New Zealand - The Good, The Bad and The Ugly.

[Wayne Potgieter]

So we did the kid's driving test this morning.

 

Rock up to VTNZ: "Hello, where do we do the paper work?" "Did you book online?" "Yep" "Ok, text your name and rego to that number, then wait in your car"

 

At the appropriate time, dude rocks out, takes Meg for test, I go drink good fresh roasted Mediterranean coffee. They rock back, into office, quick photo, clickity click on the computer, "Sign here", "Ok, you'll get your licence in the post in a week or two".

 

No queues. Friendly faces behind the counter.   Done. 

 

Coffee $3.99 at Cafe Cezwe, Porana Road.

the most shocking part of this post is the cheap coffee.

 

#NewMarketCoffeeIsOverpriced

[patches]

So we did the kid's driving test this morning.

 

Rock up to VTNZ: "Hello, where do we do the paper work?" "Did you book online?" "Yep" "Ok, text your name and rego to that number, then wait in your car"

 

At the appropriate time, dude rocks out, takes Meg for test, I go drink good fresh roasted Mediterranean coffee. They rock back, into office, quick photo, clickity click on the computer, "Sign here", "Ok, you'll get your licence in the post in a week or two".

 

No queues. Friendly faces behind the counter.   Done. 

 

Coffee $3.99 at Cafe Cezwe, Porana Road.

 

 

the most shocking part of this post is the cheap coffee.

 

#NewMarketCoffeeIsOverpriced

 

 

The difference between cafes in commercial and semi-industrial areas, haha.

 

Also that I'm boycotting that VTNZ after they failed my bike's WOF  . Apparently 6000 lumens of LED goodness was more than I was legally permitted. Oh and they couldn't figure out how start and turn-off the bike, I had to do it for them

 

But congrats on having another motorist/gofer in the house!

 

hahaha, the difference between cafes in commercial and semi-industrial areas.

Edited September 17, 2020 by patches

[davetapson]

But congrats on having another motorist/gofer in the house!

Yeh - I told her that her first job is to drive me out to the Stables Pub at Puhoi where I will have appreciably more than the legal limit of beer to drink while she drinks soda water, and then she can drive me home... #paybacktime

[davetapson]

Tony's View... 

https://forms.gle/qW9avCbaSiKcTnBQA
 

New Zealand’s Housing Markets

 

25 Reasons Why House Prices

Are Rising – and Counting

Treasury warn that house prices might fall 7% from

their current levels. But chances are they are much

too pessimistic and the recent rise in prices will

continue, though at a slightly slower pace because

there will be some bounce-back effect in price gains

these past three months. Average NZ house prices

now sit 1.5% above levels in March.

Here are 25 reasons why house prices have

surprised us with their strength. Many (not all) of

these factors will continue to apply over the coming

year and beyond.

 

1. Interest rates

The Reserve Bank cut the official cash rate 0.75% in

March and since then floating mortgage rates have

fallen to near 4.5% from 5.3%. The two-year fixed

rate has fallen to 2.65% from 3.55%. Term deposit

rates have also fallen, with the six-month rate going

to 1.3% from 2.3%.

Lower interest rates have made purchasing a home

more affordable, and encouraged investors seeking

higher yield than now offered in bank term deposits

to look at other assets including property.

 

2. Interest rate expectations

It is not just that interest rates are low. The Reserve

Bank have made it clear that they intend to keep

rates low for many years, with assistance from the

US Federal Reserve which has just shifted their

policy stance toward multiple years of low rates to try

and generate inflation above 2% for a number of

years. Also, our central bank has indicated it may

introduce a negative official cash rate next year.

Expectations that interest rates will stay low are

encouraging people to expect that other people in

the future will be seeking higher yielding assets

including property. So, they are buying before this

expected extra demand comes along.

 

3. Migration boom

Even before we had heard of Covid-19, from the

middle of last year a change was occurring in the net

flow of Kiwis across our borders from negative to

positive 2,800 come the end of 2019. By March this

year the net Kiwi flow was +13,000, contributing to a

 

record net inflow for all countries of 90,000 from

50,000 a year earlier.

