NAT win - super age limits are raised and planting pines to save the planet will be scrapped in NZ. Ute tax gone as well as EV subsidy
Global leaders start to go cold on climate change policies as they see the negative economic impacts - more focus on sound environmental policies
China recession/deflation saves our Reserve bank Gov as imported inflation disappears - assisted by overstocked warehouses needing to discount to clear stock
But Govt deficits and negative BOP drive financing costs up so house prices down further, business failures increase, wages stop rising
Ukrainians drive Russians out so much turmoil in Russia - Putin falls out of a window. Trump convicted so much turmoil there as well
I don't want to predict but wish that the people of our nation get some intelligence this year and start doing meaningful things in their life which are original. Please no more sheep follow sheep in the country.
Let's each one of us pledge to do something original or have a new idea to implement. Go back to study to discover or invent. Let's 2023 be year of original ideas in NZ.
My predictions from last year -
by Northern Lights | 31st Dec 21, 2:38pm
1. NZ average house prices will have an annual rise of 9 per cent in 2022*
2. The govt will go back to the drawing board with 3 waters not because they want to but because the political damage to their causes will not be worth the potential gains.*
3. China will start to realise that popping a credit bubble in a time of demographic decline is a really stupid thing to do. A slow reversal of the policy will take shape then as nothing happens a panicky ramping up of stimulus will ensue.
4. Biden will put together packages from his Build Back Better bill more likely to pass and keep the US show on the road.
5. 2022 will be a bit of a holding pattern year as a majority of political leaders start to read the present as a time not to take risks and do things just because they can rather sensing that the underpinings are fragile.*
To assess
!. * Prediction fail
2. * Prediction fail
Labour pushed 3 waters through and now have to deal with the political damage.
3. Prediction pass
4. Prediction pass
5. * Prediction fail
A majority of leaders ignored the warning signs and just did it anyhow.
A 40 % success rate puts you well ahead of most bank economists at predictions ... Tony " the comb-over kid " Alexander will be green with envy ...
... we'll accept that #5 was a curveball ... most of us predicted our political leaders to " read the room " and ease off on bulldozing through unpopular policies .... ZING ! ... they fooled us there ...
Thank you for your kind words. I shall now foolishly make new predictions - fair warning prediction No.1 may be a contrarian signal.
1. House prices nationally in NZ will on average fall for the first two-thirds of the year then rise after that, the end result being house prices slightly lower for the year of 2023.
2. Inflation worries will continue to create pullbacks in worldwide govt fiscal spending in the first half of 2023. Coupled with a stagnant oil price that is too high for many countries economic activity will continue to wane. The end of the year will see pockets of disinflation, pockets of inflation and the start of a trend of whipsawing interest rate rises and drops for the next few years.
3, The Labour Maori caucus having got what they were after with 3 waters will want to keep what they have taken. So all hands will be on deck to try and get a Labour/Greens/Pati Maori coalition win. But the situation will resemble the deck of the Titanic, the while good ship Labour is slowly sinking with an unrepairable hole in the hull frantic orders will be given to lighten the shipload, steer clear of any other icebergs, go full steam ahead then hove to, rally around the captain and there will be many heated discussions on the bridge between all the co-governors.
I will have many anxious moments in 2023 as Labour looks to be pulling off another dazzling con job on the gullible NZ electorate, but in the end Labour will go out.
4, Ukraine and Russia will each lose another 100,000 souls to the Russian invasion and Ukrainian fightback but in the end the Ukrainians will push the Russians out and Russia will have to come to terms with the disaster it has created for itself. Cometh the hour cometh the man (or woman) - who that person will be that has the task of salvaging a new Russian state from the ruins of the old who can say, but there will be such an individual or group of individuals. Russia is a great country but it has strayed from the path and must return to the correct direction.
5. New Zealanders will continue to work away to better their lot in life and try to avoid the worst excesses of their clueless elite classes, the end result being a situation not as bad as it could have been. Due to sheer hard work and practicality by the ordinary population we will end up with a decent result at the end of 2023, but there will be plenty of misery along the way caused by feckless ideologues at the top.
1. Labour continue to push co-governance, with the media saying little.
2. The media continue to hound national and act.
3. House prices continue to slide down, banks continue to reduce credit supply.
4. Sharemarkets continue to slide, driven by growth stocks.
5. Gold price increases to record highs.
6. Headline inflation drops however inflation is still far to high. The media highlight the positive I.e. inflation down….10% to 9.8% (example)
7. Interest rates keep increasing in NZ in line with the US.
8. Major issues in the real economy, developers collapse, cafes bars and small retail collapse.
9. All parties agree to do the right thing and remove interest deductibility restrictions, but keep bright line.
1. National to implode before the election sadly leaving labour a free run.
2. Balance of payments to get worse bad enough to see our creditors looking sideways.
3 Interest rates to head closer to 10 and look to remain high as inflation and risk continue on.
4. All Blacks struggle through to semi's and now out totally ungraciously.
#2's is giant pooooos ... which will happen if the unbearable/ unthinkable happens ... & Ardern wins again ... half the country will leave ... dont care where , anywhere but here ...
