Focus on Politics: the Campaign Mop Up
16 min
A thumping Labour win and a National humiliation. RNZ deputy political editor Craig McCulloch checks in with the rest of the gallery team to dissect the 2020 election result and what it means for the various parties.
NZ Everyday Investor
NZ Everyday Investor
Podcasts NZ / WorldPodcasts.com / Gorilla Voice Media
NZ Property and Foreign Buyers / Geoff Caradus
Are foreign buyers behind NZ’s latest housing boom? The latest report out of the Real Estate Institute shows New Zealand’s median house price was 20% higher last month than the same time last year, while in Auckland the median price has now shot north of $1 million. Naturally, for the many New Zealanders trying to enter the housing market this has been a real cause for concern over the past few months. This concern has evolved into all out rage on the public stage, as frustrated home buyers look for somewhere to focus the blame. These are all ‘demand-side distractions’, when the core issue is in fact, supply. The blame-game continues to play out though which of course ropes in the Prime Minister, the Reserve Bank, over-anxious first home buyers, and property investors, just to name a few. But for foreign buyers, the group of cashed up internationals usually at the centre of these media storms, the public has been rather quiet. That’s because in 2018, New Zealand introduced the Overseas Investment Amendment Bill, which virtually cuts out foreign buyers of the residential market. The ban was borne out of this public sentiment as the public searched for someone to blame. Was there ever a problem here - we’ll never be sure as the data collected was never clear enough from the start. “There was a perceived problem that there were too many foreign buyers on the market. There were anecdotal stories in the news of buying a home in Auckland and being surrounded by foreign people,” said Geoff Caradus, a lawyer at Pitt & Moore. So has this ban, intended to temper New Zealand’s surging housing market, been successful? “It’s been very successful in stopping overseas people buying residential property in New Zealand to the extent it was intended to be,” however, “the devil is in the detail with this sort of stuff.” What makes someone an overseas buyer? An overseas person is defined as someone who does not fall in the below 4 categories: * Have a resident’s class visa, * Have been in New Zealand for at least the last year, * During the year in New Zealand you have spent at least 183 days in the country, * And you’re a tax resident in New Zealand This covers the individuals, but it also extends to the entities they own and control. As lawmakers know, higher worth individuals often have a myriad of trusts and organisations in their name. Could it be possible these entities have been used to ‘hide’ the true origin of the purchaser or their money? “The people who write these laws know all that stuff, they aren’t idiots. So they made the threshold that if 25% of the entity is owned or controlled by an overseas person, then the entity itself will be considered an overseas person.” A wealthy yet disgruntled Trump supporter looking for greener pastures, may find the first three controls fine, but you lost them at the 4th. “We talk with people about options for buying land and the conversation is going well, until we tell them about them getting to the tax residency,” laughs Caradus. Caradus and his organization will receive around a request every month from overseas people looking for loopholes for these tough new laws. “The overseas investment office has been very active in pursuing violations of this law,” said Caradus. Lawyers and real estate agents are all equally obliged under the bill as well as new AML (anti money laundering) restrictions, so aiding and abetting this kind of behaviour would put any professional squarely in harm’s way. This nevertheless, doesn’t discount a less scrupulous lawyer than Geoff, taking the lost client instead, right? “If you’ve got someone lying to their lawyer, lying to their real estate agents and risking the millions of dollar fines that come with the act, I wouldn’t say that means the act has failed. People will do all kinds of criminal stuff and you can’t stop them, but most people will listen to the law and most people will obey,” concludes Caradus. Two years later and the amendments to the law have proven themselves to be watertight in what they set out to do — staving off overseas investment into residential property. However, with house prices continuing to go through the roof, people may call into question how meaningful these changes ever were in the first place. It’s fascinating, when contemplating the success of this legislation, that we didn’t really even know the extent of the problem we were trying to solve in the first place. Either way, it was thought that by eliminating this group, we’d significantly reduce demand for New Zealand homes. Still, as long as the discussion keeps the focus on demand-side culprits, the real culprit (lack of supply) can go on unnoticed. The free market will always respond to rising demand (that is, if a market is ever truly free). We’re quick to blame the free market when things aren't working, but we often fail to realise that perhaps the reason why it’s not working, is because it’s been neutered by red-tape. Who’s to blame for the rising housing market again? ___________________________________________________________________ Hatch and NZ Everyday Investor - Investor Challenge! Start investing regularly. It’s not about picking stocks, it’s all about investing regularly towards an objective! The goal of the challenge is to get you to start making regular contributions to your investments, to build long term wealth. Now to help you with this challenge, Hatch is going to give one lucky person a $500NZD top-up to their Hatch account. To enter the giveaway, head to: https://www.hatchinvest.nz/nz-everyday-investor-giveaway Terms and conditions: https://www.hatchinvest.nz/nz-everyday-investor-ts-and-cs Just pop down your email address _and your _goal you have when it comes to investing – that’s right – if you put it out there, it’s more likely to happen. The challenge will run from Monday 16 November to Monday 30 November, and the winner will be announced on Tuesday 1 December. _So don’t put this off _– if you’re in a position to do it, click on the link now. If you work for money, put some of it to work for you today – good luck! __________________________________________________________________ Like what you’ve heard? 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47 min
