Economic growth, inflation, and interest rates around the globe remain significantly lower than they were prior to the 2008 Global Financial Crisis. The limited success of efforts to stimulate the economy over the last 12 years are reminiscent of the Japanese economy’s stagnation during the 1990s. Are other developed economies, including New Zealand, at risk of suffering the same malaise as Japan over the medium-term?
Housing looks set to continue dominating headlines in 2020, as house prices look to rally again and rent pressures grow. Who’s got property, who’s paying for property, and how many need property will all be key issues through the year as we build towards another election. But separate from that, the spotlight will keep shining on the housing market as New Zealand’s primary method of wealth creation. With so much money and interest wrapped up in property, here are some of the components to watch in 2020.
There’s a saying that it takes money to make money. There are, of course, exceptions to any rule, but this saying generally aligns with Thomas Piketty’s thesis (Capital in the Twenty-First Century) that if the rate of return on capital exceeds the economy’s growth rate, then wealth will gradually accumulate in the hands of fewer and fewer people. That is, if investment returns are growing faster than the economy, this wealth accumulates.
Infometrics Christmas Carol 2019 – sung to the tune of Santa Baby (written by Joan Javits and Philip Springer). Originally sung by Eartha Kitt, we used the version by Madonna
The latest Infometrics Quarterly Regional Economic Monitor points towards a slowing economy, even as growth remains broad-based across the country. Construction activity continues to grow at pace as New Zealand attempts to make up the shortfalls in housing, services, and infrastructure from rapid population growth over previous years.
African Swine Fever (ASF) is now firmly entrenched in every province of China and has recently been reported in several other South East Asian countries, causing an upheaval in the world’s meat market. The Fever, a highly contagious, incurable virus that is fatal to pigs but harmless to humans, has also been detected in parts of Eastern Europe since 2014.
The latest estimated resident population data for regions and districts published by Statistics New Zealand (Stats NZ) in late October threw up a few surprises, not least that Auckland’s population is a lot lower than previously estimated. Indeed, we have been overestimating population in many of our larger urban centres and underestimating it in the smaller provincial districts.
A whopping $138 billion of infrastructure spending is planned across New Zealand over the next 10 years, according to the latest Infometrics Infrastructure Pipeline Profile . Updated in early November, the Profile shows planned infrastructure spending is expected to be roughly $9b higher than our previous estimate from September 2018.
Every time we have local elections there is lots of talk about the low levels of turnout, and rightly so. In 2016, turnout was up nationally to an unimpressive 42%. The 2019 preliminary results from Local Government NZ show a drop in national turnout to 41.4%. At a slightly more detailed level, “metro” council areas followed a similar zigzag of up in 2016 and down in 2019. Interestingly “provincial” and “rural” council areas showed an inverse zigzag, with decreased turnout in 2016 and increased turnout in 2019.
New Zealand’s housing market isn’t functioning as well as it should be, with higher house prices, rising rents, falling home ownership, and a lack of housing options. But just how large is the housing shortage that we continually hear about?