... Luxon is 100 % professional , 100 % organised ... his team is behind him , ready to assume power ... 100 % cohesion ...
I'm currently an ACT supporter ... but I'll bet a big bag of Gummies that not only do ACT/Gnat win this year's general election by a country mile , but that Luscious Luxon & Davey-Boy prove to be an effective and popular leadership team for the following 9 to 12 years ...
... and that the horrors of the Ardern years will haunt & stymie Labour for a generation ...
The councils/govt didn’t charge 3x a workers income for creating a title back then.
No way a stand-alone 3 bedroom house gets back to 3x an average workers income in my lifetime.
Hell, $3k/m2 is now considered the baseline for constructions costs, so your 3x a $56k wage only pays for the construction costs of 56m2, you still need to buy land and get it permitted on top of that.
but feel free to explain how you are going to reduce builders wages, and material costs, and council costs to make it happen.
If the current linear trend continues (unlikely),
GDP/Recession - Q4(22), Q1, Q2 and possibly Q3(23) will have positive GDP releases so we won’t know if we’re in a recession for another 12 months.
Unemployment to still be below the RBNZ’s “sustainable level” of circa 4.5% by Q3.
Inflation to drop to 3.5% by year end.
OCR to peak at 6% during H1, given the above, and hold there for the year. No drops during 2023.
House prices to continue to drop all year.
Random thoughts
Credit Suisse could be a catalyst for another ‘08 style blow up. The FDIC meeting clips doing the rounds are somewhat interesting.
CBDC to be discussed more.
Ukraine vs Russia will still be going at the end of the year.
Putin will still be President.
China won’t have invaded Taiwan.
National/ACT in power with ACT and TOP having their best results yet.
My predictions from last year:
-1: The NZ dollar will get slowly but steadily hammered over the course of the year, with inflation continuing to rise on imported goods. (Note: currently at 0.682 vs USD. Prediction: 0.5x by December.)
-2: wages will rise a little, but not enough to offset these price increases, or the effect of moderately higher interest rates.
- 3: OCR: two rises of 0.25%. RB unable to raise further despite drowning NZD because of our extraordinary mortgage debt.
- 4: With households materially poorer due to inflation and higher interest rates, and with JC no longer a millstone around National's neck, Nats will poll higher than Labour by December. They will still have the massive problem of no natural coalition partner other than ACT - but ACT's current strength is a pool of National voters who will swing back to their natural home.
- 5: There will be problems in the new-build townhouse market, but the overall property market will be surprisingly resilient in nominal terms (even with negative real yields) as people would rather have money in a hard asset than a depreciating currency.
- 6: Stagnant year for the NZX.
- 7: US equities: unprofitable hype-stocks to get destroyed at some point, with a minor accompanying pullback on profitable tech. Overall indices to remain flat as that money gets rotated into safer names.
- 8: 'Supply chain issues' will remain disturbingly persistent (because they're not just supply chain issues). Economists will continue to insist that continually rising prices are not inflation because inflation is increase of the money supply; the public will continue not to care about that fine distinction.
-9: China's internal political problems will become more obvious and they will appear less of an external threat. There will be/is a battle within the CCP between those who have made megabucks and want to continue the current model and those who think that hypergrowth is dead and consolidation is necessary (Xi's faction).
-10: the EU will face extreme internal tensions reminiscent of the Greek debt crisis, as Germany (and similar) faces extreme inflation while Italy (and similar) can't afford to raise rates. One or more "Northern" countries will make serious steps towards defecting from the bloc.
I'd give myself 7/10 there... bang on with a few of them!
For the year ahead:
-1: Labour to 'win' the next election but with a messy coalition and uncertain mandate that leaves them looking very fragile. Greens demanding more say on legislation. With an impossible job and rapidly declining popularity, JA steps down late 2023.
-2: Local housing market grinds to a halt and prices wobble downwards rather than crash. With no one willing to take a big loss, and no new entrants at current prices, transactions decline precipitously and the market remains stagnant. Current new developments sell for a marginal loss or hand developments over to Kainga Ora.
-3: USA sees a housing correction. It doesn't effect us directly but keeps economic sentiment muted for them.
-4: Unemployment remains low, but the real situation varies wildly between industries. Lots of layoffs in hospo, low-level tech and professional services, and retail. Still a shortage of workers in physically demanding roles.
-5: $NZ to go back at least to where it was in October (c. $US 0.58) and probably lower.
