WEBVTT - Property: Recovery or relapse? 0:00:03.600 --> 0:00:07.440 Junokoto. Welcome to shared lunch. I'm Garth Bray. Well winter 0:00:07.600 --> 0:00:09.520 is here not normally a boomer of a time for 0:00:09.600 --> 0:00:12.319 our property market, and the Reserve Bank is sounding a 0:00:12.360 --> 0:00:15.840 little loop warm about easing rates. Further so, what lies 0:00:15.880 --> 0:00:18.720 ahead for us? Time to check in with that sage 0:00:18.720 --> 0:00:23.040 of the savvy property investor, Tony Alexander see what he thinks. 0:00:23.440 --> 0:00:26.119 But before that, it's some important information you should always 0:00:26.160 --> 0:00:27.640 consider before investing. 0:00:28.080 --> 0:00:30.680 Investing involves the risk you might lose the money you 0:00:30.720 --> 0:00:34.000 start with. We recommend talking to a licensed financial advisor. 0:00:34.720 --> 0:00:38.559 We also recommend reading product disclosure documents before deciding to invest. 0:00:38.800 --> 0:00:41.199 Everything you're about to see and here is current at 0:00:41.200 --> 0:00:42.080 the time of recording. 0:00:42.159 --> 0:00:44.800 Tony, A rare pleasure to have you here face to 0:00:44.840 --> 0:00:47.440 face in Auckland. Love to have you with us. Yep. 0:00:47.720 --> 0:00:49.519 I'll get to the Reserve Bank in a second. But 0:00:49.680 --> 0:00:52.640 the centric starter that we've seen out very recently, the 0:00:52.640 --> 0:00:56.320 credit reporting stuff that shows business and consumer credit up. 0:00:56.680 --> 0:00:59.320 I mean it's not the lending is not where it 0:00:59.440 --> 0:01:01.880 was in twe but is that the first sign that 0:01:01.920 --> 0:01:04.640 things are getting better or is it still not looking great? 0:01:04.760 --> 0:01:08.240 Oh? We're economists don't generally look at the lending data 0:01:08.360 --> 0:01:10.720 for a sign of what's happening in the economy. We 0:01:10.800 --> 0:01:13.120 tend more to look at leading indicators, what's happening with 0:01:13.160 --> 0:01:17.399 consumer sentiment, business sentiment, these sort of things, investment, intensions, 0:01:17.440 --> 0:01:21.679 employment and tensions. So definitely interesting there. But for instance, 0:01:21.680 --> 0:01:23.640 if you look at the reserve banks lending numbers, the 0:01:23.800 --> 0:01:27.119 volume of lending to the farming sector is down about 0:01:27.120 --> 0:01:29.440 one percent or so on a year earlier. So do 0:01:29.520 --> 0:01:31.720 we look at that and go, farming's falling away. It's 0:01:31.720 --> 0:01:34.520 all getting really really bad, while not with commodity prices 0:01:34.600 --> 0:01:36.480 up about seventeen percent on a year earlier. 0:01:36.560 --> 0:01:38.959 So they're probably just paying off debt, aren't they. Because 0:01:39.000 --> 0:01:41.360 things are so good that it's actually a healthy sign. 0:01:41.600 --> 0:01:43.880 That's relevant because if we talk about the good returns 0:01:43.920 --> 0:01:46.280 being made by the farmers, oh, the region's going to boom. 0:01:46.720 --> 0:01:48.800 Rural towns are going to absolutely boom. Right, that's where 0:01:48.800 --> 0:01:50.680 I'm going to do my property investment. Yeah, we'll just 0:01:50.760 --> 0:01:53.120 remember the costs for operating a farm have gone through 0:01:53.120 --> 0:01:56.480 the roof in recent years. And yeah, they've been getting 0:01:56.480 --> 0:01:58.240 a voice in their ear to pay down debt for 0:01:58.280 --> 0:02:01.000 a long time. So the actual region stimulus. It's going 0:02:01.040 --> 0:02:02.760 to be there, but it's not really going to be 0:02:02.800 --> 0:02:04.919 what it's been in the past coming out of recessions. 0:02:04.960 --> 0:02:07.000 Just on that though, I looked at that Centrix data 0:02:07.080 --> 0:02:09.440 and there was like a heat map of how badly 0:02:09.480 --> 0:02:13.000 in areas, how badly behind people are. She was lush 0:02:13.080 --> 0:02:16.240 green all up the South Island, all in single digits. 