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Recent releases

All a bit boring as non-residential consents go back to “normal” After two very strong months, the total value of non-residential building consents slipped back to $479m in October. This result was closely in line with the average level of activity throughout the last year, and was up just 4.9% from October last year. When the $93m of large consents are excluded from the latest figures, the underlying level of consents was 15% lower than a year earlier. Read more

Consent pattern continues — but Canterbury falters October’s dwelling consent total remained close to projections, with 2,349 approvals. These results indicate we are well on track to achieve the 7,051 consents expected for the December quarter. Read more


Where are house prices going to go? In October we saw house price inflation tick up to 14%pa with rapid house price growth still taking place in Auckland and beginning to show up in neighbouring areas.  But with both the “bright-line” capital gains tax rule and changes to loan-to-value restrictions now in place, many are wondering if there is a whiff of change in the air.  Read more.

Dairy, the dollar, and drought Prices for dairy products at GlobalDairyTrade’s latest auction this week fell 7.9%, taking the total fall over the last six weeks to 17%.  Dairy prices have given up almost half the gain recorded between early August and early October, thwarting hopes of a rapid recovery in dairy incomes.  By way of reference, whole milk powder prices have slipped back from US$2,824/tonne to US$2,148/tonne, and most analysts expect prices to move back towards US$3,200/tonne over the medium term. Read more.

Dealing with a world of risks Even with the spectre of financial crisis has moved into the background, this week’s Reserve Bank of New Zealand Financial Stability report noted that fragility remains in New Zealand’s financial markets.  The key risks they identified were the Auckland housing market (with Hamilton and Tauranga receiving a special mention) and lending to farmers.  The Bank also reserved space to comment on “low interest rates”, indicating that even if economic conditions warrant it they may be unwilling to cut rates further after December. Read more.

Latest Forecasts

A (dust) storm is brewing

With the probability of a strong El Niño this summer sitting at 99%, the prospect of an impending drought has darkened our outlook for growth in 2016. Businesses are already putting up the shutters, with the global economic growth harvest falling short of expectation and demand for dairy products having all but dried up in the 2014/15 season. But with people arriving in droves to till the land, and rapid construction in Auckland and Canterbury keeping the wind out, GDP growth is only expected to slow to 2.0%pa in the year to September 2016.