-6: Inflation to ease but not disappear in the US (say 3%) while not easing elsewhere. NZ to suffer particularly because of rebounding fuel prices.
-7: China attempts 'normalisation' ie a return to the relative happiness and stable international relationships of pre-Covid years. They are not entirely successful because of internal economic problems.
-8: More direct government intervention to prop up strategically important local businesses that are at risk of collapse due to rising prices in NZ, as well as local governments finding themselves in financial trouble.
-9: Sharemarket: US to have another leg down and then stabilise by mid-2023. NZX to fare much worse.
-10: Crypto: the vaporisation of everything except BTC and Ethereum is completed. Binance goes down, followed by Tether, at which point the unnatural peg of BTC at c.$US16000 is broken and it crumbles down to perhaps $5k. By years' end it finds an organic, Tether-free price level somewhere $5-$10k.
Good luck, Happy New Year, and thanks to anyone who's read this far!
Will be interesting how long sellers can hold out for on the housing market. Some people have to sell (divorce, death, going into rest home, investors with negative cash flow, etc) and others will be very keen to sell (downsizers, investors going into retirement, investors realising there is no capital gain, etc). At some stage there could be a mass realisation that there is no upside to waiting.
Ok here are mine:
• I think inflation will reverse faster than expected leading to the reserve bank revising down the forecast for 2024. By late 2023 I expect we will be talking about interest rate cuts and see that in the 2 year rates.
• National will win the election.
• Ukraine will win the war before the end of 2023 or the stalemate will be very close to Feb 2022 borders.
• EVs will go up and up, Tesla will stabilise but not recover.
• China will become increasingly focused on domestic tensions rather than international adventures. Chinas property and population reckonings will continue.
Longer term, the big story is going to be population, population, population. With China’s population peaking, the concern will shift from immigration to ageing populations. Countries will start to realise there is a scarcity of young people to import and start competing to bring people in rather than keeping them out. China will start shedding manufacturing because they can’t deliver the cheap and abundant labour, this will boost countries like Vietnam and Mexico and drive on-shoring via automation. NZ will be no exception and the boomers who are used to be served by the younger generations will need to pay increasing amounts for that service.
I don't agree with most of your predictions at all but had to comment on the shortage of young workers.
100% there will be a population average age crisis soon, the average age in all western countries is creeping up with boomers + owning majority of wealth that is tied up in mostly property.
The comment I wanted to make was about attracting young people, not pushing them out. NZ is doing one of the worst jobs with this. Young people are consistently in the know that NZ prefers to import people from poorer economies to do work, regardless of the income vs cost of living situation.
I personally think it's a death spiral in slow movement. Kiwis leave NZ for AU or better job + house ownership opportunities overseas, making NZ have to import more labor to avoid a pop and workforce decline. This angers or further keeps the possibility of income vs cost of living being balanced, pushing more kiwis out, and the cycle continues.
I've been eyeing up AU for years but in the last year I've had multiple connections in my age group (mid-twenties) make the move and have landed roles with 40-200% more pay, with rent cheaper than Auckland. Them alone making the move and sharing experiences is making 2023 the year I finally leave NZ too. That death spiral seems to have a network effect too from what I've personally seen.
The only kiwis left in NZ working will be the suckers agreeing to slavery - underpaid work to support a property ponzi scheme that funds extravagant lifestyles of boomers. Until that changes, NZ has no optomisitc future in the eyes of any young person that understands the economics of income, tax, property prices and inflation.
There is not enough regard to making New Zealand liveable for younger generations.
This is about housing - look at Queenstown. They want cheap workers but no effort is made to accommodate those workers. The solution - bring in people who will live in a hostel, who don’t expect a house or even their own bedroom. It’s not sustainable.
I’m not anti immigration, in fact the population projections suggest we need to be building a population of younger people. But the objective of immigration policy cannot be the suppression of wages. Queenstown being the case in point, the cost of living and wages need to be in equilibrium, if they are not then we should have less businesses - tourism and hospitality are discretionary industries. If the people in multi million dollar houses there want a supermarket, someone to build their house, and restaurants to eat at, then they should be paying the prices so those people can live in that community.
You can extend this argument to all of New Zealand but Queenstown must be the worst example.
Bingo, never saw ZQN as an example like that but it is the perfect example. LA/California is the same. Average pay is relatively high and so is cost of living, with droves leaving as it's no longer worth living there, leaving the rich and the suckers that keep the system working but are not moving forward.
Absolutely agree. Throw a National govt in the mix who only care about making the property investors, business owners and farmers richer and you have a floodgate of good quality young NZers leaving to be replaced with cheap low quality immigrants.
We’re researching a relocation to mainland Europe where remote working in tech is really being embraced by companies now. Live in Italy or Spain cheaply and get paid Northern European salaries is real according to a friend hiring in Germany. So far the figures stack up well but we’re fortunate to both work in tech and hold EU passports.