0:02:16.280 --> 0:02:18.200 You get up into pretty much the whole of the 0:02:18.200 --> 0:02:20.080 North Island was a bit of an orange, and you 0:02:20.160 --> 0:02:23.320 get to Bay of Plenty, you get to the coast Titaffity, 0:02:23.440 --> 0:02:26.280 it was red and we're talking like seventeen eighteen percent, 0:02:26.639 --> 0:02:28.799 you know, in an areas and sign that's not a 0:02:28.840 --> 0:02:31.160 healthy sign. That's a two track economy, there isn't it. 0:02:31.280 --> 0:02:33.000 Well, yeah, for the moment, I think it does look 0:02:33.080 --> 0:02:34.680 like that, And in a way it's sort of a 0:02:34.960 --> 0:02:38.360 payback and a broad sense from earlier on when we 0:02:38.440 --> 0:02:41.720 saw from a housing market perspective, things were growing really 0:02:41.760 --> 0:02:44.639 strongly in the North Island but not in the South Island. 0:02:44.680 --> 0:02:46.639 I used to talk a lot about it that this 0:02:46.760 --> 0:02:49.200 boom and house prices. There was some in the South Island, 0:02:49.480 --> 0:02:51.919 but it wasn't as much as in the North Island, 0:02:51.960 --> 0:02:54.400 and so if we extrapolate that to businesses in general, 0:02:54.639 --> 0:02:58.040 probably you've got more businesses getting over optimistic in the 0:02:58.040 --> 0:03:01.080 North Island than the South Island during the boom, and 0:03:01.160 --> 0:03:03.880 so when you get the type monetary policy occur, there's 0:03:03.919 --> 0:03:06.920 more weeding out to do in the business sector, maybe 0:03:06.960 --> 0:03:10.480 residential property investment market in the North Island than the 0:03:10.520 --> 0:03:12.440 South Island. So that's sort of what I would put 0:03:12.440 --> 0:03:16.200 it down to. I wouldn't over extrapolate that towards right 0:03:16.280 --> 0:03:18.679 New Zealand's future for the next hundred years. It's back 0:03:18.720 --> 0:03:22.240 to the South Island. This population imbalanced twenty five percent 0:03:22.320 --> 0:03:24.639 in South Island or so seventy five percent North. It's 0:03:24.639 --> 0:03:26.800 going to reverse yet, No, it's just a bit of 0:03:26.800 --> 0:03:29.639 a cyclical thing from that earlier on boom which was 0:03:29.680 --> 0:03:30.280 more in the North. 0:03:30.600 --> 0:03:32.440 It just must be anecdotes that I keep running into 0:03:32.440 --> 0:03:34.000 people that are moving to christ Church the end to 0:03:34.040 --> 0:03:35.800 try and ditch the Auckland property prices. 0:03:35.840 --> 0:03:37.720 Well, that's definitely happening and it's going to keep happening 0:03:37.760 --> 0:03:38.120 as well. 0:03:38.520 --> 0:03:41.200 Yeah, yeah, I mean liquidations in some of that data 0:03:41.240 --> 0:03:44.560 were quite high. Business liquidations. We're talking like thirty percent 0:03:44.640 --> 0:03:46.400 I think was it up on year on year. That's 0:03:46.440 --> 0:03:46.800 not good. 0:03:46.920 --> 0:03:48.640 Yeah, yeah, definitely not good. But this is what I 0:03:48.680 --> 0:03:52.480 warned about from twenty twenty two. In fact, as early 0:03:52.480 --> 0:03:55.000 as the first half of twenty twenty one, I was 0:03:55.040 --> 0:03:58.000 warning residential builders just watch out. There's a boom underway. 0:03:58.200 --> 0:04:02.600 Lots of inexperienced, undercapitalized people are entering the residential construction sector, 0:04:02.720 --> 0:04:05.000 as widely defined, and there's going to be a weeding 0:04:05.040 --> 0:04:08.120 out period somewhere down the track. And then I morphed 0:04:08.200 --> 0:04:10.880 that into talking about over twenty twenty three of this 0:04:10.920 --> 0:04:13.080 weeding out is going to be across all sectors of 0:04:13.120 --> 0:04:15.320 the economy in twenty twenty four. And so that's what 0:04:15.360 --> 0:04:18.039 we saw with liquidations up et cetera last year. And 0:04:18.080 --> 0:04:20.640 then of course I was warning strongly from August last 0:04:20.720 --> 0:04:23.200 year when we saw the interest rates were coming down. 0:04:23.440 --> 0:04:26.279 A journalist wrote, We're going to be a rockstar economy again, 0:04:26.360 --> 0:04:29.320 and I thought, what a load of absolute rubbish. There 0:04:29.360 --> 0:04:31.000 are going to be businesses that are going to be 0:04:31.040 --> 0:04:33.720 caught out and some of the weakness we see in 0:04:33.720 --> 0:04:36.320 the economy at the moment. It's the reality check as 0:04:36.360 --> 0:04:38.560 I think businesses are realizing, oh, who was right? This 0:04:38.600 --> 0:04:42.359 isn't a boom. We survived to twenty five, it's not enough. 