- NZ Growth Set To Improve: Research
21/06/2006 07:39 AM
Reuters
New Zealand’s economy has probably hit its lowest level, and business investment and improved exports are likely to underpin faster growth rates over the next three years, a private research house said on Wednesday.Business and Economic Research Ltd. (BERL) said the economy had slowed in the previous two quarters, but it was likely to be either at a turning point or close to it about the middle of this year.
“It is business investment that has been holding it up for quite a while, and we see that continuing on, with exports coming in later on,” senior economist Ganesh Nana said.
The research group held its forecasts for annual average growth in gross domestic product (GDP) at 2.2 percent in the year through March 2006 and 1.9 percent in the March 2007 year. Growth was expected to increase to 2.4 percent by 2008 and 3 percent the year after.
Economic activity was also being underpinned by employment growth and a turnaround in immigration gains.
“So, while overall GDP growth may be subdued, some might even term it shaky, there remain sources of positive influences that suggest growth will continue,” Nana said.
Economists polled by Reuters forecast GDP growth of 2.1 percent in the year through March 2006, from 2.2 percent in the December year. The GDP data, due on Friday, is expected to show the impact of a strong currency on exports, and slowing domestic activity.
The research house said the central bank appeared to be justified in keeping its official cash rate steady at 7.25 percent, despite the economic slowdown, because of persistent inflation pressures, but it did not expect any easing this year.
“All the signals from the Reserve Bank are they’re going to hold out, they’re fairly hawkish,” Nana said, adding that investment might suffer the longer the central bank held rates.
The RBNZ has held its cash rate, the highest in the developed world, steady so far this year, after raising it by 2.25 percentage points between January 2004 and last December.
Consumer price inflation would remain outside of the central bank’s target band of 1 percent to 3 percent in the near term, but would fall to 2.7 percent by March next year.
BERL said it would take some time for a lower New Zealand dollar, which has fallen around 10 percent so far this year, to feed into improved returns for exporters.
“Consequently, the deficit on the nation’s current account balance of payments is set to remain its Achilles Heel over the forecast period,” Nana said.
BERL forecast the current account deficit to widen to 9.2 percent of gross domestic product in the year to March 2006 and the year after, before declining to 8.9 percent in the March 2008 year.
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http://xtramsn.co.nz/businessandmoney/0,,13273-5937322,00.html
©2006 Xtra LimitedWEDNESDAY, 21 JUNE 2006
By JAMES WEIR
The economy is cooling down, with growth of almost 2 per cent expected in the year to March 2007 and a mild improvement in the next two years, BERL has forecast.The group is expecting business investment and government spending to lead economic growth.
The workforce is forecast to grow by 40,000 in the coming year, a slower rate than the 60,000 a year for the past three years.
Net migration to New Zealand is expected to improve, as is tourism.
But despite a big fall in the New Zealand dollar this year, there is only “modest scope” for an immediate rise in exports.
“We don’t expect to see significant export-led growth till 2008, and even then our forecasts are relatively conservative at 4.2 per cent growth,” BERL says.
The New Zealand dollar has dropped about 12 per cent in the past six months, so there will be a collective sigh of relief among exporters, it says.
But there are lags between a fall in the currency and a boost to export volumes from farms, forestry and fishing.
Meat and horticulture exports will be held back by previous stock numbers and planting decisions. Meat export volumes stalled in recent quarters. Volume sales were down 2 per cent in the March 2006 year.
The big fall in the Kiwi dollar has boosted returns for forestry, with log exports the biggest winner through improving prices as well as a lower currency.
The improved returns would not mean a big rise in forestry export volumes, however, because pulp production was already close to capacity and log sales were held back by higher shipping costs.
BERL tips more robust growth in tourism, which stalled because of the high dollar last year.
March-quarter gross domestic product figures are due on Friday.
Bank economists forecast growth of 0.5 per cent to 0.9 per cent, with an annual growth rate of just more than 2 per cent. The economy stagnated in the second half of 2005, and will remain subdued this year because of high interest rates, the previously high Kiwi dollar, record fuel prices squeezing company profits and cutting household spending, and a cooling housing market.
BERL says economic growth will be subdued at 1.9 per cent in the year to March 2007, compared with average world growth of close to 5 per cent.
But there are some positive factors suggesting growth would continue.
Business investment last year was equal to 16 per cent of gross domestic product, the highest level for more than 20 years.
Government investment spending has also been rising strongly.
There are many big building and roading projects throughout the country, and that investment spending is expected to keep leading economic growth, BERL says.
Net migration had also bounced back strongly, from 7000 in 2005 to more than 10,000 in the past 12 months.
That was expected to rise to 17,000 this year, led by returning Kiwis.
House Sales Jump In May, Prices Steady
20/06/2006 09:45 AM
Reuters
New Zealand house sales rose sharply in May while median prices stayed at record highs as the housing market consolidated after a recent soft patch, a real estate organisation said on Monday.The median house price was unchanged at NZ$305,000 (US$188,271) from April, though still 10.9 percent above the same month in 2005, the Real Estate Institute of New Zealand (REINZ) said.