I think expat sentiment is against labour. I infer that from my reading of LinkedIn comments during the Covid period, and they were scathing of labours draconian policies. Most people would never post political comments on LinkedIn so you could guess a tip of the iceberg type of thing there. I agree about the salaries. I miss the beach though.
My ideal 2023 for NZ predictions would be:
Property continues to fall to become what it is actually worth, not a speculative fomo tax haven in which younger generations borrow 10-20x leverage for 30+ years to own.
NZ revamps the welfare system and refocuses spending on urgent sectors that are falling apart.
Flat capital gains tax on all assets, treat it all the same.
But we know this is not what will happen
RBNZ will quickly avert rates in the fear of a major recession or will very slowly add pain to balance the card tower so it doesn't fall.
NZ will continue to bleed young smart kiwis and will happily import poorer country natives to make up the hole, further causing cultural divide and tension
Inflation will either rise or very very slowly fall, with this I don't see crime slowing down at all.
FHB that did 5%-10% deposits may go under and be forced to sell
Crypto will drop a wee bit further and float around 10-15k BTC price. Doesn't stop the DeFi innovation going on
Can't comment on stocks much as I really don't touch that market at all
I would like to (possibly foolishly) make a prediction for in two years time, i.e. 2024, simply because, as I live through more economic cycles, I realise they always have a tendency to last longer than logically expected, until the sudden downturn occurs.
I think 2024 will be worse than 2022 and 2023 (god am I sounding DGM!), I see a worldwide recession in 2024, with crypto, stocks, real estate and interest rates dropping markedly. For the smart, brave and cashed up investors, there will be great bargain buys in 2024.
Let's see in two years time!
Interesting.
I see worse damage to GDP occurring in 2023, but nastier symptoms of the disease in 2024.
In particular I think unemployment will peak in 2024 (at between 5 to 5.5%) rather than 2023.
So I agree with you in so far as the adverse *effects* of the recession will be realised more in 2024 than 2023. However I think economic growth in the 2024 calendar year will be higher than 2023.
But most people will feel more pain in ‘24 than ‘23.
If that makes sense.
Ok, here are my horoscopes
Crypto
Binance goes bankrupt, CZ disappears
SBF goes to jail, shaves his head and learns rap
Crypto mostly collapses, btc drops further but survives in 2023
FTX usernames released in bankruptcy proceedings with some surprise investors
Real estate
NZ housing another 15% down, with possible modest upturn and stabilisation in spring 2024
Other countries follow suit, but we lead the way.
Inflation and interest rates
Persistent and sticky all year. Realisation that ultra low interest rates are now over.
Equities
Another big leg down before Q3 2023, then stabilises toward the end of the 2023. Good buying opportunities from Q2 2023
Surprises
At least one Lehman style surprise
Others
Boom year for debt collectors and private prisons
Chaos in buy now, pay later
Musk sells Twitter to Microsoft, makes excuses
Predictions for 2023 are pretty easy to make as the Reserve Bank announced its future moves only weeks ago. It will continue to raise the OCR in its attempt to smother inflation. This will result in business failures, job losses and significant difficulty for those caught up in the aftermath. As interest rates increase people will not be able to borrow like they used to. Houses, boats , used cars and toys such as jet skis will continue to drop in price as people try to offload them and get rid of some debt. It is gong to be a painful year for many. Why didn’t they get ready for rising interest rates rather than splurge on unnecessary crap. Cash will be king as deposit rates go higher. At some stage it will be a good time to buy a better car, a better house, a bigger boat but that time is some way off. What is coming will make th gfc look pretty tame.
- National will win the election but will make amendments to the interest deductibility.. not reinstate it fully. My prediction is 50%
- property market will stabilise at the arse end of 2023 but will have fallen another 15%.
- DTI will be announce for early 2024 at a sensible x7 income.
- Tesla will go out of business
- Luxon will become PM but will be GAFF prone and flip floppy on pre election policies
Why will Tesla go out of business, their year-on-year sales are rocketing, and the cars are lightyears ahead of all competition. Sure, car manufacturers are making evs now too but most people don't buy a tesla because it's an EV, they buy it because it's years ahead of every other brand.
Plus, they also dominate the charging network globally, which is bringing in revenue. Just curious as to why or what signs are that the company is going out of business, if at all they are ahead of where they have been in the past in terms of going out of business.
Thanks 21 trillion. Have you seen their share price and degradation in second hand values? All seriously negative. The Twitter thing is massive in my opinion. This is merely a loose prediction, but I’m not liking the trend… for now
https://amp.cnn.com/cnn/2022/12/29/business/tesla-stock/index.html
Hey Tom. I have a model 3, secondhand values are no less than petrol vehicles, if at all they are holding up better. Have slipped like the rest of the market as people with the ability to buy a 2nd hand 50k+ car is drying up.
