Tony Alexander

Economic Commentaries

Weekly Overview. November 19 2015

Thursday November 19th 2015

This week I had the pleasure of spending a couple of days in Christchurch and start the Weekly Overview discussing how construction of low rise office buildings has soared since I last had a decent walk around a year ago. In two more years the CBD will look amazingly different from the building site it is currently.

In the Housing section I discuss some of the factors driving apparent fear of the Auckland housing market and predictions/dreams of a substantial price correction. Such a correction remains exceedingly unlikely given the supply shortage and population growth. The more interesting development in housing is anyway outside of Auckland in the regions.

Anecdotes abound of rising house prices and listings shortages in many parts of the country. Each week the probability grows that the Reserve Bank will extend its 30% investment property deposit requirement out of Auckland. But will they demand 15% in some places, 45% in others? Potential for this tool to become a Muldoonist nightmare is high.

On the currency front the NZD has weakened this past week partly in response to the 7.9% fall in dairy prices and the terrible events in Paris. But exporters should remain wary of expecting substantial weakness in our currency. Our economy is in far better growth and structural condition than most others.