1 00:00:03,600 --> 00:00:07,440 Speaker 1: Junokoto. Welcome to shared lunch. I'm Garth Bray. Well winter 2 00:00:07,600 --> 00:00:09,520 Speaker 1: is here not normally a boomer of a time for 3 00:00:09,600 --> 00:00:12,319 Speaker 1: our property market, and the Reserve Bank is sounding a 4 00:00:12,360 --> 00:00:15,840 Speaker 1: little loop warm about easing rates. Further so, what lies 5 00:00:15,880 --> 00:00:18,720 Speaker 1: ahead for us? Time to check in with that sage 6 00:00:18,720 --> 00:00:23,040 Speaker 1: of the savvy property investor, Tony Alexander see what he thinks. 7 00:00:23,440 --> 00:00:26,119 Speaker 1: But before that, it's some important information you should always 8 00:00:26,160 --> 00:00:27,640 Speaker 1: consider before investing. 9 00:00:28,080 --> 00:00:30,680 Speaker 2: Investing involves the risk you might lose the money you 10 00:00:30,720 --> 00:00:34,000 Speaker 2: start with. We recommend talking to a licensed financial advisor. 11 00:00:34,720 --> 00:00:38,559 Speaker 2: We also recommend reading product disclosure documents before deciding to invest. 12 00:00:38,800 --> 00:00:41,199 Speaker 2: Everything you're about to see and here is current at 13 00:00:41,200 --> 00:00:42,080 Speaker 2: the time of recording. 14 00:00:42,159 --> 00:00:44,800 Speaker 1: Tony, A rare pleasure to have you here face to 15 00:00:44,840 --> 00:00:47,440 Speaker 1: face in Auckland. Love to have you with us. Yep. 16 00:00:47,720 --> 00:00:49,519 Speaker 1: I'll get to the Reserve Bank in a second. But 17 00:00:49,680 --> 00:00:52,640 Speaker 1: the centric starter that we've seen out very recently, the 18 00:00:52,640 --> 00:00:56,320 Speaker 1: credit reporting stuff that shows business and consumer credit up. 19 00:00:56,680 --> 00:00:59,320 Speaker 1: I mean it's not the lending is not where it 20 00:00:59,440 --> 00:01:01,880 Speaker 1: was in twe but is that the first sign that 21 00:01:01,920 --> 00:01:04,640 Speaker 1: things are getting better or is it still not looking great? 22 00:01:04,760 --> 00:01:08,240 Speaker 3: Oh? We're economists don't generally look at the lending data 23 00:01:08,360 --> 00:01:10,720 Speaker 3: for a sign of what's happening in the economy. We 24 00:01:10,800 --> 00:01:13,120 Speaker 3: tend more to look at leading indicators, what's happening with 25 00:01:13,160 --> 00:01:17,399 Speaker 3: consumer sentiment, business sentiment, these sort of things, investment, intensions, 26 00:01:17,440 --> 00:01:21,679 Speaker 3: employment and tensions. So definitely interesting there. But for instance, 27 00:01:21,680 --> 00:01:23,640 Speaker 3: if you look at the reserve banks lending numbers, the 28 00:01:23,800 --> 00:01:27,119 Speaker 3: volume of lending to the farming sector is down about 29 00:01:27,120 --> 00:01:29,440 Speaker 3: one percent or so on a year earlier. So do 30 00:01:29,520 --> 00:01:31,720 Speaker 3: we look at that and go, farming's falling away. It's 31 00:01:31,720 --> 00:01:34,520 Speaker 3: all getting really really bad, while not with commodity prices 32 00:01:34,600 --> 00:01:36,480 Speaker 3: up about seventeen percent on a year earlier. 33 00:01:36,560 --> 00:01:38,959 Speaker 1: So they're probably just paying off debt, aren't they. Because 34 00:01:39,000 --> 00:01:41,360 Speaker 1: things are so good that it's actually a healthy sign. 35 00:01:41,600 --> 00:01:43,880 Speaker 3: That's relevant because if we talk about the good returns 36 00:01:43,920 --> 00:01:46,280 Speaker 3: being made by the farmers, oh, the region's going to boom. 37 00:01:46,720 --> 00:01:48,800 Speaker 3: Rural towns are going to absolutely boom. Right, that's where 38 00:01:48,800 --> 00:01:50,680 Speaker 3: I'm going to do my property investment. Yeah, we'll just 39 00:01:50,760 --> 00:01:53,120 Speaker 3: remember the costs for operating a farm have gone through 40 00:01:53,120 --> 00:01:56,480 Speaker 3: the roof in recent years. And yeah, they've been getting 41 00:01:56,480 --> 00:01:58,240 Speaker 3: a voice in their ear to pay down debt for 42 00:01:58,280 --> 00:02:01,000 Speaker 3: a long time. So the actual region stimulus. It's going 43 00:02:01,040 --> 00:02:02,760 Speaker 3: to be there, but it's not really going to be 44 00:02:02,800 --> 00:02:04,919 Speaker 3: what it's been in the past coming out of recessions. 45 00:02:04,960 --> 00:02:07,000 Speaker 1: Just on that though, I looked at that Centrix data 46 00:02:07,080 --> 00:02:09,440 Speaker 1: and there was like a heat map of how badly 47 00:02:09,480 --> 00:02:13,000 Speaker 1: in areas, how badly behind people are. She was lush 48 00:02:13,080 --> 00:02:16,240 Speaker 1: green all up the South Island, all in single digits. 49 00:02:16,280 --> 00:02:18,200 Speaker 1: You get up into pretty much the whole of the 50 00:02:18,200 --> 00:02:20,080 Speaker 1: North Island was a bit of an orange, and you 51 00:02:20,160 --> 00:02:23,320 Speaker 1: get to Bay of Plenty, you get to the coast Titaffity, 52 00:02:23,440 --> 00:02:26,280 Speaker 1: it was red and we're talking like seventeen eighteen percent, 53 00:02:26,639 --> 00:02:28,799 Speaker 1: you know, in an areas and sign that's not a 54 00:02:28,840 --> 00:02:31,160 Speaker 1: healthy sign. That's a two track economy, there isn't it. 55 00:02:31,280 --> 00:02:33,000 Speaker 3: Well, yeah, for the moment, I think it does look 56 00:02:33,080 --> 00:02:34,680 Speaker 3: like that, And in a way it's sort of a 57 00:02:34,960 --> 00:02:38,360 Speaker 3: payback and a broad sense from earlier on when we 58 00:02:38,440 --> 00:02:41,720 Speaker 3: saw from a housing market perspective, things were growing really 59 00:02:41,760 --> 00:02:44,639 Speaker 3: strongly in the North Island but not in the South Island. 60 00:02:44,680 --> 00:02:46,639 Speaker 3: I used to talk a lot about it that this 61 00:02:46,760 --> 00:02:49,200 Speaker 3: boom and house prices. There was some in the South Island, 62 00:02:49,480 --> 00:02:51,919 Speaker 3: but it wasn't as much as in the North Island, 63 00:02:51,960 --> 00:02:54,400 Speaker 3: and so if we extrapolate that to businesses in general, 64 00:02:54,639 --> 00:02:58,040 Speaker 3: probably you've got more businesses getting over optimistic in the 65 00:02:58,040 --> 00:03:01,080 Speaker 3: North Island than the South Island during the boom, and 66 00:03:01,160 --> 00:03:03,880 Speaker 3: so when you get the type monetary policy occur, there's 67 00:03:03,919 --> 00:03:06,920 Speaker 3: more weeding out to do in the business sector, maybe 68 00:03:06,960 --> 00:03:10,480 Speaker 3: residential property investment market in the North Island than the 69 00:03:10,520 --> 00:03:12,440 Speaker 3: South Island. So that's sort of what I would put 70 00:03:12,440 --> 00:03:16,200 Speaker 3: it down to. I wouldn't over extrapolate that towards right 71 00:03:16,280 --> 00:03:18,679 Speaker 3: New Zealand's future for the next hundred years. It's back 72 00:03:18,720 --> 00:03:22,240 Speaker 3: to the South Island. This population imbalanced twenty five percent 73 00:03:22,320 --> 00:03:24,639 Speaker 3: in South Island or so seventy five percent North. It's 74 00:03:24,639 --> 00:03:26,800 Speaker 3: going to reverse yet, No, it's just a bit of 75 00:03:26,800 --> 00:03:29,639 Speaker 3: a cyclical thing from that earlier on boom which was 76 00:03:29,680 --> 00:03:30,280 Speaker 3: more in the North. 