Economy Watch
Economy Watch
Interest.co.nz / Podcasts NZ
US hospital pass
Kia ora, Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand. I'm David Chaston and this is the International edition from Interest.co.nz. Today we lead with news that any recovery for the world's largest economy is looking increasingly tenuous. Their incoming Administration has been handed a mess. There is a mountain of American data to report today, a dump just before their long Thanksgiving Weekend. Next week, it will all be about the signals from the retail sector. But first, US jobless claims for last week came in higher than expected. In fact a small dip was expected but a rise is what they got, to 778,000 new claims. And the prior week was revised up, making matters worse. There are now 6.071 mln people on these benefits, a drop of -300,000 in a week as support levels expire at a fast rate. And without new Congressional action in the next few weeks that ending of qualification will bite millions more. The chance of new or renewed support seems low as Republican senators seem intent of hobbling the incoming Administration. The recovering in durable goods orders slipped in October from September, but at least there was some small growth. At least that growth didn't slip as much as expected. On a year-on-year basis, they are -1.1% lower. Non-defence capital goods orders are level-pegging year-on-year, and if you exclude aircraft orders (there were none in October 2020 but quite a few in October 2019), then they are up +5.5% year-on-year and that is a good sign. However, there is no progress to report for the American merchandise trade deficit. It came in at a record -US$86.9 bln for the month with exports down -7.1% on a year-on-year basis, and imports little-changed. There is good news on one front however - sales of new-built houses is holding at their high level of about +1 mln per month, and that is more than +40% higher than a year ago. That makes it four months in a row or sales at this very elevated level. Not so good is data for personal incomes in October (-0.7%). They fell more than expected while spending stayed in growth mode (+0.5%). It is not a trend that can continue much longer. In fact, the spending growth is tailing off quite quickly now and this may be the last we see of it. The latest consumer sentiment readings continue to show lower levels, and lower expectations. In fact, the November levels are now more than -20% below where they were at this time last year. In China, regulatory pressure is rising on the many SOE companies that are under bond pressures. And China has substantially dialled back its criticism of Australia, saying recent remarks by PM Morrison were "positive". It is hard to tell at this point whether this is a reset, or just a test. A more internationally engaged American Administration in the region will be a tougher test for China's relatively hard line policies. And in Australia, home-building fell to a six-year low in the September quarter, as a combination of Victoria's lockdown, less infrastructure work and falling commercial construction made for a weak result of completed construction. Global airline trade association IATA is signaling that airline industry losses will be much greater than originally estimated. They now say a net loss of US$119 bln is expected for 2020 (deeper than the -US$84 bln forecast in June). A net loss of US$39 bln is expected in 2021 (deeper than the $16 bln forecast in June). And France has started its crackdown on Google and Facebook among other major US tech giants for tax avoidance. The US is on record of retaliating if this happened, but the situation is less sure now. After touching new records, Wall Street is backing off a little today with the S&P500 dipping -0.2% in cautious pre-holiday afternoon trade. Overnight, European markets were mixed, but with London down -0.6%. Yesterday Tokyo closed up +0.5%, Hong Kong was up +0.3%, but Shanghai went the other way closing down -1.2% in losses that grew as their session progressed. The ASX200 ended up +0.9% and the NZX50 Capital Index was up +0.9%. The latest global compilation of COVID-19 data is here. The global tally is 60,038,000 and a +637,000 rise overnight. The largest number of reported cases globally are still in the US, which rose +202,000 overnight to 13,004,000 and at their higher pace of infection. In Australia, they are not getting any major resurgence. The UST 10yr yield will start today -2 bps lower at 0.87%. The price of gold is has recovered some of the big falls over the past few days, up +US$7 today to US$1811/oz. Oil prices are higher again today, up by another +US$0.50 or so to just on US$45.50/bbl in the US, while the international price is now just under US$48.50/bbl. And the Kiwi dollar has risen again to 70.1 USc this morning and another 'good' gain since this time yesterday. And it is a 30 month high. Against the Australian dollar we are firmer at 95.2 AUc. Against the euro we are holding at 58.8 euro cents. That means our TWI-5 will start today up at 72.6. We were last at this level in March 2019. The bitcoin price has fallen overnight after very briefly touching a record high. But is now at US$18,987 and -1.4% below the price this time yesterday. You can find links to the articles mentioned today in our show notes. And get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston. We will do this again tomorrow.
6 min
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