We already have in the country the net migration

gain we expected would be recorded by just after the

middle of 2021. This means extra pressure on rental

accommodation, allowing investors to (now) raise

rents, whilst discouraging them from selling and

encouraging more purchasing.

 

4. Migration expectations

Most Kiwis expect that when the borders reopen, we

will see a great number of our expats coming home

– along with many foreigners wanting to shift here.

Expectations of a coming horde which will purchase

property is encouraging extra purchasing now –

especially with people swapping stories of expats

buying property unseen whilst still offshore. The

numbers doing so are however probably very low.

 

5. Migration Data

And third in the migration spot, it is entirely possible

that despite our borders being closed, in a few

months our monthly net migration numbers will be

back above 1,000. Why? Because the chances are

high that inflows into NZ through quarantine will stay

firm (though easing) ahead of the borders one day

reopening. But outflows will peter off as the

government makes it easier for visa holders to

remain here, and long-term foreign visitors will have

already departed.

This possible yet-to-arrive factor will add to

expectations of a return to high annual net migration

inflows when the borders open.

 

6. LVR Removal

In March the Reserve Bank announced that it was

removing Loan to Value Ratio requirements. First

home buyers have read this to mean that banks will

accept much smaller deposits, and they have

entered the housing market in high numbers.

 

7. Cash Build-ups

During seven weeks of lockdown, young people built

up cash savings through wage income continuing,

but spending on bars, clothes etc. no longer being

possible. They also now have spare cash which had

been allocated for overseas travel. For some this will

have encouraged efforts to build a deposit now

rather than later, and in seeing their deposit grow

they have entered the housing market.

 

8. Travel and Housing Switch

Unable to travel, but still wanting to, it is likely that

some young people have decided to switch their

planned spending timing between travel and

housing. They have changed from planning to travel

then look to buy a house, toward buying a house

first, then later on travelling.

 

9. Expected Reduced Construction

Although monthly dwelling consents have yet to

trend downward, the expectation of most people is

that the Covid-19 shock and tightening of bank

lending criteria will lead to a reduction in house

construction over the next couple of years. Reduced

supply will tend to place upward pressure on prices

unless demand also declines.

 

10. Unemployment of Non-home Owners

The bulk (not all) of the people losing employment

as a result of the Covid-19 shock are in the retail,

hospitality, tourism, entertainment, and

accommodation sectors. They tend to be young,

earning below average wages, and not home

owners. The Household Labour Force Survey says

90% are females, but I have found the below-

headline numbers in the HLFS to be quite volatile in

the past, with changes that don’t seem to line up with

reality. So, chances are, it is not true that 90% of the

job loss burden is being borne by females.

Unlike previous recessions, we are not seeing many

distressed sellers in the property market.

 

11. A Focus on Home

Around the world people have turned their attention

to their immediate living arrangements. This has

produced a boom for the home renovation sector.

Focussing on improving one’s nest is easier if one

owns the property and can change it around at will,

as compared with renting. Therefore, the Covid-19

shock has probably produced a desire to shift from

renting to owning.

 

12. Listings Shortage

We went into the Covid-19 shock in March with the

stock of property listings around New Zealand down

27% from March 2019 and 64% from March 2010. At

the end of August, listings were still 13% down from

a year earlier. By comparison, in March 2019 listings

were ahead 3% from March 2018. So, we entered

the shock with a rapidly growing shortage of listings.

 

13. Hidden Buyers

It is likely that over the past four years a high number

of people wanting to buy a property had given up in

the face of rising prices and insufficient listings.

Seeing the Covid-19 shock come along, some of

these buyers not active in the market are likely to

have become incentivised to re-engage amidst

hopes of distress bringing many new vendors to the

market.

 

14. Fear of Not Being Able to Repurchase

There is now so much awareness of a shortage of

stock that agents are reporting vendors as being

unwilling to sell because they do not want to run the

risk of bit being unable to quickly purchase a new

suitable property. The listings shortage has started

to feed on itself in a self-perpetuating manner.