0:04:42.560 --> 0:04:45.520 And some businesses, either from their own volition or the 0:04:45.560 --> 0:04:49.159 ird or the bank the creditors are realizing we can't 0:04:49.200 --> 0:04:49.560 make it. 0:04:49.839 --> 0:04:50.880 If we don't have a boom. 0:04:51.120 --> 0:04:53.400 Then, given the cost we've got going up, the massive 0:04:53.440 --> 0:04:56.560 margin compression, we've got to close down. And so that 0:04:56.640 --> 0:05:00.279 weeding out process is still rolling through twenty twenty five. Actually, 0:05:00.279 --> 0:05:03.839 as the CENTRIC data showed in the construction sector, where 0:05:03.880 --> 0:05:06.320 there was a much sharper increase in number of liquidations 0:05:06.320 --> 0:05:08.719 sort of trending upwards in the past three years compared 0:05:08.760 --> 0:05:11.200 with other sectors like retail, hospitality. 0:05:11.360 --> 0:05:14.039 Because broadly, I think this month that actually turned, or 0:05:14.800 --> 0:05:17.080 last month it's turned, and it almost looks like the 0:05:17.080 --> 0:05:19.640 worm is turning down. The liquidations might just be starting 0:05:19.640 --> 0:05:20.960 to trend down. You don't think it's over. 0:05:21.080 --> 0:05:23.320 It'd be nice to think that, but I think it's 0:05:23.360 --> 0:05:27.120 too soon to really call that. Having said that, although 0:05:27.120 --> 0:05:30.520 my commentary since August has been a negative, quite shockingly 0:05:30.600 --> 0:05:33.160 so to some people, I do have to keep emphasizing 0:05:33.400 --> 0:05:36.599 there is still a recovery underway. We've got the absence 0:05:36.640 --> 0:05:39.240 of those crunching interest rates, out there. We have the 0:05:39.279 --> 0:05:42.920 surprisingly good returns in parts of the primary set sector, 0:05:43.120 --> 0:05:45.640 more foreign students coming into the country, there is some 0:05:45.720 --> 0:05:49.599 business investment infrastructure, so there is a recovery underway, but 0:05:49.680 --> 0:05:52.880 it's not an especially strong one. It's the absence of 0:05:52.920 --> 0:05:56.760 the strong upturn, which is catching out some businesses just 0:05:56.839 --> 0:05:59.320 in the last gasp of their breath for this year. 0:06:00.000 --> 0:06:01.960 If we look at what the Reserve Bank came out with, 0:06:02.000 --> 0:06:04.880 which was effectively a little bit of a split decision there, 0:06:04.920 --> 0:06:08.560 they took some convincing the full board that a full 0:06:08.560 --> 0:06:10.960 cut was needed of twenty five basis points. Apparently they 0:06:11.040 --> 0:06:14.920 even talk about cutting fifty What do you take out 0:06:14.960 --> 0:06:15.200 of that. 0:06:15.400 --> 0:06:17.440 Yeah, I wouldn't have voted for a cut. I would 0:06:17.480 --> 0:06:19.080 have stuck there at three point five percent. 0:06:19.520 --> 0:06:19.680 Yeah. 0:06:19.800 --> 0:06:21.640 No, people don't want to hear that because I've just 0:06:21.680 --> 0:06:24.599 said the economy this year weaker than people were thinking. 0:06:24.760 --> 0:06:28.400 That sounds like less inflationary pressure. Not so quick, because 0:06:28.440 --> 0:06:30.560 the other thing I've been saying since August last year, 0:06:30.640 --> 0:06:32.600 on top of the economy's going to still be a 0:06:32.640 --> 0:06:35.880 bit weak going forward, is there are still inflationary pressures 0:06:35.920 --> 0:06:39.479 bubbling on underneath in the economy. Where are they coming from, well, 0:06:39.520 --> 0:06:42.719 they're coming through the business sector. Generally, it's when you 0:06:42.760 --> 0:06:44.640 go and buy your cheese also at the supermarket there 0:06:44.720 --> 0:06:47.560 or you meet So the high commodity prices great news 0:06:47.560 --> 0:06:50.760 for our farmer's, horticulturalists, et cetera. But it feeds through 0:06:50.760 --> 0:06:53.720 into the supermarket, so we feel it there as a consumers. 