Twitter has nothing to do with Tesla, 2 separate businesses but same CEO. Share price doesn't really affect the business operations as well, the share price was far overvalued, and just like most tech companies, it has fallen. Meta, Netflix, Spotify all down over 50% in a year too.
Sounds like the media or news has convinced you that Tesla is a dead end, but I see the opposite. They are selling vehicles with optional paid software upgrades, monthly connection subscription and own the most dominant charging network globally. Selling solar panels, large commercial batteries, building a physical workforce bot and have just launched their semi trucks with Pepsi using them on the USA supply chain.
I'd bet on ford going bust before Tesla :P, hell even Toyota at this point is pretty high risk
Fair points. Another reason is the mining of cobalt. There will be a lot of pressure on Tesla to commit to clean mining and this will push up the price of Cobalt. The reason Tesla have such good battery life is less to do with lithium and more to do with cobalt. The Congo supplies 75% of the worlds cobalt and it’s a nut case!! I think this will become a choke point and will reduce the amount of cars Tesla can produce. With massive overheads and a reduced bottoms line… you see the issue??
We already have robots doing manual work in factories. Making a human shaped one makes no sense. Unless you are not in the business of delivering products, but in the business of raising funds like Elisabeth Holmes by selling sci-fi technology ideas that you never deliver on (don't mention the hyperloop). Long distance heavy trucks are not an obvious choice for battery power. Anyway, what was the payload on those trucks? Oh, they won't say.
Last years predictions below. Putin went further than I expected. I was right on Rishi, the relaxation of immigration, increase in emigration, COVID developments and the housing market. I think 2023 is much harder to call. So I will not be making any predictions. I will be taking a fairly cautious approach the next 12 months.
2022 predictions.
-
Politics:
Grant Robertson to become labour leader and PM. Jacinda Ardern takes a well earned break from politics before embarking on international career. WRONG
Judith Collins leaves Parliament. WRONG
Russia and China continue to play brinkmanship games in order to boost internal political power, distract their populations from failing economies and to win concessions from the US and Europe. Turkey start causing issues in their neighbourhood for similar reasons. PARTIALLY CORRECT
Rishi Sunak to become UK Prime Minister. CORRECT
Economy:
Supply chain issues worsen. Both importers and exporters find business more difficult. Markets consolidate as only the big players can secure affordable shipping rates. PARTIALLY CORRECT
Towards the end of the year immigration settings will be loosened in order to steady the falling housing market and bring in talent. Emigration rates will also increase in the 18-30 age group. CORRECT
Covid:
Treatments improve further. Less reliance on injections. Trend towards managing within the community continues. Border open without restriction by 2023. CORRECT
Pretty happy with last years predictions. More or less all there with the exception of JA resigning. 2022 follows...
- More inflation. A lot more. Businesses push 10-15% price increases to keep staff. This is already visible in Medical, IT, Retirement and Construction. More sectors follow. This will repeat annually untill interest rates lift to slow it down.
- Labours is happy that wages rise. Rises are destroyed by increased cost of everything. This especially hits the retired, beneficiaries and teachers, nurses, police etc. Labour secretly happy at higher tax take as tax points dont change.
- Govt needs more tax. Greens pressure a wealth/land tax. Labours tries to hide this agenda till post election.
- Great resignation gets going. Mass exodus of medical sector to Aussie. More and more IT sector workers start teleworking into Aussie.
- Wage and price spiral puts lots of pressure on company profits. This equals less tax.
- Govt/RBNZ caught between a rock and a hard place. Rates lift to 6-7% to slow wage and price spiral. Housing tanks last years speculative gains. Housing lobby noises goes into overdrive.
- Banks tighten lending more to protect themselves. Over leveraged get a margin call.
- Jacinda pulls the ejection handle for a UN gig. Robertson takes over.
- Immigration and Covid are related. Who knows what will happen.
- Let's hope China and the US avoid a punch up while playing chicken in the water around Taiwan.
- Omicron is everywhere quickly. Unvaxed question themselves when the ventilator appears bedside
Collective shitting of pants by the great unwashed in late Feb early March when all the cheer and exuberance of the Xmas/New Year period has to be paid for and the cupboards bare.
Price reductions on many everyday items at the big yellow sheds after a year of gouging the public on prices(in collusion with big dairy).
Desperation from Labour,courting all and Sundry with ever increasing unrepayable bribes,be it monetary,racial and social.
The middle refusing to bow to the unrelenting attack by the left by continuing to do what gets you marginally ahead in this country and also swinging to the right ,Nats Act and NZF.