 

15. Fear of Missing Out

This is known as FOMO. It has been around forever,

but in past periods of strong house price growth in

New Zealand is not a term which has been in

common usage. It means, in the current context,

people have become concerned that if they do not

make a purchase now, they will miss out on a likely

capital gain or on the opportunity to buy something

at all.

This fear of missing out is encouraging people to

make a purchase as early as possible – dragging

future purchasers into the market now, before their

intended purchase timing of perhaps next year or

2022.

 

16. High Household Wealth

It is not true that Kiwi households are poor, even

though the common message is that we are. We are

meant to believe that we all live with high levels of

debt which will one day cripple us, house prices, and

our country’s future.

In truth, household debt amounts to some $300bn.

But household housing assets amount to near

$900bn, and financial assets like shares, managed

funds, company ownership, bank deposits etc.,

amount to $1 trillion. Net worth is around $1.6tn.

Some 43% of owner occupiers do not have a

mortgage.

Not everyone passively manages their net worth.

Sensing a need to gain a decent return and perhaps

an opportunity in the housing market, plenty of

people are able to become property investors.

 

17. Giving up on Travel Dreams

Many people have assumed international travel may

not be possible for a number of years. Some of these

people have decided to purchase a second property

to use for holiday purposes in New Zealand, and this

probably helps explain the limited decline which has

occurred in Queenstown Lakes District property

prices (down only 1.9% in the three months to

August from a year earlier, versus a nationwide rise

of 1.3%, and Dunedin City fall of 3.1%).

 

18. Money Printing

This is something new for New Zealand. Overseas

experience shows that central bank buying of bonds

and conversion of bond investors’ bond asset into a

bank cash deposit places upward pressure on asset

prices including shares and property. The Reserve

Bank admitted in May that there is a risk their bond

buying pushes up asset prices, and it is now

commonly discussed that their actions are

contributing to higher house prices – often in the

context of a debate about their contribution to a

widening of the wealth gap in our country.

Growing awareness of the impact of the RB’s actions

is likely to be contributing to a desire by people to

buy before the RB causes prices to rise further.

 

19. Mortgage Deferrals

The introduction of this scheme and its extension to

March next year will have taken away the immediate

pressure on many people to sell their house through

inability to meet mortgage payments. The scheme

has reduced current seller numbers.

 

20. Good Financials Leading into the

Covid-19 Shock

Household debt in the five years leading into this

shock grew near 40% compared with 80% in the five

years ahead of the 2008-09 Global Financial Crisis.

More than that, the introduction of LVRs in 2013,

plus the application by banks of high test interest

rates for assessing debt servicing capacity of

borrowers, meant there was little high-risk housing

debt heading into the shock. This has limited

mortgage stress – as these measures were

designed to do.

 

21. Lack of Bank Staff

Banks have not had the staffing resources to handle

many mortgagee sales, with personnel run off their

feet adjusting to working from home and processing

credit assistance applications from businesses and

home owners.

 

22. Soaring Share Prices

Share prices rose very sharply from late-March and

this may have encouraged a positive view by

investors of other, less rapidly repriced assets – like

property.

 

23. Job Losses for Migrants

Just as many job losses are hitting young people

who do not own homes, they are also hitting the

many migrants on working visas who were present

in the accommodation and hospitality sectors in

particular. Heading into this downturn 8% of jobs in

New Zealand were held by migrants, compared with

4% at the start of the GFC.

To the extent migrants bear much of the burden of

unemployment, this does not produce a hike in the

number of distressed property sellers, because they

will not be property owners.

 

24. Quiet Government

A key point I made many months ago was that calls

by large bodies for house prices to decline in the

interests of social equity would disappear. I noted

that neither the Reserve Bank, banks, Treasury, or

Government would want house prices to be falling

this year. Falling prices would make the economic

downturn worse.

It has come to pass that we rarely read of desires

these days for house prices to fall, and lack of such

expressions from senior government members in

particular has removed one factor which might have

stayed the hand of many potential property

purchasers, whilst also potentially encouraging

some sellers. Policy makers want house prices to

rise.

 

25. Wage subsidies

Were it not for the three rounds of wage subsidies to

employers to keep staff on there would be a lot more

people unemployed currently. The absence of this

unique employment shock has reduced the number

of property sellers and kept many potential buyers

engaged with the market.