0:06:53.839 --> 0:06:56.360 But just generally, the costs are still rising out there. 0:06:56.600 --> 0:07:01.080 And I've talked a lot about our price seat behavior 0:07:01.120 --> 0:07:03.280 by businesses. And if we look, for instance, at the 0:07:03.320 --> 0:07:06.599 A and Z's Monthly Business Outlook Survey, on average, since 0:07:06.680 --> 0:07:09.560 nineteen ninety two, when inflation started settling around two two 0:07:09.600 --> 0:07:12.200 and a half percent on average and net twenty six 0:07:12.280 --> 0:07:15.480 percent of businesses have said I'm raising my prices within 0:07:15.520 --> 0:07:18.080 the next year. That's still running at forty five percent. 0:07:18.400 --> 0:07:20.800 So we've got a well above average proportion of businesses 0:07:20.800 --> 0:07:23.040 saying I'm putting my prices up. And this is when 0:07:23.200 --> 0:07:26.360 conditions are still weak. We've had recession or two recessions 0:07:26.360 --> 0:07:28.600 in the economy in the past three years. You would 0:07:28.640 --> 0:07:31.280 expect that number to be way way down, And of 0:07:31.280 --> 0:07:33.920 course it comes from a net seventy three percent of 0:07:33.920 --> 0:07:36.400 them are saying my cost arising, I expect them to 0:07:36.400 --> 0:07:38.920 go higher in a year's time. So my concern is 0:07:38.960 --> 0:07:41.680 that monetary policy aims at where things are going to 0:07:41.720 --> 0:07:44.000 be in eighteen to twenty four months time. Well, I 0:07:44.040 --> 0:07:46.200 expect the economy is going to be stronger. And when 0:07:46.240 --> 0:07:47.960 I look at the A and Z survey and I 0:07:48.040 --> 0:07:50.800 offset it against another survey from the New Zealand Institute 0:07:50.800 --> 0:07:53.280 of Economic Research, you know they've done that survey since 0:07:53.280 --> 0:07:55.400 the nineteen sixties. What it says to me is this, 0:07:55.800 --> 0:07:58.280 once businesses see customers coming through the door and good 0:07:58.360 --> 0:08:02.400 numbers like next year, to raise their prices to rebuild margins. 0:08:01.960 --> 0:08:03.440 And that will bring the inflation back. 0:08:03.440 --> 0:08:05.240 The inflation will come back. And so that's why I 0:08:05.280 --> 0:08:08.520 think the Reserve Bank's mind now has shifted away from right, 0:08:08.600 --> 0:08:11.520 we no longer need high interesstrates to crunch inflation. To 0:08:12.000 --> 0:08:15.240 let's be careful, we don't continue the whipping around behavior 0:08:15.320 --> 0:08:17.600 of the past, you know, one to two decades and 0:08:17.680 --> 0:08:20.600 cut too far now and have to rapidly increase late 0:08:20.640 --> 0:08:22.240 twenty six, twenty twenty twenty seven. 0:08:22.600 --> 0:08:24.560 Right, they really are taking quite a long view there. 0:08:24.800 --> 0:08:26.640 Hard to get that long view though, I mean, you 0:08:26.720 --> 0:08:30.120 saw Christian hawksbeare who's you know, acting governor at the moment, 0:08:30.200 --> 0:08:32.320 came out kind of with a well, it's not just 0:08:32.440 --> 0:08:33.800 what we see in front of us, it's what we 0:08:33.840 --> 0:08:36.800 see either side of us. They have these alternative scenarios 0:08:36.840 --> 0:08:39.480 which I kind of boiled down into my head to all, 0:08:39.520 --> 0:08:42.000 we're facing some headwinds and it's all going to get 0:08:42.040 --> 0:08:45.079 more expensive, or all, we're facing these headwinds and we're 0:08:45.080 --> 0:08:46.480 just kind of going to give up. You know, the 0:08:46.520 --> 0:08:48.880 whole economy is going to go into a coma globally 0:08:48.960 --> 0:08:50.719 almost Am I way off there? Yeah? 0:08:50.760 --> 0:08:52.960 No, the economy is