The house price downturn is 'officially over'
New data this morning confirms the end of the recent housing market downturn, but even the low was high. Building consents are down and rent prices and migration are up.
Mōrena, and welcome to The Bulletin for Wednesday, November 1, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: Nicola Willis says third entrant needed to break up the supermarket duopoly; New Zealand ‘no longer on track’ to meet climate goals; a deep dive into the Taxpayers’ Union and its election campaign; but first, the messy confluence of migration, housing supply, house price, inflation and unemployment data
Downturn is 'officially over' says Corelogic
Corelogic’s national house price index showed the first rise in property values since March last year, up 0.4% in October and 0.1% over the past three months. That’s prompted the property research firm to call the house price downturn “officially over”. Corelogic data often lags some of the other property data sources because it is collected from completed sales rather than unconditional deals. Its national house price index is also a rolling three-month tracker rather than a month-by-month measurement. Nationally, from the start of the downturn to now, the average loss was $138,000. In Auckland, it was $261,000. Corelogic chief property economist Kelvin Davidson says average values are still almost 25% above the pre-Covid levels of March 2020. The average house value in Auckland is now $1.26m.
High migration to drive prices higher says economist
Westpac chief economist Kelly Eckhold says that while higher interest rates will have some impact on restraining prices, population growth running at a “multi decades high” due to migration will boost demand for housing. Building consent data released by Stats NZ yesterday shows the number of residential building consents continuing to fall, with the number issued for the year ended September at 40,400, a 20% drop on the previous year. Westpac senior economist Satish Ranchhod said the downturn in the building sector was deepening, and consent numbers were likely to fall further. “If I think about the actual amount of construction activity, we're looking at a downturn that's probably going to be in the ballpark of about 16%. That's a very sharp downturn. In fact, the last time we saw something getting that sharp was during the global financial crisis where things fell by about 30%,” he said.
Rent rising and growth outstripping housing supply
interest.co.nz’s Greg Ninness looked at recent housing supply numbers in Auckland, contrasted against migration data. Population growth in Auckland is outstripping the supply of new homes being built in the region. Recent data from Barfoot & Thompson shows average rent in Auckland rising by 4.4% in the September year to $652.93 per week. Average rents were nearly 13% higher than September 2019. Ninness concludes we’re at a tipping point on housing supply and warns of a return to the housing shortages of 2020. The first comment on Ninness’ piece reads, “We love scoring own goals in this country. Self inflicted and preventable.”
Stats NZ labour market data out today
Stats NZ labour market data for the September quarter is out today. By now, we all know the orthodox drumbeats: when employment levels are high, wages rise faster. People have more money to spend, so prices go up and so does inflation. When unemployment is high, the lack of money to spend means that inflation goes down. It is our old mate, the Phillips curve, conceived by New Zealander Bill Phillips. A consensus of bank economists ( paywalled, and is that the collective noun or just an accidentally clever allusion to it by Liam Dann?) is picking that the unemployment rate will have risen. Most are pinning that prediction on high levels of migration.
Nicola Willis says a third entrant is needed to break up the supermarket duopoly
Commenting on the news that grocery start up Supie had been put into voluntary administration, National’s Nicola Willis says that if she’s finance minister in the next few weeks, she will “seek advice on how do we ensure that we do get a third entrant into this sector, and it doesn't have get the sort of failure that we saw here.” Willis has previously said that the party would not rule out forcibly breaking up the supermarket duopoly, but would rather find ways to encourage a “third entrant” to increase competition and keep prices in check. The Commerce Commission stopped short of recommending a radical shake up of the supermarket sector in its March 2022 report. Newsroom Pro’s Jono Milne spoke to Supie founder Sarah Balle who said she’s “devastated” at having to call in administrators and supplied Newsroom with a list of suppliers, including Fonterra and Mars, who she says have refused to take part in the new government-backed regime requiring supermarkets to give smaller retailers access to their wholesale chain at competitive prices.