Edited September 17, 2020 by davetapson

[patches]

That old harbour bridge right?!

 

I bet Intern is laughing at all the Jaffas, especially those poor sods (like me) on the north shore who have been shafted by some bendy metal on the harbour bridge.

 

The bad... it took my 2hrs to get home on Friday.

 

The ugly... reports say that repair may take up to 6 weeks.

 

The good... it gave me a reason to just off the motorbike. Commute in this morning, 30min. Only 10min longer than a usual motorcycle commute.

[Steven Knoetze (sk27)]

I see the levels are dropping on your side of the pond too, good news!!!!

[patches]

That old harbour bridge right?!

 

blah-blah-blah

 

The good... it gave me a reason to just off the motorbike. Commute in this morning, 30min. Only 10min longer than a usual motorcycle commute.

 

Aaaaand that was where the good ended.

 

My 15km commute home took me about 1hr15. Yes, even on the bike.

 

I got caught in the Curran Street debacle 

 

Well done AT (Auckland Transport), for defending the title of most reviled government agency! 

[patches]

Oh nearly forgot...

Kudos to the motorcycle police officer I encountered yesterday at the Fanshawe Street onramp.

 

I saw him pointing at me then to the side. I thought he was pulling me over for lane-splitting (although technically it is legal in NZ).

However, he was actually instructing me to use the Bus Only lane to bypass the queue of cars backed up at the onramp signals. 

[davetapson]

Oh nearly forgot...

 

Kudos to the motorcycle police officer I encountered yesterday at the Fanshawe Street onramp.

 

I saw him pointing at me then to the side. I thought he was pulling me over for lane-splitting (although technically it is legal in NZ).

 

However, he was actually instructing me to use the Bus Only lane to bypass the queue of cars backed up at the onramp signals. 

 

We're so conditioned to obstructive officials we get all confused when they're not.

 

(Alternatively, we're all so used to breaking traffic laws we drive about with guilty consciences...    ) 

[arabsandals]

Oh nearly forgot...

 

Kudos to the motorcycle police officer I encountered yesterday at the Fanshawe Street onramp.

 

I saw him pointing at me then to the side. I thought he was pulling me over for lane-splitting (although technically it is legal in NZ).

 

However, he was actually instructing me to use the Bus Only lane to bypass the queue of cars backed up at the onramp signals. 

Surely you mean Featherstonhaugh?

[patches]

Surely you mean Featherstonhaugh?

 

haha I have no idea what that is. Is that a street in Sydney?

[arabsandals]

haha I have no idea what that is. Is that a street in Sydney?

https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It's%20just%20a%20hint%20in,a%20small%20wood%20or%20grove'.

[patches]

 

haha I have no idea what that is. Is that a street in Sydney?

<a data-ipb="nomediaparse" data-cke-saved-href="https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It" href="https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It" s%20just%20a%20hint%20in,a%20small%20wood%20or%20grove'."="">https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It's%20just%20a%20hint%20in,a%20small%20wood%20or%20grove'.

<a data-ipb="nomediaparse" data-cke-saved-href="https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It" href="https://hellenisteukontos.opoudjis.net/2016-12-09-how-did-the-surname-featherstonhaugh-get-its-completely-unintuitive-pronunciation/#:~:text=It" s%20just%20a%20hint%20in,a%20small%20wood%20or%20grove'."="">

 

Crazy the evolution of that.

 

At first glance the only similarities are that they start with an "F" and end with an "awww" sound.

 

Is it a name that appears in your family tree? or did you just happen upon the connection?

[arabsandals]

Crazy the evolution of that.

 

At first glance the only similarities are that they start with an "F" and end with an "awww" sound.

 

Is it a name that appears in your family tree? or did you just happen upon the connection?

Came across it in relation to these guys: https://www.bbc.com/news/entertainment-arts-14475985

[Wayne Potgieter]

So our trip down to the South Island is underway and I think Wanaka might be on the list for a place to buy a house.

 

Relatively good pricing. New developments. Good schools and pretty as all hell.

[Wayne Potgieter]