wild. Economy is still going to grow. 0:08:53.040 --> 0:08:55.680 Like I was reading commentary this morning about the OECD 0:08:56.040 --> 0:08:58.640 have slashed their forecast for world growth over the next 0:08:58.640 --> 0:09:01.080 two years. Well that was the word that was used 0:09:01.080 --> 0:09:03.199 in there. It was only a reduction of about zero 0:09:03.240 --> 0:09:05.520 point two percent in their forecast this year and zero 0:09:05.520 --> 0:09:08.640 point one percent next year. So people have detail as media, 0:09:09.480 --> 0:09:12.000 what are you going to do? But we pay attention 0:09:12.080 --> 0:09:14.600 to Oh there's a shocking headline, you know, and we 0:09:14.679 --> 0:09:16.959 read it, but the actual change is relatively small. And 0:09:17.080 --> 0:09:20.040 you know the Trump Terwi war that's underway, it's definite 0:09:20.120 --> 0:09:23.680 negative for the world economy. There are two minds on 0:09:23.840 --> 0:09:25.600 does this boost world inflation. 0:09:25.360 --> 0:09:25.920 Or lower it? 0:09:26.080 --> 0:09:28.360 Lower it? Even Treasure and Reserve Bank can't agree on 0:09:28.400 --> 0:09:28.640 that one. 0:09:28.840 --> 0:09:31.720 For New Zealand, hence those different scenarios. Different scenario. We're 0:09:31.720 --> 0:09:33.680 going to land here in the next sort of six 0:09:33.720 --> 0:09:34.400 to twelve months. 0:09:34.400 --> 0:09:37.600 What are we saying, still slow recovery, which will strengthen 0:09:37.600 --> 0:09:40.400 in twenty twenty six. But we shouldn't ignore the fact 0:09:40.440 --> 0:09:42.959 that these are good prices for the farmers being received 0:09:42.960 --> 0:09:46.160 out there. They will gain some greater confidence, do some spending. 0:09:46.480 --> 0:09:49.439 And contrary to what I was thinking up until a 0:09:49.440 --> 0:09:51.559 few months ago, where I said I think the recovery 0:09:51.600 --> 0:09:53.640 is going to be broadly based in the economy, it 0:09:53.800 --> 0:09:56.520 will now start more in the regions you see it 0:09:56.559 --> 0:09:59.199 first and in Theicargo and Neden, christ Church gets it, 0:09:59.320 --> 0:10:03.000 Taranaki plenty Waykatta get it. Auckland will be seeing it 0:10:03.040 --> 0:10:06.079 early next year, Wellington maybe twenty twenty seven. Something will 0:10:06.080 --> 0:10:08.600 flow through. It's just the normal lag in the process. 0:10:08.840 --> 0:10:13.719 So broadly economic recovery is underway. But my message to 0:10:13.720 --> 0:10:15.480 people when it comes to boring and interest rates, this 0:10:15.559 --> 0:10:17.400 is almost as good as it's going to get almost 0:10:17.480 --> 0:10:18.920 on the mortgage mortgage rates. 0:10:19.080 --> 0:10:20.840 That was exactly what I want to ask you next. 0:10:20.880 --> 0:10:24.120 You've seeing banks now actually jousting again. I mean they're 0:10:24.360 --> 0:10:26.679 you know, skuting about the fact that they're under sort 0:10:26.720 --> 0:10:29.600 of four point nine percent. Yeah, eighteen months, Like that's 0:10:30.080 --> 0:10:32.160 a wonderful sort of a number. Not bad, I suppose 0:10:32.200 --> 0:10:35.720 in recent times we've seen a lot lower. What's going 0:10:35.720 --> 0:10:37.520 on there are they're just trying to scoop up some 0:10:37.559 --> 0:10:40.280 of those I think it was like thirty billion a 0:10:40.280 --> 0:10:42.439 month that we're going to be rolling over their mortgages. 0:10:42.480 --> 0:10:44.080 I think it was. Yeah, a lot of people. 