77 00:03:30,600 --> 00:03:32,440 Speaker 1: It just must be anecdotes that I keep running into 78 00:03:32,440 --> 00:03:34,000 Speaker 1: people that are moving to christ Church the end to 79 00:03:34,040 --> 00:03:35,800 Speaker 1: try and ditch the Auckland property prices. 80 00:03:35,840 --> 00:03:37,720 Speaker 3: Well, that's definitely happening and it's going to keep happening 81 00:03:37,760 --> 00:03:38,120 Speaker 3: as well. 82 00:03:38,520 --> 00:03:41,200 Speaker 1: Yeah, yeah, I mean liquidations in some of that data 83 00:03:41,240 --> 00:03:44,560 Speaker 1: were quite high. Business liquidations. We're talking like thirty percent 84 00:03:44,640 --> 00:03:46,400 Speaker 1: I think was it up on year on year. That's 85 00:03:46,440 --> 00:03:46,800 Speaker 1: not good. 86 00:03:46,920 --> 00:03:48,640 Speaker 3: Yeah, yeah, definitely not good. But this is what I 87 00:03:48,680 --> 00:03:52,480 Speaker 3: warned about from twenty twenty two. In fact, as early 88 00:03:52,480 --> 00:03:55,000 Speaker 3: as the first half of twenty twenty one, I was 89 00:03:55,040 --> 00:03:58,000 Speaker 3: warning residential builders just watch out. There's a boom underway. 90 00:03:58,200 --> 00:04:02,600 Speaker 3: Lots of inexperienced, undercapitalized people are entering the residential construction sector, 91 00:04:02,720 --> 00:04:05,000 Speaker 3: as widely defined, and there's going to be a weeding 92 00:04:05,040 --> 00:04:08,120 Speaker 3: out period somewhere down the track. And then I morphed 93 00:04:08,200 --> 00:04:10,880 Speaker 3: that into talking about over twenty twenty three of this 94 00:04:10,920 --> 00:04:13,080 Speaker 3: weeding out is going to be across all sectors of 95 00:04:13,120 --> 00:04:15,320 Speaker 3: the economy in twenty twenty four. And so that's what 96 00:04:15,360 --> 00:04:18,039 Speaker 3: we saw with liquidations up et cetera last year. And 97 00:04:18,080 --> 00:04:20,640 Speaker 3: then of course I was warning strongly from August last 98 00:04:20,720 --> 00:04:23,200 Speaker 3: year when we saw the interest rates were coming down. 99 00:04:23,440 --> 00:04:26,279 Speaker 3: A journalist wrote, We're going to be a rockstar economy again, 100 00:04:26,360 --> 00:04:29,320 Speaker 3: and I thought, what a load of absolute rubbish. There 101 00:04:29,360 --> 00:04:31,000 Speaker 3: are going to be businesses that are going to be 102 00:04:31,040 --> 00:04:33,720 Speaker 3: caught out and some of the weakness we see in 103 00:04:33,720 --> 00:04:36,320 Speaker 3: the economy at the moment. It's the reality check as 104 00:04:36,360 --> 00:04:38,560 Speaker 3: I think businesses are realizing, oh, who was right? This 105 00:04:38,600 --> 00:04:42,359 Speaker 3: isn't a boom. We survived to twenty five, it's not enough. 106 00:04:42,560 --> 00:04:45,520 Speaker 3: And some businesses, either from their own volition or the 107 00:04:45,560 --> 00:04:49,159 Speaker 3: ird or the bank the creditors are realizing we can't 108 00:04:49,200 --> 00:04:49,560 Speaker 3: make it. 109 00:04:49,839 --> 00:04:50,880 Speaker 1: If we don't have a boom. 110 00:04:51,120 --> 00:04:53,400 Speaker 3: Then, given the cost we've got going up, the massive 111 00:04:53,440 --> 00:04:56,560 Speaker 3: margin compression, we've got to close down. And so that 112 00:04:56,640 --> 00:05:00,279 Speaker 3: weeding out process is still rolling through twenty twenty five. Actually, 113 00:05:00,279 --> 00:05:03,839 Speaker 3: as the CENTRIC data showed in the construction sector, where 114 00:05:03,880 --> 00:05:06,320 Speaker 3: there was a much sharper increase in number of liquidations 115 00:05:06,320 --> 00:05:08,719 Speaker 3: sort of trending upwards in the past three years compared 116 00:05:08,760 --> 00:05:11,200 Speaker 3: with other sectors like retail, hospitality. 117 00:05:11,360 --> 00:05:14,039 Speaker 1: Because broadly, I think this month that actually turned, or 118 00:05:14,800 --> 00:05:17,080 Speaker 1: last month it's turned, and it almost looks like the 119 00:05:17,080 --> 00:05:19,640 Speaker 1: worm is turning down. The liquidations might just be starting 120 00:05:19,640 --> 00:05:20,960 Speaker 1: to trend down. You don't think it's over. 121 00:05:21,080 --> 00:05:23,320 Speaker 3: It'd be nice to think that, but I think it's 122 00:05:23,360 --> 00:05:27,120 Speaker 3: too soon to really call that. Having said that, although 123 00:05:27,120 --> 00:05:30,520 Speaker 3: my commentary since August has been a negative, quite shockingly 124 00:05:30,600 --> 00:05:33,160 Speaker 3: so to some people, I do have to keep emphasizing 125 00:05:33,400 --> 00:05:36,599 Speaker 3: there is still a recovery underway. We've got the absence 126 00:05:36,640 --> 00:05:39,240 Speaker 3: of those crunching interest rates, out there. We have the 127 00:05:39,279 --> 00:05:42,920 Speaker 3: surprisingly good returns in parts of the primary set sector, 128 00:05:43,120 --> 00:05:45,640 Speaker 3: more foreign students coming into the country, there is some 129 00:05:45,720 --> 00:05:49,599 Speaker 3: business investment infrastructure, so there is a recovery underway, but 130 00:05:49,680 --> 00:05:52,880 Speaker 3: it's not an especially strong one. It's the absence of 131 00:05:52,920 --> 00:05:56,760 Speaker 3: the strong upturn, which is catching out some businesses just 132 00:05:56,839 --> 00:05:59,320 Speaker 3: in the last gasp of their breath for this year. 133 00:06:00,000 --> 00:06:01,960 Speaker 1: If we look at what the Reserve Bank came out with, 134 00:06:02,000 --> 00:06:04,880 Speaker 1: which was effectively a little bit of a split decision there, 135 00:06:04,920 --> 00:06:08,560 Speaker 1: they took some convincing the full board that a full 136 00:06:08,560 --> 00:06:10,960 Speaker 1: cut was needed of twenty five basis points. Apparently they 137 00:06:11,040 --> 00:06:14,920 Speaker 1: even talk about cutting fifty What do you take out 138 00:06:14,960 --> 00:06:15,200 Speaker 1: of that. 139 00:06:15,400 --> 00:06:17,440 Speaker 3: Yeah, I wouldn't have voted for a cut. I would 140 00:06:17,480 --> 00:06:19,080 Speaker 3: have stuck there at three point five percent. 141 00:06:19,520 --> 00:06:19,680 Speaker 1: Yeah. 142 00:06:19,800 --> 00:06:21,640 Speaker 3: No, people don't want to hear that because I've just 143 00:06:21,680 --> 00:06:24,599 Speaker 3: said the economy this year weaker than people were thinking. 