Ardern to disappear after defeat and reappear at next year's Rhythm and Vines as guest DJ.
Michael Wood next Labour leader.
Arsenal lose last two games of season handing title to Citeh with Haaland scoring 55 Prem goals.
The dirty monied trophy dodgers from Newcastle to finish in 9th, once again proving they are no more than the Spurs of the North.
by Kate | 31st Dec 21, 1:38pm
The forecast for accommodation supplement costs will rise from $2.5 billion (actual) to $3.0 billion (forecast) and the government will subsequently introduce rental market price regulation coming into effect in December 2022.
No predictions on the form that regulation will take (but I'm working on it - lol).
A/S costs did rise but the government isn't even talking about regulation and, I'm still working on it.
What's the cheese commercial again - something about 'good things take time'?
I'll go with that.
Happy start to 2023, may it deliver what each hopes for.
The diversity expressed in the posts has been enjoyable to read - thanks.
My prediction (desperate hope) is balance of payments (deficit) gains the serious consideration it warrants and has failed toreceivein 2022.
I like to think of the national economy as similar to running a household. When more income is coming in than costs going out ....all peachy. If the reverse, then (to keep with my horticultural theme) it's a bad case of terminal brown rot.
As I ponder the last year or so I'm inclined to see the NZ economy as a spinning top (money cycling around), very close to the point of losing all momentum (strangled supply of export earnings) and falling off the table.
So just like managing my household deficit requires either growth of income (export earnings - exporting my labour for a wage income) or cuts to expenditure to bring it into balance, so NZ must do similar. Just don't sell any more crown owned assets - we're already being bled dry by offshore ownership.
Bought a WSJ subscription. Lots of stories about inventory gluts and ongoing/coming waves of redundancies. From microchips to PCs to fertilizer to clothes. The pullback is well under way, don't let a year-end domestic spike fueled by a few days of good weather fool you. Interest rates will start to come down by June 30.
2022 predictions
1 variant omicron will make its way into the community and not before time, following nz opening international borders the virus will escape. Complete
2 omicron being a less severe form will cause the pandemic response to collapse. Contact tracing will be seen as irrelevant, those with symptoms will not bother to be tested, merchants will not do the my vaccine pass checks for fear of loss of customers Complete
3 housing prices will not fall. The hpi and median will continue to increase albeit at a slower pace. Construction will begin to slow due to financing seizing up as well as inflation taking hold. New home buyers and banks will be nervous to commit. Builders and developers will nearly fully complete projects before offering for sale at fixed prices
2023 - The worst is behind us now, though the coming election will keep the sales market unsettled. If Lab win its the status quo, and a Nat win will be positive for a small house price rally. Market participants have had time to mentally adjust to the new economic environment of higher inflation and interest rates. Barring an invasion of Taiwan or deepening Ukraine crisis, house prices will probably pick up slightly by years end.
4 rents will rise strongly, because of fewer homes both new and existing, being bought by investors. And for many other reasons such as increased demand after the international borders reopen and foreign students and tourists return. More homes will be used for short term lets thus removing them from the rental pool. Labour has unwittingly and fundamentally changed the structure of the rental market
2023 - Rents will rise because of fewer investors thus falling rental stock and greater demand coming back to the market mainly through international students and migrants. 5300 Auckland Stock level has peaked
So investors are going to sell off their houses into a market with very few buyers and rising interest rates, yet you think there will be a small house price rally? Each to their own I guess.
Also I doubt a labour win would be considered status quo by property investors, most of them think a national win is a forgone conclusion. 3 more years of labour could trigger a mass investor exodus.
I notice that very few are predicting 2023 to be a good year. Covid is well and truly over, supply chains etc should be back to normal, NZ will have many more houses built, Ukraine war could end, some good technology advancements may be coming. Why all the doom and gloom?
Because interest rates all over the world are going to continue to rise in 2023 as Reserve Banks combat inflation. It looks like plenty of money is being spent this christmas/new year so another .75% in February. Get those shitbox rentals sold asap as they certainly are not going to rise in price any time soon.
I’m certainly not a socialist. But wouldn’t you agree that 2023 should be a good year, coming out of a pandemic with very low unemployment. Obviously there are lots of negatives too, I’m just pointing out that almost all predictions here focus solely on the negatives. Those same dire predictions have been wrong year after year, maybe they will be wrong again.
Covid is over in terms of having any real economic effect. We’ll probably all get it every few years like the flu. Sure a new strain could be problematic but seems unlikely compared to past pandemics. China will muddle through it in the coming months.
We will see I guess. I’m a bit 50/50 whether it will be a good year or not. If we do have a soft landing with inflation and the RBNZ doesn’t need to jack up the OCR any more then it might all work out nicely, particularly if housing becomes more affordable in the process. But obviously there are many other bad scenarios well documented here.