0:10:44.120 --> 0:10:46.400 Yeah, because everyone's been fixing sort of one year for 0:10:46.440 --> 0:10:48.640 a number of years now. Not many people locked in 0:10:48.679 --> 0:10:50.600 for the five years at two point nine nine percent, 0:10:50.640 --> 0:10:52.360 as I was jumping up and down saying I would 0:10:52.400 --> 0:10:56.880 do for eleven month months starting exactly last week five 0:10:56.960 --> 0:10:59.080 years ago. That's when we had the two point nine 0:10:59.120 --> 0:11:01.600 to nine percent for five years first to appear in 0:11:01.600 --> 0:11:04.320 twenty twenty, and it lasted for about eleven months. And 0:11:04.400 --> 0:11:06.520 so you've just got to think there's actually a group 0:11:06.559 --> 0:11:08.880 of people out there for whom their interstrates are now 0:11:08.920 --> 0:11:11.640 jumping up from two point ninety nine to four ninety 0:11:11.720 --> 0:11:14.280 nine or so. Poor beggars all that far. At least 0:11:14.280 --> 0:11:16.400 they got that time. You know, at the lower rates there, 0:11:16.520 --> 0:11:18.199 it'll be a shock. It'll be a shock of for 0:11:18.240 --> 0:11:20.640 them out there. Don't anticipate that the interest rates go 0:11:20.760 --> 0:11:23.440 much lower than they are at At the moment. The 0:11:23.480 --> 0:11:26.640 financial markets are looking towards a future where global inflation 0:11:26.720 --> 0:11:30.920 is slightly higher, US budget deficit blowout, et cetera. Places 0:11:30.960 --> 0:11:34.000 upward pressure on medium to long term interest rates are everywhere, 0:11:34.200 --> 0:11:38.079 and there is an economic recovery underway in New Zealand. 0:11:38.400 --> 0:11:40.839 It's hard to talk about interstrates still needing to be 0:11:41.000 --> 0:11:44.960 cut when there's an economic recovery underway, Like duh. 0:11:45.040 --> 0:11:47.160 Yeah, right, there's normal medicine reques. Does that mean? I 0:11:47.200 --> 0:11:49.079 suppose if you're in a position where you're watching these 0:11:49.160 --> 0:11:52.040 rates and you're thinking, oh, maybe I should break, It's like, well, 0:11:52.120 --> 0:11:54.400 everybody's situation is their own. We should say this is 0:11:54.400 --> 0:11:57.520 not financial advice, your own circummit senses dictate what you 0:11:57.520 --> 0:12:00.600 should do, but potentially something to consider as hey, it's 0:12:00.679 --> 0:12:03.240 it's going to be a longer interest rate picture. 0:12:03.320 --> 0:12:06.240 For if I had a mortgage that was maturing let's 0:12:06.280 --> 0:12:09.040 say in three months time or six months time, I 0:12:09.040 --> 0:12:11.439 wouldn't feel in need of Oh hang on, I'd better 0:12:11.480 --> 0:12:14.079 get in right now, because inflation's going to jump up, 0:12:14.320 --> 0:12:16.320 and in three or six months time the interest rates 0:12:16.360 --> 0:12:17.600 are going to be half a percent high. 0:12:17.800 --> 0:12:19.440 No, I don't think that'd all see that. 0:12:19.600 --> 0:12:21.840 No, I think And even if people are going one 0:12:21.880 --> 0:12:24.360 year fixed or two years or three years, it's going 0:12:24.440 --> 0:12:26.240 to be you know, here or there six to one, 0:12:26.320 --> 0:12:28.600 half a dozen of the other. Because I can't yet 0:12:28.679 --> 0:12:32.200 see enough form in the interest rates outlook to say 0:12:32.720 --> 0:12:34.880 this is when interest rates are going to start jumping up. 0:12:35.000 --> 0:12:36.840 This is how much they're going to go by. I'd 0:12:36.840 --> 0:12:39.440 want to get cover against that. Probably it's the other 0:12:39.480 --> 0:12:41.679 side of the equation. It's the employment picture that's more 0:12:41.679 --> 0:12:44.040 important at the moment, isn't it. Yeah, that's I think 0:12:44.080 --> 0:12:45.880 one of the reasons the real estate market is still 0:12:45.920 --> 0:12:49.160 being held back. So in my monthly survey of realistic 0:12:49.240 --> 0:12:51.800 agents been doing it for five years now now, on average, 0:12:51.800 --> 0:12:55.080 in five years, twenty one percent of the agents have 0:12:55.160 --> 0:12:57.600 ticked the box saying buyers are worried about their jobs. 0:12:58.040 --> 0:13:00.800 At the start of twenty twenty four, it was fourteen 0:13:00.960 --> 0:13:04.240 one four percent. So we started last year with stronger 0:13:04.240 --> 0:13:07.280 than average job security in the economy. It was one 0:13:07.320 --> 0:13:10.360 wonderful well. Come June last year, fifty six percent of 0:13:10.400 --> 0:13:12.480 agents saying people are worried about their jobs. And my 0:13:12.600 --> 