Related:
The Herald’s Chris Keall with an excellent explainer (paywalled) on how start up funding works and why it’s getting harder to find funding
Supie directors resigned to make it easier to make the necessary changes
New Zealand no longer on track to meet climate goals
The Herald’s Thomas Coughlan reports that a paper taken to cabinet by James Shaw in July said the government was no longer on track to meet its first emissions budget in 2025. According to the paper, proactively released on October 19, significant and costly action offshore will be required to hit its first Paris Agreement target in 2030. The paper kicked off the process of reviewing New Zealand’s Nationally Determined Contribution (NDC). An NDC is a climate action plan and every country signed up to the Paris agreement is required to have one and to update it every five years. In 2021, New Zealand committed to up its NDC to reduce net greenhouse gas emissions to 50% below 2005 levels by 2030. To meet the NDC, the government is relying on offshore deals that will offset emissions New Zealand does not get rid of domestically. In 2021, the estimated cost of that was between $7.5b-$13.2b. A new analysis of the cost of hitting a 50% reduction target by 2030 now has an upper limit of $23.7b.
In new international research released this week, scientists have found that emissions would have to plunge to net zero globally by 2034 to retain a 50% chance of limiting global temperature rise to the 1.5C target laid out in the Paris agreement. For a 90% chance of keeping below 2C (the upper limit of the Paris agreement), emissions would have to hit net zero in about 2035, the study found.
Rec Room has a new editor at the helm
And it’s Spinoff founder Duncan Greive.
Greive has spent most of his adult life writing about pop culture. He hosts The Fold, co-hosts the Real Pod and brings a honed eye to what we’re listening to and watching. If you’re familiar with Duncan’s work, you’ll know he has a firm grip on the media and cultural landscape and the sometimes mind-bending change happening at pace. He will also keep you updated on the new, the buzzy and make his own recommendations about how to spend your viewing, reading and listening time wisely. If you’re not a subscriber already, I highly recommend.
Click and Collect
Newsroom’s David William with a deep dive into the Taxpayers’ Union and its election campaign
Whakaari Management convicted of one health and safety charge relating to fatal eruption
Another craft brewery, Deep Creek, goes into liquidation
Thames-Coromandel District Council unanimously votes for Māori representation
Christchurch is getting its very own Monopoly board
Watch: What does it take to become a Scrabble champ?
Every Word Counts follows three passionate Scrabble players from around the country as they hone their skills ahead of the fiercely competitive national championships. Full documentary out November 7 on The Spinoff.
Joel MacManus digs into whether a secret deal to reopen Reading Cinema could be the win Wellington mayor Tory Whanau needs. Stewart Sowman-Lund reports on the Auckland councillor calling for leniency for bus lane fines. Shanti Mathias investigates what will happen to the call for free dental care now. Thomas Giblin profiles Tom Sainsbury, who’s pivoted from character comedy to wilderness horror in his new film. Tara Ward goes on a hair-raising ghost tour of New Zealand's most haunted city. A 29-year-old explains the ‘humiliating juggling act’ of surviving on a disability benefit for the latest in our Cost of Being series.
Sporting snippets
Another New Zealand v South Africa game for us all. This time it’s at the Cricket World Cup, starting at 9.30pm tonight
Dylan Cleaver describes all the Cricket World Cup teams in three words for those us of distracted by other recent sporting events on
“See ya later Rugby World Cup. Won’t miss you, or the death threats” — Polly Barnes, co-founder of the Women’s Rugby Association and Wayne Barnes’ wife.
Here’s what happened when a Florida school district banned cellphones
As we know, banning cellphones in schools is part of National’s 100 day plan. In May, Florida passed a law requiring public school districts to impose rules barring student cellphone use during class time. One school district went further, barring students from using cellphones entirely during the school day. The New York Times reports (gift link) on how that’s going.
Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.
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The link "spoke to Supie founder Sarah Balle" is broken.