Institute members sold 9,642 houses in May, a 27 percent rise on April and 4.2 percent higher than a year earlier.
“The sales statistics show that the market has consolidated; prices remain strong with a good number of properties continuing to sell, which shows a resilient residential property market,” REINZ President Howard Morley said in a statement.
The median number of days taken to sell a house rose to 38 days from 34 days in April.
The strength of the housing market has been a factor in the central bank ruling out any prospect of an interest rate cut this year, despite a slowdown in other parts of the economy.
The Reserve Bank of New Zealand (RBNZ) left interest rates at 7.25 percent this month after raising them by a total of 2.25 percentage points since January 2004.
Prices rose in five of the REINZ’s 12 regions, fell in six and were unchanged in one.
Median house prices in Auckland, the country’s largest commercial and population centre, rose 3.3 percent against April, and sales rose 22 percent. (US$1=NZ$1.62)
Find this item at:
http://xtramsn.co.nz/businessandmoney/0,,13276-5928859,00.htmlI don’t feel we will get the interest rate cuts (floating rates) that we thought might occur around september. Invers median house prices rose 15% according to qv – sorry I don’t have that link maybe someone else has. Nice for people who brought residnetial property in NZ in the last 12 months. QT is the fastest growing region in the country.
Cheers
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hey Don!
hope yr business is still going off !!
I dont know much about the current NZ market ,only that Dolfy still swears by it and he has the runs on the board all over the world.
Can u possibly post some current or recent deals up (with figures)on the forum for me and others to get an idea of what can be done in NZ at the moment.?
Do u find many value add deals around?
thanks heaps !
lukeWe’ve got 70 yrs on planet earth,Lets make the most of every day!
Luke Taylor | Hope Property Investing
http://hopepropertyinvesting.com
Email MeProperty Support,Strategist and Buyers Agent
Hi Don,
Thanks for the news articles. Sounds like some good times ahead in NZ for the coming years.
Regards,
Ozi[quoteDo u find many value add deals around?
][/quote]Hi Guys, It funny – just when you think all then good ones are gone the phone rings and something unusual pops up – or you look at something you had passed over a week earlier and there is something you missed in the council file – or you make a phone call or visit the land titles office and find something out that other people don’t know about – or you knock on a door just out of curiosity and the owners says “sure I have thought about selling”. It’s all good fun!
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
This from yesterdays press also;
House prices in south keep defying gravity
21 June 2006
By SUSIE NORDQVISTPredictions of a softer southern housing market have failed to materialise.
Prices continue to climb with a shortage of houses for sale.
Real Estate Institute of New Zealand figures show the median price for Southland was $130,000 in May, up from $127,750 in April, but still well below the national of $305,000.
Real Estate Institute of New Zealand Southland deputy president Tony Jenkins said those who had been “sitting on the fence” amid predictions of a slump had joined the property queue while those investing remained high.
“I would say the market is still very, very good. There are no signs of it weakening. Interest rates are at a good level and we are still coming off a very low base so our median price is still good when compared to other regions.”
The biggest problem agents in Invercargill were facing was a lack of listings, Mr Jenkins said.
“There’s still a very strong demand from buyers and multiple offers on properties … but we have found over the last month there has been a shortage of good stock, which is not giving the buyers the choices,” he said.
Meanwhile, sales for Southland in May were 312, well ahead of the 202 sold in April but almost on par with the same time two years ago.
Days to sell were up slightly to 32.
The national median price was steady at $305,000 with sales up from 7576 in April to 9642 in May.
The median in the Central Otago-Lakes District eased $10,000 to $420,000 in May. Sales totalled 139 – 24 more than the previous month.
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
Hi all
good to see price rises in Sothland.
Regarding the first stories posted by Don
Lets read what they are really saying, I didn’t see to much to get excited about in those stories, It looks like NZ will still under perform the rest of the world.
0zi maybe you should read those stories again, when you make comments like
Sounds like some good times ahead in NZ for the coming years.. The article said
BERL says economic growth will be subdued at 1.9 per cent in the year to March 2007, compared with average world growth of close to 5 per cent.To compare the NZ economy with a football team, Its like saying “We are getting better instead of getting beaten by 10 goals every match, things are improving and we will only loose by 5 goals”.
Don
Nice for people who brought residential property in NZ in the last 12 months, but it depends where they bought
Prices rose in five of the REINZ’s 12 regions, fell in six and were unchanged in one., according to the report half the regions lost value. Also given the huge drop in the Kiwi dollar over the past 12 months many would have lost money.
The GDP figure is out tomorrow that will be interesting. Current account out today $14 Billion Plus, the worst in NZ history.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auIn todays local paper I read an article by Bill Harcourt ( whoever he is ) who basically claims that NZ is now leading the world down .
NZ is the nearest country to the International Date Line and I well remember the 87 sharemarket crash where the NZ market was the first to feel the rezults .
Perhaps it is not faceious to claim that NZ is the worlds canary….
