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Recent releases

House price inflation hits 10 percent National house price inflation struck 10.1%pa in July, just tipping above the 10.0%pa growth recorded in December 2013 to become the fastest rate of house price inflation since November 2007. Boosting this increase was a strong lift in Auckland house prices over July, but house price growth over the rest of the country is also ticking upwards. We expect to see further acceleration in house prices in the months leading up to regulatory changes in October. Read more

Lending growth accelerates in June Nominal debt to GDP ratios edged upwards in March 2015 and look as though they climbed further in June with lending growth accelerating across the three broad sectors: agriculture, business, and households. However, lending growth is likely to moderate over the year ahead as dairy and rebuild-related investment cools and economic growth eases off the throttle. Read more

Commentary

Why Chinese stock market woes are worrying us Disarray re-emerged this week in Chinese equity markets, with the Shanghai Composite Index plunging 8.5% on Monday – the index’s biggest daily plunge since 2007.  Although some stabilisation has occurred since, we still believe that there are many reasons to be cautious regarding the underlying health of the Chinese economy. Read more.

Is the Bank doing enough? In the month since we released our forecasts New Zealand has been struck by a series of negative blows – slumping dairy prices, an early peak in the Canterbury rebuild, and the negative confidence shock associated with events in Europe.  The Reserve Bank of New Zealand, and the New Zealand dollar, have both responded to these shocks – with the Bank expected to cut the OCR to 2.75% in September, and the dollar having depreciated 12% in the past three months.  But with rapid change the name of the game right now this raises the question of what is driving these changes, and whether enough is being done to prevent unnecessary harm to the New Zealand economy. Read more.

Optimal incompetence I quite like our office, it has a great view and an easy layout, but I do get locked out of it from time to time. Not because I don’t have a key, oh no. But, sometimes our staff keys just don’t work. Naturally we can get this sorted within an hour or so, but we’ve been locked out the building, office, and in the bathroom (awkward, I know) so many times that I might just be past the point of forgiveness. It’s moments like these that really makes me wonder whether the person responsible is trying to be useless. Seeing as this is not the only service I’ve had a bad run with in the past few months, I thought I’d explore for you whether there can be real opportunities and motivations to provide a lousy service. Read more.

Latest Forecasts

Overhauling the economic growth menu

The New Zealand economy has drawn praise from connoisseurs around the world over the past year, with a perfect balance of ingredients pushing GDP growth above 3%pa. Migrants have come from far and wide to sample our fare, while bubbles have continued to flow on the party circuit for construction and housing market participants. Although the regions have kept the pantries well stocked with fresh primary produce, critics claim that our dairy products will struggle to cut it against a growing supply of European milk, and so must now be priced down accordingly. Given these low dairy prices, at a time when growth in residential building consent numbers in Canterbury is being removed from the menu, economic growth is set to cool. We forecast that GDP growth will reach an eight-year high of 3.7%pa in the September quarter, but be turned down to a simmer after that.