0:13:14.920 latest survey are just sent out. The results of that 0:13:15.200 --> 0:13:17.800 fifty one percent of agents still say people are worried 0:13:17.800 --> 0:13:20.240 about their jobs. And I think that's one reason the 0:13:20.320 --> 0:13:24.240 housing market has failed to continue the recovery we saw 0:13:24.280 --> 0:13:26.800 in the second half of last last year. And why 0:13:27.040 --> 0:13:29.000 for the second time now since the start of twenty 0:13:29.000 --> 0:13:32.520 twenty three, a recovery has fizzled out again. And I 0:13:32.559 --> 0:13:34.720 think the labor market is one of the factors in play. 0:13:34.880 --> 0:13:37.120 And you you see it at all levels, I guess, because 0:13:37.160 --> 0:13:39.920 if you're not if you're not selling, you're not buying, 0:13:40.400 --> 0:13:43.120 you're not seeing people transitioning out of homes into retirement 0:13:43.160 --> 0:13:46.480 villages and so on, you just everything kind of slows down. 0:13:46.559 --> 0:13:49.959 And yep, you're still seeing listings and you're still seeing 0:13:50.080 --> 0:13:51.280 stuff being built, right. 0:13:51.240 --> 0:13:53.560 Yeah, yeah, Well, the level of construction out there still 0:13:53.559 --> 0:13:56.520 seems are pretty strong. In fact, as have been pointing 0:13:56.520 --> 0:14:00.200 out to people, one of the structural shifts in you ye, 0:14:00.559 --> 0:14:03.680 relevant to why house prices won't rise as much on 0:14:03.760 --> 0:14:06.400 average in the future is that the level of construction 0:14:06.640 --> 0:14:09.800 versus the population is now higher than we've had in 0:14:09.880 --> 0:14:13.440 the past, so more supply coming forward and land being 0:14:13.440 --> 0:14:15.720 made available, densification and tensification. 0:14:15.920 --> 0:14:18.360 Then the consent stuff as well. I mean they're talking 0:14:18.400 --> 0:14:20.680 this private consenting outfit that's saying we'll get you a 0:14:20.720 --> 0:14:22.960 consent of its simple in ten days. You've got the 0:14:23.000 --> 0:14:26.680 government requiring councils to say how well you performing, and 0:14:26.680 --> 0:14:29.960 apparently that's lifted it from like eighty percent in time 0:14:30.000 --> 0:14:32.160 to like ninety more than ninetyer cent in time. So 0:14:32.560 --> 0:14:35.440 there's like the system's working better, isn't it. But that 0:14:35.480 --> 0:14:38.600 means more supply therefore perhaps lower prices. 0:14:38.240 --> 0:14:41.000 More supply coming forward, not so much lower prices, although 0:14:41.000 --> 0:14:43.120 a net thirty eight percent of realistate agents at the 0:14:43.120 --> 0:14:45.720 moment say prices are falling in there in the area. 0:14:45.880 --> 0:14:47.840 So yeah, that's quite a strong result or almost back 0:14:47.880 --> 0:14:49.200 to where we were in the middle of last year. 0:14:49.280 --> 0:14:50.720 I was looking. There was some There was a story 0:14:50.760 --> 0:14:54.000 this week about how the listed property trusts out there 0:14:54.360 --> 0:14:58.200 have seen their valuations basically kind of hit the bottom 0:14:58.360 --> 0:15:00.920 and start to build again and there's more interest there. 0:15:00.920 --> 0:15:02.600 Do you take any kind of indication from that end 0:15:02.640 --> 0:15:03.000 of the market. 0:15:03.080 --> 0:15:05.120 Don't look at that at all myself. No, I look 0:15:05.160 --> 0:15:07.400 more at what I'm picking up from my surveys of 0:15:07.560 --> 0:15:11.120 the agents, the mortgage brokers, the property investors, et cetera. 0:15:11.280 --> 0:15:14.680 Are out there, and that tells him what's happening right now. 0:15:14.800 --> 0:15:17.040 I mean, the market will turn around, but I'm thinking 0:15:17.080 --> 0:15:19.280 this is more a story for twenty twenty six than 0:15:19.320 --> 0:15:21.960 it is for twenty twenty five. With the labor market 0:15:22.040 --> 0:15:25.320 uncertainty at the moment, the strong supply that sits out there. 