144 00:06:24,760 --> 00:06:28,400 Speaker 3: That sounds like less inflationary pressure. Not so quick, because 145 00:06:28,440 --> 00:06:30,560 Speaker 3: the other thing I've been saying since August last year, 146 00:06:30,640 --> 00:06:32,600 Speaker 3: on top of the economy's going to still be a 147 00:06:32,640 --> 00:06:35,880 Speaker 3: bit weak going forward, is there are still inflationary pressures 148 00:06:35,920 --> 00:06:39,479 Speaker 3: bubbling on underneath in the economy. Where are they coming from, well, 149 00:06:39,520 --> 00:06:42,719 Speaker 3: they're coming through the business sector. Generally, it's when you 150 00:06:42,760 --> 00:06:44,640 Speaker 3: go and buy your cheese also at the supermarket there 151 00:06:44,720 --> 00:06:47,560 Speaker 3: or you meet So the high commodity prices great news 152 00:06:47,560 --> 00:06:50,760 Speaker 3: for our farmer's, horticulturalists, et cetera. But it feeds through 153 00:06:50,760 --> 00:06:53,720 Speaker 3: into the supermarket, so we feel it there as a consumers. 154 00:06:53,839 --> 00:06:56,360 Speaker 3: But just generally, the costs are still rising out there. 155 00:06:56,600 --> 00:07:01,080 Speaker 3: And I've talked a lot about our price seat behavior 156 00:07:01,120 --> 00:07:03,280 Speaker 3: by businesses. And if we look, for instance, at the 157 00:07:03,320 --> 00:07:06,599 Speaker 3: A and Z's Monthly Business Outlook Survey, on average, since 158 00:07:06,680 --> 00:07:09,560 Speaker 3: nineteen ninety two, when inflation started settling around two two 159 00:07:09,600 --> 00:07:12,200 Speaker 3: and a half percent on average and net twenty six 160 00:07:12,280 --> 00:07:15,480 Speaker 3: percent of businesses have said I'm raising my prices within 161 00:07:15,520 --> 00:07:18,080 Speaker 3: the next year. That's still running at forty five percent. 162 00:07:18,400 --> 00:07:20,800 Speaker 3: So we've got a well above average proportion of businesses 163 00:07:20,800 --> 00:07:23,040 Speaker 3: saying I'm putting my prices up. And this is when 164 00:07:23,200 --> 00:07:26,360 Speaker 3: conditions are still weak. We've had recession or two recessions 165 00:07:26,360 --> 00:07:28,600 Speaker 3: in the economy in the past three years. You would 166 00:07:28,640 --> 00:07:31,280 Speaker 3: expect that number to be way way down, And of 167 00:07:31,280 --> 00:07:33,920 Speaker 3: course it comes from a net seventy three percent of 168 00:07:33,920 --> 00:07:36,400 Speaker 3: them are saying my cost arising, I expect them to 169 00:07:36,400 --> 00:07:38,920 Speaker 3: go higher in a year's time. So my concern is 170 00:07:38,960 --> 00:07:41,680 Speaker 3: that monetary policy aims at where things are going to 171 00:07:41,720 --> 00:07:44,000 Speaker 3: be in eighteen to twenty four months time. Well, I 172 00:07:44,040 --> 00:07:46,200 Speaker 3: expect the economy is going to be stronger. And when 173 00:07:46,240 --> 00:07:47,960 Speaker 3: I look at the A and Z survey and I 174 00:07:48,040 --> 00:07:50,800 Speaker 3: offset it against another survey from the New Zealand Institute 175 00:07:50,800 --> 00:07:53,280 Speaker 3: of Economic Research, you know they've done that survey since 176 00:07:53,280 --> 00:07:55,400 Speaker 3: the nineteen sixties. What it says to me is this, 177 00:07:55,800 --> 00:07:58,280 Speaker 3: once businesses see customers coming through the door and good 178 00:07:58,360 --> 00:08:02,400 Speaker 3: numbers like next year, to raise their prices to rebuild margins. 179 00:08:01,960 --> 00:08:03,440 Speaker 1: And that will bring the inflation back. 180 00:08:03,440 --> 00:08:05,240 Speaker 3: The inflation will come back. And so that's why I 181 00:08:05,280 --> 00:08:08,520 Speaker 3: think the Reserve Bank's mind now has shifted away from right, 182 00:08:08,600 --> 00:08:11,520 Speaker 3: we no longer need high interesstrates to crunch inflation. To 183 00:08:12,000 --> 00:08:15,240 Speaker 3: let's be careful, we don't continue the whipping around behavior 184 00:08:15,320 --> 00:08:17,600 Speaker 3: of the past, you know, one to two decades and 185 00:08:17,680 --> 00:08:20,600 Speaker 3: cut too far now and have to rapidly increase late 186 00:08:20,640 --> 00:08:22,240 Speaker 3: twenty six, twenty twenty twenty seven. 187 00:08:22,600 --> 00:08:24,560 Speaker 1: Right, they really are taking quite a long view there. 188 00:08:24,800 --> 00:08:26,640 Speaker 1: Hard to get that long view though, I mean, you 189 00:08:26,720 --> 00:08:30,120 Speaker 1: saw Christian hawksbeare who's you know, acting governor at the moment, 190 00:08:30,200 --> 00:08:32,320 Speaker 1: came out kind of with a well, it's not just 191 00:08:32,440 --> 00:08:33,800 Speaker 1: what we see in front of us, it's what we 192 00:08:33,840 --> 00:08:36,800 Speaker 1: see either side of us. They have these alternative scenarios 193 00:08:36,840 --> 00:08:39,480 Speaker 1: which I kind of boiled down into my head to all, 194 00:08:39,520 --> 00:08:42,000 Speaker 1: we're facing some headwinds and it's all going to get 195 00:08:42,040 --> 00:08:45,079 Speaker 1: more expensive, or all, we're facing these headwinds and we're 196 00:08:45,080 --> 00:08:46,480 Speaker 1: just kind of going to give up. You know, the 197 00:08:46,520 --> 00:08:48,880 Speaker 1: whole economy is going to go into a coma globally 198 00:08:48,960 --> 00:08:50,719 Speaker 1: almost Am I way off there? Yeah? 199 00:08:50,760 --> 00:08:52,960 Speaker 3: No, the economy is wild. Economy is still going to grow. 200 00:08:53,040 --> 00:08:55,680 Speaker 3: Like I was reading commentary this morning about the OECD 201 00:08:56,040 --> 00:08:58,640 Speaker 3: have slashed their forecast for world growth over the next 202 00:08:58,640 --> 00:09:01,080 Speaker 3: two years. Well that was the word that was used 203 00:09:01,080 --> 00:09:03,199 Speaker 3: in there. It was only a reduction of about zero 204 00:09:03,240 --> 00:09:05,520 Speaker 3: point two percent in their forecast this year and zero 205 00:09:05,520 --> 00:09:08,640 Speaker 3: point one percent next year. So people have detail as media, 206 00:09:09,480 --> 00:09:12,000 Speaker 3: what are you going to do? But we pay attention 207 00:09:12,080 --> 00:09:14,600 Speaker 3: to Oh there's a shocking headline, you know, and we 208 00:09:14,679 --> 00:09:16,959 Speaker 3: read it, but the actual change is relatively small. And 209 00:09:17,080 --> 00:09:20,040 Speaker 3: you know the Trump Terwi war that's underway, it's definite 210 00:09:20,120 --> 00:09:23,680 Speaker 3: negative for the world economy. There are two minds on 211 00:09:23,840 --> 00:09:25,600 Speaker 3: does this boost world inflation. 212 00:09:25,360 --> 00:09:25,920 Speaker 1: Or lower it? 213 00:09:26,080 --> 00:09:28,360 Speaker 3: Lower it? Even Treasure and Reserve Bank can't agree on 214 00:09:28,400 --> 00:09:28,640 Speaker 3: that one. 215 00:09:28,840 --> 00:09:31,720 Speaker 1: For New Zealand, hence those different scenarios. Different scenario. We're 216 00:09:31,720 --> 00:09:33,680 Speaker 1: going to land here in the next sort of six 217 00:09:33,720 --> 00:09:34,400 Speaker 1: to twelve months. 218 00:09:34,400 --> 00:09:37,600 Speaker 3: What are we saying, still slow recovery, which will strengthen 219 00:09:37,600 --> 00:09:40,400 Speaker 3: in twenty twenty six. But we shouldn't ignore the fact 220 00:09:40,440 --> 00:09:42,959 Speaker 3: that these are good prices for the farmers being received 221 00:09:42,960 --> 00:09:46,160 Speaker 3: out there. They will gain some greater confidence, do some spending. 