I do think the building industry will be hit hard, although maybe it will just change from excess demand to equilibrium.
A bit late the comments party but I have just read through them and have not seen one reference to primary industries, we have completely forgotten where the fuel for our economy comes from .
I'm not a farmers are the backbone of the country blah blah type (every sector plays a part) but come on.
Spending in rural NZ has slowed significantly (alot of ods being extended just to pay operating expenses ) , this will flow on.
No but there's a number of comments noting the balance of payments worsening. Due to the fact primary industry accounts for 81% of exports it's a indirect comment on primary industries.
Fact is we run on debt. None of the economists and most of the population could give a toss about wether the money comes from productive endeavor or elsewhere, so long as it comes.
They may care when it finally affects the cost of that debt or it's availability but for now meh
“A 40-year bull market,” says William Eigen, a bond investor at JPMorgan Asset Management and one of those rare exceptions who had positioned his fund to avert the pain to come, “does funny things to you.” It sears core principles into the brain that are hard to erase. Ever since the late 1980s, young traders, investors and analysts have been schooled in the ways of the Fed Put, a belief that policy makers were always there to prop up markets in moments of turbulence — by scaling back plans to raise rates or outright cutting them — and, therefore, you should buy the dip. Any rate increases, (others) said, would come in increments so small that financial markets would barely feel them." And yet, despite how badly they got burned by underestimating inflation, many in the investing community remain convinced that Powell, for all his tough talk, is getting ready to make that pivot. “If you were rich and famous by the end of 2020, you were famous because of low rates. Your business, your fortune, your success was tied to low rates.” This has made it hard for investors to rethink their approach. Rising rates, and the way they force investors to discount future corporate earnings, are particularly damaging. “When you see the world changing you have to (change your) position because (otherwise) you're hoping and praying every day that the world isn't changing.” There are some signs that the re-education of Wall Street is slowly underway.
2017 predictions. Only one mention of Ardern.
https://www.interest.co.nz/news/85394/we-want-your-opinion-about-what-l…
In 2022:
- Jacinda to resign. WRONG
- House prices fall and a credit crunch sparks a review of CCCFA CORRECT
- Inflation goes wild as RBNZ pause rate hikes in the face of house prices declining CORRECT
- A crypto meltdown happens when assets held by 'pegged' coins turn out to be bogus CORRECT
- The price of physical metals go through the roof HALF RIGHT
- Peloton is the stock of 2022 rising 250%. Locally, A2 Milk and Sky TV make big comebacks. A2 and Sky meh, peloton, LOL
2023
1. National win the election, realise they cant afford to unwind many policies.
2. House prices fall further, average price down to mid 700s.
3. Stock market capitulates led by Apple and Mcdonalds, rebounds in an epic santa rally late 2023.
4. The fed pause rate hikes and the market FALLS. People believe the fed overcooked things.
5. The war in Ukraine ends. I hope.
My humble predictions (ranked in order of risk).
- A serious nuclear accident (10% probability). Either as a result of the Ukrainian shelling of the Zaporizhzhia nuclear power plant, or as a result of a US sponsored “Ukrainian victory” which would necessarily result in nuclear annihilation of western Ukraine by Russia. Either mechanism would be catastrophic for humanity potentially resulting in hundreds of millions of deaths from the poisoning of a large area of the worlds food production coupled with radiation induced cancer in the northern hemisphere.
- A huge rally in the share market (5% probability). Debt deflation causes central banks to engage in easy money policies again however this also coincides with skyrocketing consumer prices leading to a loss in confidence in the purchasing power of fiat currency by the general public. Everything skyrockets from gold to the share market to cans of baked beans, as people try to get rid of cash and buy anything real.
- Inflation becomes deflation (70% probability). As the global recession grinds on, and because interest rates have risen so sharply recently, global loan initiation will slow down. Because aggregate demand is equal to income plus the change in debt, the global money supply will have to contract if there isn't any new massive government spending.
- Scarcity (60% probability). Broken supply chains and hostility among resource rich countries will crimp production and result in new and continued shortages of essential chemical inputs to various consumer products.
- An apocalyptic share market crash (20% probability). The contracting money supply has an adverse feedback effect on stocks via reduced buybacks, and declining margin debt. Resource scarcity and increasing input costs reduce corporate profitability, while a tapped out consumer reduces sales. That combination exposes the inappropriately high p/e ratios of many stocks. Finally, a Leeman type event spooks the horses and starts the stampede.
- A continued realization at the damage caused by the mrna covid19 vaccines (95% probability). The unusually high excess death rate among younger people, the weakening of peoples immune systems leading to cancer, Epstein-Barr reinfection, Herpes reinfection, and shingles etc. will be reflected in peer reviewed publications this year.
