Economic week

November 17, 2017
By Nick Clark
Unlike last week, this week has been a quiet one for farming-related economic data.

The Auckland housing market has continued to come off the boil according to the latest monthly residential statistics from the Real Estate Institute of NZ.

In October 2017 the Auckland median house price was $850,000, virtually unchanged for September and down 3.2% on October 2016.  For the remainder of the country the media house price was $440,000, up 2.3% month-on-month and up 8.5% year-on-year.  Overall the nationwide median house price was $530,000, up 1.0% month-on-month and up 3.9% year-on-year.

Sales volumes are still down but their annual rate of decline has eased back and are recovering in some areas.  Auckland sales were down 0.9% compared to September and were down 21% compared to October 2016.  For the remainder of the country sales volumes were up 1.5% month-on-month but still down 14% year-on-year.  Overall, nationwide sales volumes were up 0.8% month-on-month but still down 16% year-on-year.  

With the housing market having cooled down the Reserve Bank will be making an announcement in the coming weeks on how any relaxation of regulation on loan-to-value ratios will work.

Consumer confidence slipped in November, but remains above its historical average, according to the latest monthly ANZ-Roy Morgan Consumer Confidence Survey.  The current conditions index rose slightly but that for future conditions fell.

According to ANZ “consumers appear to be looking through housing headwinds and the recent period of political uncertainty, seemingly happy to go with the flow, but with a cautious eye to the future”. 

As this commentary reported a couple of weeks back, the new government has inherited a healthy fiscal position. Under the new government fiscal policy will be looser with big increases coming both in operating and in capital spending, smaller surpluses (if any), and slower repayment in debt.  

Since Parliament resumed last week there has been a bit of political debate on how much the new government’s spending commitments will cost and what they will mean for the surplus and for debt.  So far the picture is hazy but the Half Year Economic and Fiscal Update, due out next month, should provide some welcome clarity.

Over the next week we will see economic releases on business price indexes (which includes the farm expenses price index), food price index and international travel and migration statistics and there’ll be another Global Dairy Trade auction.

Also coming out later in November will be the results of Federated Farmers’ six-monthly Banking Survey, which closed on Monday.  Results are currently being analysed.  We thank the nearly 500 farmers who completed the survey.    

With the Labour-NZ First coalition agreement committing the new government to investigating farm debt mediation the results of our Banking Survey will provide unique insight into farmers’ relationships with their banks.

Exchange Rates

Source: Reserve Bank of NZ

Wholesale Interest Rates

Source: Reserve Bank of NZ