222 00:09:46,480 --> 00:09:49,439 Speaker 3: And contrary to what I was thinking up until a 223 00:09:49,440 --> 00:09:51,559 Speaker 3: few months ago, where I said I think the recovery 224 00:09:51,600 --> 00:09:53,640 Speaker 3: is going to be broadly based in the economy, it 225 00:09:53,800 --> 00:09:56,520 Speaker 3: will now start more in the regions you see it 226 00:09:56,559 --> 00:09:59,199 Speaker 3: first and in Theicargo and Neden, christ Church gets it, 227 00:09:59,320 --> 00:10:03,000 Speaker 3: Taranaki plenty Waykatta get it. Auckland will be seeing it 228 00:10:03,040 --> 00:10:06,079 Speaker 3: early next year, Wellington maybe twenty twenty seven. Something will 229 00:10:06,080 --> 00:10:08,600 Speaker 3: flow through. It's just the normal lag in the process. 230 00:10:08,840 --> 00:10:13,719 Speaker 3: So broadly economic recovery is underway. But my message to 231 00:10:13,720 --> 00:10:15,480 Speaker 3: people when it comes to boring and interest rates, this 232 00:10:15,559 --> 00:10:17,400 Speaker 3: is almost as good as it's going to get almost 233 00:10:17,480 --> 00:10:18,920 Speaker 3: on the mortgage mortgage rates. 234 00:10:19,080 --> 00:10:20,840 Speaker 1: That was exactly what I want to ask you next. 235 00:10:20,880 --> 00:10:24,120 Speaker 1: You've seeing banks now actually jousting again. I mean they're 236 00:10:24,360 --> 00:10:26,679 Speaker 1: you know, skuting about the fact that they're under sort 237 00:10:26,720 --> 00:10:29,600 Speaker 1: of four point nine percent. Yeah, eighteen months, Like that's 238 00:10:30,080 --> 00:10:32,160 Speaker 1: a wonderful sort of a number. Not bad, I suppose 239 00:10:32,200 --> 00:10:35,720 Speaker 1: in recent times we've seen a lot lower. What's going 240 00:10:35,720 --> 00:10:37,520 Speaker 1: on there are they're just trying to scoop up some 241 00:10:37,559 --> 00:10:40,280 Speaker 1: of those I think it was like thirty billion a 242 00:10:40,280 --> 00:10:42,439 Speaker 1: month that we're going to be rolling over their mortgages. 243 00:10:42,480 --> 00:10:44,080 Speaker 1: I think it was. Yeah, a lot of people. 244 00:10:44,120 --> 00:10:46,400 Speaker 3: Yeah, because everyone's been fixing sort of one year for 245 00:10:46,440 --> 00:10:48,640 Speaker 3: a number of years now. Not many people locked in 246 00:10:48,679 --> 00:10:50,600 Speaker 3: for the five years at two point nine nine percent, 247 00:10:50,640 --> 00:10:52,360 Speaker 3: as I was jumping up and down saying I would 248 00:10:52,400 --> 00:10:56,880 Speaker 3: do for eleven month months starting exactly last week five 249 00:10:56,960 --> 00:10:59,080 Speaker 3: years ago. That's when we had the two point nine 250 00:10:59,120 --> 00:11:01,600 Speaker 3: to nine percent for five years first to appear in 251 00:11:01,600 --> 00:11:04,320 Speaker 3: twenty twenty, and it lasted for about eleven months. And 252 00:11:04,400 --> 00:11:06,520 Speaker 3: so you've just got to think there's actually a group 253 00:11:06,559 --> 00:11:08,880 Speaker 3: of people out there for whom their interstrates are now 254 00:11:08,920 --> 00:11:11,640 Speaker 3: jumping up from two point ninety nine to four ninety 255 00:11:11,720 --> 00:11:14,280 Speaker 3: nine or so. Poor beggars all that far. At least 256 00:11:14,280 --> 00:11:16,400 Speaker 3: they got that time. You know, at the lower rates there, 257 00:11:16,520 --> 00:11:18,199 Speaker 3: it'll be a shock. It'll be a shock of for 258 00:11:18,240 --> 00:11:20,640 Speaker 3: them out there. Don't anticipate that the interest rates go 259 00:11:20,760 --> 00:11:23,440 Speaker 3: much lower than they are at At the moment. The 260 00:11:23,480 --> 00:11:26,640 Speaker 3: financial markets are looking towards a future where global inflation 261 00:11:26,720 --> 00:11:30,920 Speaker 3: is slightly higher, US budget deficit blowout, et cetera. Places 262 00:11:30,960 --> 00:11:34,000 Speaker 3: upward pressure on medium to long term interest rates are everywhere, 263 00:11:34,200 --> 00:11:38,079 Speaker 3: and there is an economic recovery underway in New Zealand. 264 00:11:38,400 --> 00:11:40,839 Speaker 3: It's hard to talk about interstrates still needing to be 265 00:11:41,000 --> 00:11:44,960 Speaker 3: cut when there's an economic recovery underway, Like duh. 266 00:11:45,040 --> 00:11:47,160 Speaker 1: Yeah, right, there's normal medicine reques. Does that mean? I 267 00:11:47,200 --> 00:11:49,079 Speaker 1: suppose if you're in a position where you're watching these 268 00:11:49,160 --> 00:11:52,040 Speaker 1: rates and you're thinking, oh, maybe I should break, It's like, well, 269 00:11:52,120 --> 00:11:54,400 Speaker 1: everybody's situation is their own. We should say this is 270 00:11:54,400 --> 00:11:57,520 Speaker 1: not financial advice, your own circummit senses dictate what you 271 00:11:57,520 --> 00:12:00,600 Speaker 1: should do, but potentially something to consider as hey, it's 272 00:12:00,679 --> 00:12:03,240 Speaker 1: it's going to be a longer interest rate picture. 273 00:12:03,320 --> 00:12:06,240 Speaker 3: For if I had a mortgage that was maturing let's 274 00:12:06,280 --> 00:12:09,040 Speaker 3: say in three months time or six months time, I 275 00:12:09,040 --> 00:12:11,439 Speaker 3: wouldn't feel in need of Oh hang on, I'd better 276 00:12:11,480 --> 00:12:14,079 Speaker 3: get in right now, because inflation's going to jump up, 277 00:12:14,320 --> 00:12:16,320 Speaker 3: and in three or six months time the interest rates 278 00:12:16,360 --> 00:12:17,600 Speaker 3: are going to be half a percent high. 279 00:12:17,800 --> 00:12:19,440 Speaker 1: No, I don't think that'd all see that. 280 00:12:19,600 --> 00:12:21,840 Speaker 3: No, I think And even if people are going one 281 00:12:21,880 --> 00:12:24,360 Speaker 3: year fixed or two years or three years, it's going 282 00:12:24,440 --> 00:12:26,240 Speaker 3: to be you know, here or there six to one, 283 00:12:26,320 --> 00:12:28,600 Speaker 3: half a dozen of the other. Because I can't yet 284 00:12:28,679 --> 00:12:32,200 Speaker 3: see enough form in the interest rates outlook to say 285 00:12:32,720 --> 00:12:34,880 Speaker 3: this is when interest rates are going to start jumping up. 286 00:12:35,000 --> 00:12:36,840 Speaker 3: This is how much they're going to go by. I'd 287 00:12:36,840 --> 00:12:39,440 Speaker 3: want to get cover against that. Probably it's the other 288 00:12:39,480 --> 00:12:41,679 Speaker 3: side of the equation. It's the employment picture that's more 289 00:12:41,679 --> 00:12:44,040 Speaker 3: important at the moment, isn't it. Yeah, that's I think 290 00:12:44,080 --> 00:12:45,880 Speaker 3: one of the reasons the real estate market is still 291 00:12:45,920 --> 00:12:49,160 Speaker 3: being held back. So in my monthly survey of realistic 292 00:12:49,240 --> 00:12:51,800 Speaker 3: agents been doing it for five years now now, on average, 293 00:12:51,800 --> 00:12:55,080 Speaker 3: in five years, twenty one percent of the agents have 294 00:12:55,160 --> 00:12:57,600 Speaker 3: ticked the box saying buyers are worried about their jobs. 295 00:12:58,040 --> 00:13:00,800 Speaker 3: At the start of twenty twenty four, it was fourteen 296 00:13:00,960 --> 00:13:04,240 Speaker 3: one four percent. So we started last year with stronger 297 00:13:04,240 --> 00:13:07,280 Speaker 3: than average job security in the economy. It was one 298 00:13:07,320 --> 00:13:10,360 Speaker 3: wonderful well. Come June last year, fifty six percent of 299 00:13:10,400 --> 00:13:12,480 Speaker 3: agents saying people are worried about their jobs. And my 300 00:13:12,600 --> 00:13:14,920 Speaker 3: latest survey are just sent out. The results of that 301 00:13:15,200 --> 00:13:17,800 Speaker 3: fifty one percent of agents still say people are worried 302 00:13:17,800 --> 00:13:20,240 Speaker 3: about their jobs. And I think that's one reason the 303 00:13:20,320 --> 00:13:24,240 Speaker 3: housing market has failed to continue the recovery we saw 304 00:13:24,280 --> 00:13:26,800 Speaker 3: in the second half of last last year. And why 305 00:13:27,040 --> 00:13:29,000 Speaker 3: for the second time now since the start of twenty 306 00:13:29,000 --> 00:13:32,520 Speaker 3: twenty three, a recovery has fizzled out again. And I 307 00:13:32,559 --> 00:13:34,720 Speaker 3: think the labor market is one of the factors in play. 308 00:13:34,880 --> 00:13:37,120 Speaker 1: And you you see it at all levels, I guess, because 309 00:13:37,160 --> 00:13:39,920 Speaker 1: if you're not if you're not selling, you're not buying, 310 00:13:40,400 --> 00:13:43,120 Speaker 1: you're not seeing people transitioning out of homes into retirement 311 00:13:43,160 --> 00:13:46,480 Speaker 1: villages and so on, you just everything kind of slows down. 312 00:13:46,559 --> 00:13:49,959 Speaker 1: And yep, you're still seeing listings and you're still seeing 313 00:13:50,080 --> 00:13:51,280 Speaker 1: stuff being built, right. 314 00:13:51,240 --> 00:13:53,560 Speaker 3: Yeah, yeah, Well, the level of construction out there still 315 00:13:53,559 --> 00:13:56,520 Speaker 3: seems are pretty strong. In fact, as have been pointing 316 00:13:56,520 --> 00:14:00,200 Speaker 3: out to people, one of the structural shifts in you ye, 317 00:14:00,559 --> 00:14:03,680 Speaker 3: relevant to why house prices won't rise as much on 318 00:14:03,760 --> 00:14:06,400 Speaker 3: average in the future is that the level of construction 319 00:14:06,640 --> 00:14:09,800 Speaker 3: versus the population is now higher than we've had in 320 00:14:09,880 --> 00:14:13,440 Speaker 3: the past, so more supply coming forward and land being 321 00:14:13,440 --> 00:14:15,720 Speaker 3: made available, densification and tensification. 322 00:14:15,920 --> 00:14:18,360 Speaker 1: Then the consent stuff as well. I mean they're talking 323 00:14:18,400 --> 00:14:20,680 Speaker 1: this private consenting outfit that's saying we'll get you a 324 00:14:20,720 --> 00:14:22,960 Speaker 1: consent of its simple in ten days. You've got the 325 00:14:23,000 --> 00:14:26,680 Speaker 1: government requiring councils to say how well you performing, and 326 00:14:26,680 --> 00:14:29,960 Speaker 1: apparently that's lifted it from like eighty percent in time 327 00:14:30,000 --> 00:14:32,160 Speaker 1: to like ninety more than ninetyer cent in time. So 328 00:14:32,560 --> 00:14:35,440 Speaker 1: there's like the system's working better, isn't it. But that 329 00:14:35,480 --> 00:14:38,600 Speaker 1: means more supply therefore perhaps lower prices. 330 00:14:38,240 --> 00:14:41,000 Speaker 3: More supply coming forward, not so much lower prices, although 331 00:14:41,000 --> 00:14:43,120 Speaker 3: a net thirty eight percent of realistate agents at the 332 00:14:43,120 --> 00:14:45,720 Speaker 3: moment say prices are falling in there in the area. 333 00:14:45,880 --> 00:14:47,840 Speaker 3: So yeah, that's quite a strong result or almost back 334 00:14:47,880 --> 00:14:49,200 Speaker 3: to where we were in the middle of last year. 335 00:14:49,280 --> 00:14:50,720 Speaker 1: I was looking. There was some There was a story 336 00:14:50,760 --> 00:14:54,000 Speaker 1: this week about how the listed property trusts out there 337 00:14:54,360 --> 00:14:58,200 Speaker 1: have seen their valuations basically kind of hit the bottom 338 00:14:58,360 --> 00:15:00,920 Speaker 1: and start to build again and there's more interest there. 339 00:15:00,920 --> 00:15:02,600 Speaker 1: Do you take any kind of indication from that end 340 00:15:02,640 --> 00:15:03,000 Speaker 1: of the market. 341 00:15:03,080 --> 00:15:05,120 Speaker 3: Don't look at that at all myself. No, I look 342 00:15:05,160 --> 00:15:07,400 Speaker 3: more at what I'm picking up from my surveys of 343 00:15:07,560 --> 00:15:11,120 Speaker 3: the agents, the mortgage brokers, the property investors, et cetera. 344 00:15:11,280 --> 00:15:14,680 Speaker 3: Are out there, and that tells him what's happening right now. 345 00:15:14,800 --> 00:15:17,040 Speaker 3: I mean, the market will turn around, but I'm thinking 346 00:15:17,080 --> 00:15:19,280 Speaker 3: this is more a story for twenty twenty six than 347 00:15:19,320 --> 00:15:21,960 Speaker 3: it is for twenty twenty five. With the labor market 348 00:15:22,040 --> 00:15:25,320 Speaker 3: uncertainty at the moment, the strong supply that sits out there. 349 00:15:25,560 --> 00:15:29,360 Speaker 3: Net migration only plus twenty six thousand in the past year. 350 00:15:30,120 --> 00:15:32,280 Speaker 3: Two years ago almost it was one hundred and thirty 351 00:15:32,320 --> 00:15:35,400 Speaker 3: five thousand net. The average for ten years net migration 352 00:15:35,520 --> 00:15:37,920 Speaker 3: gained for New Zealand is fifty thousand. So let's say 353 00:15:37,960 --> 00:15:40,720 Speaker 3: we're running at about half average recent average at the moment. 354 00:15:41,000 --> 00:15:43,280 Speaker 3: So whereas a year ago or just over a year ago, 355 00:15:43,360 --> 00:15:46,320 Speaker 3: in my survey of property investors of landlords, I had 356 00:15:46,320 --> 00:15:49,120 Speaker 3: about a net twenty five percent of landlords saying it's 357 00:15:49,200 --> 00:15:51,680 Speaker 3: easy to get a good tenant, it's bonser, no worries. 358 00:15:51,920 --> 00:15:54,160 Speaker 3: Now I've got about a record net thirty three percent 359 00:15:54,240 --> 00:15:56,560 Speaker 3: or so, saying it is hard to get a good tenant. 360 00:15:56,840 --> 00:15:59,520 Speaker 3: So for the moment, the real estate market is subdued 361 00:16:00,040 --> 00:16:00,800 Speaker 3: buyers market. 362 00:16:00,920 --> 00:16:02,720 Speaker 1: I'm many of the places in the country where that's 363 00:16:02,720 --> 00:16:05,080 Speaker 1: going to be particularly attractive or tricky, or it's just 364 00:16:05,120 --> 00:16:06,400 Speaker 1: a case of shopping around. 