- Nothing eventful (75% probability). We muddle through this year. Ukraine conflict grinds on in the background. S&P down because of growth stocks but value outperforms. National and Act win the next election with a large margin.
Ford ranger repos spike.
Youth unemployment.
Miniature Nuclear Fusion breakthrough (creating the fastest growing company in history).
Civil War in Russia.
My net worth balloons.
Housing sales trickle.
North Korea hits neighbour with a stray nuke and is dismantled.
Gnats win.
Oil state becomes insolvent.
UK PM resigns.
Pope steps down.
Covid evaporates, everywhere.
David Attenborough gets Nobel prize.
Cure for several types of cancer.
USTs hit 7%.
I'm surprised that there are few calls for large property price declines in 23.
My predictions -
There's no "soft landing."
US Fed continues to raise rates and either holds them high or pivots due to something big and systemic breaking (different and bigger than Lehman, i.e. a developed nation sovereign debt crisis).
Inflation remains a challenge. The RBNZ continues to mirror the US Fed with interest rate rises. RBNZ and Politics prioritise fighting inflation and holding up the exchange rate over struggling mortgage holders.
The effects of recession and stagflation hit the wider economy and unemployment increases.
House prices (NZ HPI) take a big leg down, dropping another 20% - 25% to return to pre-pandemic levels or below.
Any rate pivot due to a financial crisis will not change the downward trend in house prices.
Agree 100 % ... house prices are still in barking mad overpriced territory ...
... I'm generally optimistic about 2023 ... an end to the Ukraine war ... an end to Ardern's government ... a boom in share markets worldwide ...
My only downer is house prices ... although , that's a very good thing mostly ... high house prices are splitting our society in two ...
There are a lot of things that I would like to happen and I think that the trap with this is that wish lists becomes ones predictions.
-I would like to see house prices drop say 20 % this year and at least 40% peak to trough over several years. (nationals election campaigning and possible election will reverse the current fall.)
-I would like to see some of our low payed workers receive at least a 10% wage rise and about 35% for nurses.
-I would like to see immigration heavily curtailed to give rise to the necessary wage rises, high interest rates and property price drops.
-I would like to see all the businesses that are dependent on low wage immigrant labor, either lift their productivity so that they can pay kiwis a decent wage or go broke; we do not need them. We cannot afford to keep funding the housing, infrastructure and services that these low pay workers and their extended families require.
-I would like to see our government meaningfully address the lack of competition with powerful results.
This way we might have some hope of stopping our young Kiwis from leaving the country. I suspect we will see very high outward migration as there is no hope here for young ones as things are where they are having to compete with low wage immigrants for work, pay crazy prices for anything in our non competitive monopolist economy and try to get ahead in our crazy property market.
Do we have hope of any of this happening. Not a show. I will predict that.
I will also predict that our hospital system will collapse, perhaps about the middle of the year.
OK, let's make predictions, nothing to lose, not my job, not being paid for that. :)
1. House prices will continue to go down, by more than any financial institution has been predicting (basically same as last year scenario with forecasts revised for the worst every couple of months). I simply don't see what could make it different.
2. OCR to reach between 5.5 and 6% in Q2 then plateau as it seems inflation peak is behind us. What has been done so far must be effective enough, only lagging due to delays from RBNZ to realise what's happening then delay for new (higher) rates to hit households.
3. Labour to be barely re-elected
4. NZ vs France final
I predict that 2023 will see 1yr fixed interest rates hitting 8.0% by the end of the year.
Do I want to see it happen? Absolutely not, I cannot afford it.
Do I think it will happen? Quite likely, given how slow they report back on how the lever changing has been affecting the economy
If the Gnats can dominate the polls by doing and saying very little then, when the election vote buying begins, they will win by a landslide.
Ardern will be banished to the idiots in the UN never to be seen again and lambasted for all the destruction she has caused
she will be remembered within the shadows of racial divide, economic recession, crime, poverty's, dishonesty, health and education catastrophe , housing collapse...
Poverty Bay will be renamed Ardern Bay but in Maori one uwha huakore ( you can translate this.)
House prices will crash due to supply outgrowing demand and new stock not selling. Look for another 20%>
Cuddles Costa will be gone by september.
Covid 23 will arrive, be managed poorly like 23, and the world will ignore Mr Baker and suckie Wiles.
National will cut the public service by 30%
Maori will still be claiming traaty billions and blaming whities for thier modern day issues . Despite having all the money!
Womans sport will crash as crowds dwindle.
Our best sportsman will finally be recognized!. Stand up Mr Adams
EVs will be deemed a dumb idea as charging demands and electricty supply compromises charging capacity.( Re California right now)
The greenie morons will continue to ban road cars while high polluting planes continue polluting the planet.
Elvis will be found in syria.
Putin will be overthrown by the people and be assassinated.
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