0:15:25.560 --> 0:15:29.360 Net migration only plus twenty six thousand in the past year. 0:15:30.120 --> 0:15:32.280 Two years ago almost it was one hundred and thirty 0:15:32.320 --> 0:15:35.400 five thousand net. The average for ten years net migration 0:15:35.520 --> 0:15:37.920 gained for New Zealand is fifty thousand. So let's say 0:15:37.960 --> 0:15:40.720 we're running at about half average recent average at the moment. 0:15:41.000 --> 0:15:43.280 So whereas a year ago or just over a year ago, 0:15:43.360 --> 0:15:46.320 in my survey of property investors of landlords, I had 0:15:46.320 --> 0:15:49.120 about a net twenty five percent of landlords saying it's 0:15:49.200 --> 0:15:51.680 easy to get a good tenant, it's bonser, no worries. 0:15:51.920 --> 0:15:54.160 Now I've got about a record net thirty three percent 0:15:54.240 --> 0:15:56.560 or so, saying it is hard to get a good tenant. 0:15:56.840 --> 0:15:59.520 So for the moment, the real estate market is subdued 0:16:00.040 --> 0:16:00.800 buyers market. 0:16:00.920 --> 0:16:02.720 I'm many of the places in the country where that's 0:16:02.720 --> 0:16:05.080 going to be particularly attractive or tricky, or it's just 0:16:05.120 --> 0:16:06.400 a case of shopping around. 0:16:06.440 --> 0:16:08.440 Oh, you shop around, you find where you want to 0:16:08.520 --> 0:16:10.920 live the broad area because it's near your church, it's 0:16:10.960 --> 0:16:14.720 it's near your relatives, your friends, your sports fields, et cetera. 0:16:15.400 --> 0:16:17.160 And you've got a greater chance of being able to 0:16:17.280 --> 0:16:20.760 get something without having to accept. Okay, it's an operating 0:16:20.800 --> 0:16:22.560 meth house at the moment, so I've got what are 0:16:22.560 --> 0:16:24.640 you going to do. I've got to take it. You're 0:16:24.680 --> 0:16:27.840 not really going to have to be making such die compromises. 0:16:27.880 --> 0:16:30.240 There will be compromises, but not so much of that 0:16:30.320 --> 0:16:30.920 sort of stuff. 0:16:31.080 --> 0:16:33.000 Sure, And I mean, are you getting that sense of 0:16:33.040 --> 0:16:36.920 confidence because you speak to property investors in large numbers. 0:16:38.120 --> 0:16:39.120 What are they telling you? 0:16:39.200 --> 0:16:40.920 What are they give the Well, then the investors are 0:16:41.000 --> 0:16:43.560 interested in buying. But it's like when you see a 0:16:43.640 --> 0:16:47.600 market relatively flat, you're thinking, am I missing something? If 0:16:47.720 --> 0:16:50.520 they're not buying, maybe I shouldn't buy as well, because 0:16:50.520 --> 0:16:53.320 we're social animals and we take our queue for what 0:16:53.480 --> 0:16:56.680 to do from what other people are doing. This is 0:16:56.680 --> 0:16:59.720 the test. There aren't many Warren Buffets, the sort of 0:16:59.720 --> 0:17:02.480 person when everyone else is going that way, he goes no, no, no, 0:17:02.840 --> 0:17:05.399 I go this way. This is part of that challenge 0:17:05.520 --> 0:17:08.680 that for the moment, prices aren't rising, and so you're thinking, well, 0:17:08.680 --> 0:17:10.720 if I buy now, what if the price goes down 0:17:10.760 --> 0:17:13.000 three or four percent? Will I feel like an an idiot? 0:17:13.160 --> 0:17:16.399 And we call that foop fear of overpaying. And so 0:17:16.440 --> 0:17:18.160 I've got a measure of that from my real estate 0:17:18.200 --> 0:17:20.080 agent survey as well. And now and then I'll do 0:17:20.119 --> 0:17:23.240 a graph of foop has gone up so that more recently, 0:17:23.280 --> 0:17:25.399 over the past four months, more buyers are worried. 0:17:25.440 --> 0:17:26.000 Am I buying? 0:17:26.040 --> 0:17:28.919 Then the price goes down? Whereas FOMO only five percent 0:17:28.960 --> 0:17:32.080 of agents say buyers are feeling fomo. It's a buyers market, 0:17:32.160 --> 0:17:35.320 is all I can say. Wow, despite the foop, despite 0:17:35.320 --> 0:17:37.560 the foop, Yeah, that's right. Hey, no one's going to 0:17:37.560 --> 0:17:40.120 pick the bottom. You can't pick the top. And you've 0:17:40.119 --> 0:17:41.560