365 00:16:06,440 --> 00:16:08,440 Speaker 3: Oh, you shop around, you find where you want to 366 00:16:08,520 --> 00:16:10,920 Speaker 3: live the broad area because it's near your church, it's 367 00:16:10,960 --> 00:16:14,720 Speaker 3: it's near your relatives, your friends, your sports fields, et cetera. 368 00:16:15,400 --> 00:16:17,160 Speaker 3: And you've got a greater chance of being able to 369 00:16:17,280 --> 00:16:20,760 Speaker 3: get something without having to accept. Okay, it's an operating 370 00:16:20,800 --> 00:16:22,560 Speaker 3: meth house at the moment, so I've got what are 371 00:16:22,560 --> 00:16:24,640 Speaker 3: you going to do. I've got to take it. You're 372 00:16:24,680 --> 00:16:27,840 Speaker 3: not really going to have to be making such die compromises. 373 00:16:27,880 --> 00:16:30,240 Speaker 3: There will be compromises, but not so much of that 374 00:16:30,320 --> 00:16:30,920 Speaker 3: sort of stuff. 375 00:16:31,080 --> 00:16:33,000 Speaker 1: Sure, And I mean, are you getting that sense of 376 00:16:33,040 --> 00:16:36,920 Speaker 1: confidence because you speak to property investors in large numbers. 377 00:16:38,120 --> 00:16:39,120 Speaker 1: What are they telling you? 378 00:16:39,200 --> 00:16:40,920 Speaker 3: What are they give the Well, then the investors are 379 00:16:41,000 --> 00:16:43,560 Speaker 3: interested in buying. But it's like when you see a 380 00:16:43,640 --> 00:16:47,600 Speaker 3: market relatively flat, you're thinking, am I missing something? If 381 00:16:47,720 --> 00:16:50,520 Speaker 3: they're not buying, maybe I shouldn't buy as well, because 382 00:16:50,520 --> 00:16:53,320 Speaker 3: we're social animals and we take our queue for what 383 00:16:53,480 --> 00:16:56,680 Speaker 3: to do from what other people are doing. This is 384 00:16:56,680 --> 00:16:59,720 Speaker 3: the test. There aren't many Warren Buffets, the sort of 385 00:16:59,720 --> 00:17:02,480 Speaker 3: person when everyone else is going that way, he goes no, no, no, 386 00:17:02,840 --> 00:17:05,399 Speaker 3: I go this way. This is part of that challenge 387 00:17:05,520 --> 00:17:08,680 Speaker 3: that for the moment, prices aren't rising, and so you're thinking, well, 388 00:17:08,680 --> 00:17:10,720 Speaker 3: if I buy now, what if the price goes down 389 00:17:10,760 --> 00:17:13,000 Speaker 3: three or four percent? Will I feel like an an idiot? 390 00:17:13,160 --> 00:17:16,399 Speaker 3: And we call that foop fear of overpaying. And so 391 00:17:16,440 --> 00:17:18,160 Speaker 3: I've got a measure of that from my real estate 392 00:17:18,200 --> 00:17:20,080 Speaker 3: agent survey as well. And now and then I'll do 393 00:17:20,119 --> 00:17:23,240 Speaker 3: a graph of foop has gone up so that more recently, 394 00:17:23,280 --> 00:17:25,399 Speaker 3: over the past four months, more buyers are worried. 395 00:17:25,440 --> 00:17:26,000 Speaker 1: Am I buying? 396 00:17:26,040 --> 00:17:28,919 Speaker 3: Then the price goes down? Whereas FOMO only five percent 397 00:17:28,960 --> 00:17:32,080 Speaker 3: of agents say buyers are feeling fomo. It's a buyers market, 398 00:17:32,160 --> 00:17:35,320 Speaker 3: is all I can say. Wow, despite the foop, despite 399 00:17:35,320 --> 00:17:37,560 Speaker 3: the foop, Yeah, that's right. Hey, no one's going to 400 00:17:37,560 --> 00:17:40,120 Speaker 3: pick the bottom. You can't pick the top. And you've 401 00:17:40,119 --> 00:17:41,560 Speaker 3: got to be thinking, if I'm buying a property, I'm 402 00:17:41,560 --> 00:17:43,239 Speaker 3: probably going to be in it or owning it as 403 00:17:43,240 --> 00:17:45,800 Speaker 3: a rental for a great number of years. Seriously, who 404 00:17:45,880 --> 00:17:47,760 Speaker 3: gives a great worry at all that what happens in 405 00:17:47,760 --> 00:17:48,840 Speaker 3: the next twelve to twelve months. 406 00:17:49,000 --> 00:17:51,480 Speaker 1: Yeah, yeah, that twelve months won't matter twenty years from. 407 00:17:51,320 --> 00:17:53,119 Speaker 3: Now, surely or not. Trouble is we all live in 408 00:17:53,160 --> 00:17:53,920 Speaker 3: the short term. 409 00:17:54,600 --> 00:17:56,959 Speaker 1: True, Just thinking in the short term and thinking back 410 00:17:57,000 --> 00:18:01,080 Speaker 1: to the budget, there was some supposed long term, long 411 00:18:01,160 --> 00:18:03,320 Speaker 1: term thinking in the budget there around things like key 412 00:18:03,359 --> 00:18:05,639 Speaker 1: we saver and so on. Was there anything in there 413 00:18:05,680 --> 00:18:07,600 Speaker 1: that jumped out and made you think, kriky, we're on 414 00:18:07,640 --> 00:18:10,080 Speaker 1: the right track here, right track and terms of well, 415 00:18:10,280 --> 00:18:12,400 Speaker 1: just in terms of the long term plan for how 416 00:18:12,440 --> 00:18:14,639 Speaker 1: we get people saving more in a position to be 417 00:18:14,680 --> 00:18:17,280 Speaker 1: able to either invest in property, invest in whatever they're doing. 418 00:18:17,400 --> 00:18:20,199 Speaker 3: We are we are we answering that question, Well, the 419 00:18:20,200 --> 00:18:22,760 Speaker 3: budget wasn't focused on that. The budget was all about 420 00:18:22,800 --> 00:18:26,159 Speaker 3: putting in place a better fiscal track to get the 421 00:18:26,160 --> 00:18:29,240 Speaker 3: Crown accounts for New Zealand ready for when the next 422 00:18:29,359 --> 00:18:32,240 Speaker 3: shock comes along. I mean, you can virtually guarantee within 423 00:18:32,240 --> 00:18:34,080 Speaker 3: the next ten years there's going to be another major 424 00:18:34,119 --> 00:18:36,399 Speaker 3: shock at the New Zealand economy. We've just got no 425 00:18:36,520 --> 00:18:40,000 Speaker 3: idea when it's what it's going to be, how bad 426 00:18:40,040 --> 00:18:41,800 Speaker 3: it's going to be. But the accounts need to be 427 00:18:41,880 --> 00:18:44,800 Speaker 3: ready for that, especially given our high dependence in New 428 00:18:44,880 --> 00:18:48,479 Speaker 3: Zealand on people saving overseas. We use there, we use 429 00:18:48,560 --> 00:18:51,679 Speaker 3: their money, and so yeah, improving savings is definitely a 430 00:18:51,680 --> 00:18:54,960 Speaker 3: positive i'd suggest for New Zealand, but the budget wasn't 431 00:18:54,960 --> 00:18:58,000 Speaker 3: aim data doing that, and unfortunately for Key we Savor 432 00:18:58,080 --> 00:19:01,360 Speaker 3: from my point of view, right early on, when businesses 433 00:19:01,400 --> 00:19:05,199 Speaker 3: were allowed to opt out of making a contribution by saying, oh, 434 00:19:05,280 --> 00:19:09,240 Speaker 3: we're going to put it into the person's salary instead 435 00:19:09,280 --> 00:19:12,320 Speaker 3: of contributing three percent ourselves, well, i'd suggest most people 436 00:19:12,320 --> 00:19:15,040 Speaker 3: who had it put into their fully costed up salary 437 00:19:15,040 --> 00:19:17,280 Speaker 3: in that year might have noticed. I didn't get much 438 00:19:17,320 --> 00:19:19,320 Speaker 3: of a salary increase in the next three or four 439 00:19:19,359 --> 00:19:21,520 Speaker 3: years after that one, and I think for me, that's 440 00:19:21,520 --> 00:19:24,280 Speaker 3: a bastardization of Key we Savor away from what it 441 00:19:24,280 --> 00:19:24,840 Speaker 3: could have been. 442 00:19:25,359 --> 00:19:27,520 Speaker 1: So and it's too late to try and fish that. Obviously, 443 00:19:28,080 --> 00:19:29,879 Speaker 1: the costs are quite high there. You've just got to 444 00:19:29,880 --> 00:19:32,800 Speaker 1: try and work on it. Yeah, right, it's nothing else 445 00:19:32,840 --> 00:19:34,720 Speaker 1: in there. Obviously, the tweaks that they made to things 446 00:19:34,720 --> 00:19:37,080 Speaker 1: like contributions. It's all sort of water under the bridge. 