I’ve lived in NZ and have seen how the small towns are hit hard when there is an economic downturn. Things get very tough and people migrate to the big cities or Australia. Any Australians who have invested in places like Tokoroa in the last 12-18 months must seriously look at reviewing their NZ portfolio. You’ve probably lost 20% already on the exchange rate changes over the last 4 months plus you would IMHO be looking at losing at least another 20% when the market turns. Just my opinion. I was in NZ in 1997 when exactly this happened and back then the market was not nearly as overheated in the smaller NZ towns as it is now.
ned kelly
Hi Ned
wow, someone else shares my concern, thanks for your opinion. I often feel like i’m the only one raising some concerns, so i appreciate your comments.
regards westan
USA deals, cash flow equity and capital growth all in one property.
International Property Consulting Pty/Ltd.
Property Investing New Zealand Ltd
http://www.iproperty.net.auNZ Business Confidence Improves In June
30/06/2006 08:38 AM
Reuters
New Zealand business confidence perked up in June as inflation expectations steadied, a survey showed on Friday, pointing to moderate economic growth this year.The National Bank of New Zealand’s monthly Business Outlook showed a net 16.6 percent of companies expected their own business to improve in the next 12 months compared with 10.3 percent in May.
The measure, regarded as a useful barometer of economic growth, pointed to a “respectable” 1.5 percent to 2 percent growth rate over the coming year and banished fears of a recession, the bank said.
“At the trough in the economic cycle, it now looks increasingly like there will not only be growth, but reasonable growth at that,” Chief Economist Cameron Bagrie said in a statement.
The picture was mixed, however, with firms broadly expecting higher profits, exports and investment, but a fall in the number of new jobs.
The survey showed companies’ overall business expectations became fractionally more negative, with a net 32.2 percent expecting general conditions to deteriorate over the next year compared with last month’s 31.3 percent.
Bagrie said the economy was likely to be short of impetus in the second half of the year as the drivers of growth started to change.
Sectors which had previously driven growth, such as retail, housing and construction, were slowing, but external sectors were picking up as the lower New Zealand dollar, down around 13 percent against the US dollar this year, started to have an effect.
“Such a rebalancing of growth is as inevitable as night follows day.”
The survey showed respondents’ inflation expectations easing marginally to 3.26 percent from 3.29 percent, while those expecting to raise their prices fell to a net 35.2 percent from 39.6 percent in the previous month.
The next move in interest rates was also seen more likely to be down than up.
Bagrie said the Reserve Bank of NZ appeared to be adhering to its stated intention of looking beyond the initial impact of higher oil prices and a lower currency.
However, the central bank would remain wary of a “stickiness” in inflationary expectations and would want to see signs of receding price pressures.
“Until they are assured on that front, the Governor will continue to barrack that cuts in interest rates are off the agenda,” Bagrie said.
The Reserve Bank of New Zealand has kept its benchmark rate at a lofty 7.25 percent since December, but has been adamant there is no scope for an easing this year because of pockets of strong inflationary pressure.
Consumer prices rose 3.3 percent in the year to March 31, and inflation has been outside the central bank’s 1-3 percent target band since the middle of last year
This same message is being repeated quite a bit a the moment. The panic merchants really have pulled there heads in. What you see a present is an economy moving through the lowest point in the cycle without negative growth – good sign.
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
So who do you believe; Punch and Judy or the puppet master?
Price of houses will drop, says Reserve Bank headTuesday June 27, 2006
By Matthew BrockettReserve Bank Governor Alan Bollard expects house prices to start falling by the end of the year as higher interest rates begin to bite.
“We are seeing the rate of increase slowing a lot,” Dr Bollard said in Basel, Switzerland, where he is attending a meeting of central bankers.
By the end of the year the bank expected house prices to “go negative”.
“Monetary policy is now having an effect and we feel more comfortable as a result of that.”New Zealanders were wrong to think they could “overwhelmingly save through housing”.http://www.nzherald.co.nz/section/story.cfm?c_id=1&ObjectID=10388515
So the governor of the reserve bank seems intent and content to see across the board falls in NZ house prices.
F.[cowboy2]
Does not really matter if you are not a property investor foundation! Those of us who are actually investing need to take a position. Those who are sitting on the side lines can only commentate and wish they had the guts to do something!
I Buy Property http://www.cashflowproperties.co.nz
Don Nicolussi | Mortgage Broker - Home Loan Warehouse
http://homeloanwarehouse.com.au
Email Me | Phone Me"I think of finance as a technology, a way of getting things done." Robert Shiller
I’ve taken a position. I’ve decided not to sell my surplus property. Thus, I have a vested interest in further house price appreciation. I simply posted a contrasting view… one that I would think is important for NZ investors to at least acknowledge, given that the governor is the one who is essentially in control of future house prices, and that he intends to use monitary policy to induce house price falls.
Cheers, F.[cowboy2]<edit>
Oops, just realised I might have accidentally pushed a button when I referred to “Punch and Judy”… I meant of course, the VIs of the banking, lending and RE world who were interviewed, along with the papers who published the articles, not your good self, DP…
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