447 00:19:37,160 --> 00:19:38,919 Speaker 3: Yeah, it's neither here nor there. I think in terms of, 448 00:19:38,960 --> 00:19:40,720 Speaker 3: you know, the outlook, do I think all suddenly there's 449 00:19:40,720 --> 00:19:42,359 Speaker 3: a big pool of savings and this is going to 450 00:19:42,680 --> 00:19:44,920 Speaker 3: provide capital for growing New Zealand businesses. 451 00:19:45,000 --> 00:19:45,639 Speaker 1: No, no, no, no no. 452 00:19:45,680 --> 00:19:47,720 Speaker 3: This was hardly even at the margin sort of stuff there. 453 00:19:47,720 --> 00:19:50,880 Speaker 3: It really doesn't classifies anything major. Even when we look 454 00:19:50,880 --> 00:19:54,000 Speaker 3: at something like the twenty percent first year depreciation allowance, 455 00:19:54,080 --> 00:19:57,199 Speaker 3: businesses can claim for their for their investment, and it 456 00:19:57,280 --> 00:19:59,600 Speaker 3: sounds good and I'd say, yes, it is a good thing. 457 00:20:00,080 --> 00:20:02,439 Speaker 3: The issue is a lot of businesses were already saying 458 00:20:02,720 --> 00:20:05,560 Speaker 3: I'm going to invest and ah, now I can claim 459 00:20:05,560 --> 00:20:07,919 Speaker 3: more this year, I'll whack. Oh it's going to be 460 00:20:07,960 --> 00:20:11,240 Speaker 3: of cash flow assistance and it might stimulate some more 461 00:20:11,400 --> 00:20:14,359 Speaker 3: business investment in New Zealand. But it doesn't really change 462 00:20:14,359 --> 00:20:16,399 Speaker 3: the outlook. I'm not actually aware of anyone who's actually 463 00:20:16,440 --> 00:20:18,680 Speaker 3: changed their outlook for our economy on the basis of 464 00:20:18,720 --> 00:20:19,199 Speaker 3: the budget. 465 00:20:19,240 --> 00:20:22,879 Speaker 1: I certainly haven't so yet. Apparently it's going to increase 466 00:20:22,960 --> 00:20:25,840 Speaker 1: our gdp BI. I can't remember their figure by so much, 467 00:20:25,880 --> 00:20:27,399 Speaker 1: but enough to sort of nudge it up by more 468 00:20:27,400 --> 00:20:28,159 Speaker 1: than half a percent. 469 00:20:28,680 --> 00:20:30,480 Speaker 3: I think it's going to be one percent over twenty years. 470 00:20:30,960 --> 00:20:34,560 Speaker 3: So full credit to Treasury for actually writing that. You're saying, yes, 471 00:20:34,600 --> 00:20:36,320 Speaker 3: there's a positive impact, but by the way, it's the 472 00:20:36,320 --> 00:20:39,520 Speaker 3: next two decades, and they're probably right, it is probably 473 00:20:39,520 --> 00:20:41,480 Speaker 3: going to be something like that, But it doesn't change 474 00:20:41,520 --> 00:20:43,960 Speaker 3: the key dynamic. Let's say, for businesses at the moment 475 00:20:44,040 --> 00:20:48,320 Speaker 3: of their margins are severely compressed, their costs are still rising, 476 00:20:48,560 --> 00:20:51,600 Speaker 3: they're wondering, really, when do more customers come forward? That 477 00:20:52,000 --> 00:20:55,439 Speaker 3: stuff is far more important than these tweaks from the budget. 478 00:20:57,240 --> 00:20:58,800 Speaker 1: I wanted to try and get to a bit of 479 00:20:58,800 --> 00:21:00,879 Speaker 1: long term stuff now, and if we can just try 480 00:21:00,880 --> 00:21:03,840 Speaker 1: and sort of think long term, people talk about I 481 00:21:03,880 --> 00:21:06,320 Speaker 1: think the phrase the great wealth transfer is one that's 482 00:21:06,320 --> 00:21:09,320 Speaker 1: been thrown around, this idea that you've got a range 483 00:21:09,359 --> 00:21:12,159 Speaker 1: of people probably hitting retirement now and getting on and 484 00:21:12,160 --> 00:21:14,080 Speaker 1: they're getting at the point where they're going to potentially 485 00:21:14,080 --> 00:21:18,120 Speaker 1: hand that wealth to another generation and so on. I mean, 486 00:21:19,200 --> 00:21:21,520 Speaker 1: people talk about that and how people have built that 487 00:21:21,600 --> 00:21:23,359 Speaker 1: up and might leave it to their kids and grandkids. 488 00:21:24,400 --> 00:21:27,160 Speaker 1: Are the implications of that for the property market. 489 00:21:27,880 --> 00:21:30,840 Speaker 3: We lack research on what is really going to happen, 490 00:21:30,840 --> 00:21:33,520 Speaker 3: And even if one looks at research coming from countries 491 00:21:33,560 --> 00:21:37,200 Speaker 3: which have already gone through aging processes like Japan, Germany 492 00:21:37,200 --> 00:21:39,560 Speaker 3: and a few others, it may not be entirely relevant 493 00:21:39,560 --> 00:21:42,720 Speaker 3: to the New Zealand situation. And maybe especially when we've 494 00:21:42,800 --> 00:21:45,040 Speaker 3: looked at one of the developments in the past eighteen months, 495 00:21:45,200 --> 00:21:49,119 Speaker 3: is that with soaring local authority rates and insurance premiums 496 00:21:49,240 --> 00:21:53,160 Speaker 3: and electricity prices, butter and meat, any spreadsheet a person 497 00:21:53,200 --> 00:21:55,720 Speaker 3: has run for this is what I can afford to 498 00:21:55,760 --> 00:21:59,040 Speaker 3: spend in my retirement, It's all out the window. Any 499 00:21:59,080 --> 00:22:01,760 Speaker 3: savings or investment calculations you made from you know, when 500 00:22:01,800 --> 00:22:04,040 Speaker 3: campaigns first were run by the government on save for 501 00:22:04,080 --> 00:22:06,679 Speaker 3: retirement late eighties, early nineties, it's all out the window. 502 00:22:06,920 --> 00:22:08,960 Speaker 3: And so I can't help but thinking that some people 503 00:22:09,000 --> 00:22:11,600 Speaker 3: who have reached the conclusion I'm actually going to have 504 00:22:11,600 --> 00:22:14,320 Speaker 3: to spend more of what this inheritance passing on is 505 00:22:14,320 --> 00:22:16,560 Speaker 3: going to be? Why should I sacrifice even more for 506 00:22:16,880 --> 00:22:20,119 Speaker 3: these ungrateful kids or whoever a situation? And so I 507 00:22:20,160 --> 00:22:22,800 Speaker 3: think for the New Zealand context, it's really hard to 508 00:22:23,040 --> 00:22:26,200 Speaker 3: figure out any implication for what's going to happen. However, 509 00:22:26,680 --> 00:22:28,800 Speaker 3: when I was running through a little list earlier on 510 00:22:29,040 --> 00:22:32,000 Speaker 3: of reasons why the housing market is subdued at the moment, 511 00:22:32,280 --> 00:22:34,959 Speaker 3: and I did mention a lot of construction, a lot 512 00:22:34,960 --> 00:22:39,880 Speaker 3: of supply out there, the employment market worries low fomo, 513 00:22:40,160 --> 00:22:41,959 Speaker 3: I did make a little bit of a reference earlier 514 00:22:42,000 --> 00:22:45,959 Speaker 3: on to investors doing selling that extra supply is on 515 00:22:46,000 --> 00:22:48,520 Speaker 3: the market. Other investors come in bring it up to 516 00:22:48,560 --> 00:22:52,520 Speaker 3: healthy home standards, or young buyers come in and watch 517 00:22:52,560 --> 00:22:54,439 Speaker 3: some videos and learn how to use a screwdriver and 518 00:22:54,440 --> 00:22:58,280 Speaker 3: a hammer and do it up themselves. There's an opportunity 519 00:22:58,520 --> 00:23:03,040 Speaker 3: to add value to one's proper by improving undertaking long 520 00:23:03,040 --> 00:23:05,080 Speaker 3: overdue maintenance on some of those properties. So I think 521 00:23:05,119 --> 00:23:07,680 Speaker 3: that's one elements in there from the retiring genet generation 522 00:23:07,840 --> 00:23:08,800 Speaker 3: or already in retirement. 523 00:23:08,880 --> 00:23:10,680 Speaker 1: But is that like a wee blip or is that 524 00:23:10,800 --> 00:23:14,040 Speaker 1: like the start of quite a strong trend if you like, 525 00:23:14,080 --> 00:23:16,159 Speaker 1: Because there are a lot of people out there that 526 00:23:16,240 --> 00:23:19,120 Speaker 1: would be facing those circumstances. 527 00:23:18,200 --> 00:23:20,439 Speaker 3: It's probably a move up to a higher level of 528 00:23:20,480 --> 00:23:22,719 Speaker 3: investors selling on average than was the case. So if 529 00:23:22,800 --> 00:23:25,760 Speaker 3: it was chugging along like this before, it's now I 530 00:23:25,800 --> 00:23:27,720 Speaker 3: think going to chug along at a higher level like 531 00:23:27,720 --> 00:23:32,000 Speaker 3: that for a number of years, so higher average listings 532 00:23:32,000 --> 00:23:33,560 Speaker 3: of property than would have been the case. So I 533 00:23:33,560 --> 00:23:36,560 Speaker 3: don't think it's a blip, but it's going to be sustained. 534 00:23:36,600 --> 00:23:39,240 Speaker 3: But that doesn't mean it sustains its negative impact on 535 00:23:39,280 --> 00:23:41,520 Speaker 3: the market for a great number of years. It's just 536 00:23:41,600 --> 00:23:43,880 Speaker 3: a bit more supply out there for buyers to choose from. 537 00:23:44,000 --> 00:23:45,640 Speaker 3: And you have to think to yourself, you know, from 538 00:23:45,680 --> 00:23:47,760 Speaker 3: having all of us watch this housing market be so 539 00:23:47,840 --> 00:23:50,480 Speaker 3: difficult for young buyers in particular for so many years. 540 00:23:50,840 --> 00:23:53,800 Speaker 3: Thank goodness, this is a really good story, quite frankly. 541 00:23:54,080 --> 00:23:56,760 Speaker 3: But yeah, just to finish off with the passing on 542 00:23:56,840 --> 00:23:59,480 Speaker 3: to the next generation, I don't know how that spins 543 00:23:59,520 --> 00:24:01,879 Speaker 3: out in terms of how does it affect the saving 544 00:24:01,960 --> 00:24:04,720 Speaker 3: is an investment desire of the generation that think it's 545 00:24:04,800 --> 00:24:07,240 Speaker 3: that they're going to get it, And you've got to 546 00:24:07,240 --> 00:24:10,520 Speaker 3: watch your assumptions because what I'm increasingly hearing from people 547 00:24:10,520 --> 00:24:12,560 Speaker 3: who are thinking about when they pass and then passing 548 00:24:12,600 --> 00:24:15,480 Speaker 3: on the wealth, they're going to skip a generation, or 549 00:24:15,480 --> 00:24:18,040 Speaker 3: they're going to skip two generations and give it to 550 00:24:18,160 --> 00:24:20,159 Speaker 3: not even the grand kids, the great grand kids, or 551 00:24:20,200 --> 00:24:22,800 Speaker 3: something like this, people need to watch their assumption about 552 00:24:22,800 --> 00:24:23,560 Speaker 3: who gets the dosh. 553 00:24:23,840 --> 00:24:25,359 Speaker 1: You've got to wonder as well whether it's going to 554 00:24:25,440 --> 00:24:27,320 Speaker 1: change people's approaches, like is it just going to be 555 00:24:27,400 --> 00:24:30,280 Speaker 1: a straight roll into the same kinds of investments property 556 00:24:30,320 --> 00:24:32,800 Speaker 1: investments as before. Are people going to take different approaches 557 00:24:32,840 --> 00:24:33,240 Speaker 1: as well? 558 00:24:33,400 --> 00:24:36,080 Speaker 3: Yeah, exactly. I think there's going to be more diversification 559 00:24:36,440 --> 00:24:40,680 Speaker 3: in people's investment portfolios when they needs to save for retirement. 560 00:24:40,720 --> 00:24:42,959 Speaker 3: At central messages were getting hammered by the government from 561 00:24:42,960 --> 00:24:46,200 Speaker 3: the early nineteen nineties. It was soon after the shear 562 00:24:46,240 --> 00:24:48,439 Speaker 3: market had crashed in nineteen eighty seven, and people, i 563 00:24:48,440 --> 00:24:52,560 Speaker 3: think naturally moved towards other assets like residential property, assisted 564 00:24:52,600 --> 00:24:56,040 Speaker 3: by interst rates falling sharply. In the early nineteen nineties, 565 00:24:56,880 --> 00:24:59,200 Speaker 3: inflation went from averaging eleven percent to about two and 566 00:24:59,200 --> 00:25:02,040 Speaker 3: a half percent. Straits are foul away, we had migration 567 00:25:02,119 --> 00:25:04,960 Speaker 3: numbers getting stronger. It all came together to bring a 568 00:25:05,000 --> 00:25:08,400 Speaker 3: lot more people into the residential property investment market from 569 00:25:08,480 --> 00:25:12,439 Speaker 3: the mid part of the nineteen nineties than we'd seen before. 570 00:25:12,920 --> 00:25:17,080 Speaker 3: I think now that extra layer of people is slowly 571 00:25:17,119 --> 00:25:19,040 Speaker 3: going to be dissipated away. We're still going to be 572 00:25:19,119 --> 00:25:21,840 Speaker 3: left with a lot of people investing in residential property. 573 00:25:22,000 --> 00:25:23,679 Speaker 3: But I think more people now are going to be 574 00:25:23,680 --> 00:25:26,399 Speaker 3: looking at other areas in which to invest their money, 575 00:25:26,600 --> 00:25:29,000 Speaker 3: be it either for retirement or for something special. In 576 00:25:29,040 --> 00:25:30,920 Speaker 3: ten or twenty years time, I think there'll be more 577 00:25:30,960 --> 00:25:33,760 Speaker 3: diversification away from property. But still one thing of the 578 00:25:33,800 --> 00:25:35,960 Speaker 3: population is still going to be renting, So the need 579 00:25:36,119 --> 00:25:39,240 Speaker 3: for the rental population, the rental stop to be out there, 580 00:25:39,359 --> 00:25:40,240 Speaker 3: is still going to be strong. 581 00:25:40,440 --> 00:25:43,719 Speaker 1: Tony Alexander, thank you so much, and thank you for watching. 582 00:25:43,840 --> 00:25:46,520 Speaker 1: For listening, whether you're on iHeart or straight off the 583 00:25:46,560 --> 00:25:50,120 Speaker 1: app or Spotify or YouTube, make sure that you hit 584 00:25:50,119 --> 00:26:00,240 Speaker 1: that like and subscribe Quimitu. That's us for this week.