Tony Alexander

Economic Commentaries

Sporadic 14 July 12 2015

Sunday July 12th 2015

Chinese House Buying
It is probable that the true proportion of Auckland houses being sold to Chinese investors located offshore lies somewhere between 5% and the 39.5% estimated this weekend based upon surname data from an unidentified real estate agency’s sales from February to April. The vacuum of accurate information means formulating policy to address rising concern about foreign buying of NZ houses is extremely difficult. But even without the data it still seems sensible to at least adopt Australia’s rules restricting foreign buying of existing housing stock. We take a look at this issue in Sporadic 14 and also note that even Aussie rules aren’t in a true sense working.

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Sporadic 13 July 8 2015

Wednesday July 8th 2015

Failure’s Lessons
Listening to visiting ex-PM Helen Clark speak in Auckland last week I was struck at how her final comments regarding factors holding NZ back matched those summarised in my “What we Lack” series of papers put together back in early-2011. Fear of failure is one factor holding us back, but a new policy initiative from China shows we are not alone in that space. I take a look at issues surrounding this plus summarise developments since Sporadic 12 relevant to the likely SME operating environment – the upshot being things are getting worse but that can actually help many companies because it means lower interest rates, a lower exchange rate, and continued high migration flows. See the housing implications from that? Greece is mainly relevant to Europe and the stance of talks may now be shifting from negotiating a bailout to making sure Greece pays as high a price as possible for abandoning the Europe project, thus discouraging other recalcitrants. China’s slowing growth is more relevant to us so keep an eye on that.

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Sporadic 12 July 2 2015

Thursday July 2nd 2015

Implications of Unforecastability
In this issue of Sporadic I take a look at the many factors which are causing economic forecasts to be wrong and repeat earlier warnings that businesses need to explicitly allow for unpredictable operating environment changes. Plus from this issue on I’m adding back in the section “If I Were A Borrower What Would I Do?” in which I also explicitly allow for unpredictability of interest rates. Additionally, for over a month I’ve been noting the deterioration in NZ economic conditions and we can see the manifestation of this deterioration in the lower NZD and altered interest rates outlook. I’ll start having a quick run-through of recent developments – the rather important ones this week being the crystallisation of the Greek default risk, the further deterioration in China’s economic outlook prompting more interest rate cuts there, and of course the extra 5.9% fall in dairy prices back to 2009 levels. It never rains…. – which reminds one of the building risk of a repeat of the 1997/98 El Nino weather pattern.

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Sporadic 11 June 25 2015

Thursday June 25th 2015

How Much Are We Slowing?
In Sporadic 9 (“The Wind Shifts Direction”) issued on June 3, I looked at how prospects for growth in the NZ economy were deteriorating. Eight days later the Reserve Bank eased monetary policy as they also acknowledged that since the start of the year the negative developments have outweighed the positive ones. Is that still happening? That is, has the news we have received since June 3 been weighted toward the good side or yet again the bad side? Lets run through the items.

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Sporadic 10 June 11 2015

Thursday June 11th 2015

Fieldays 2015
I am at Fieldays again in Hamilton and here are some of the interesting things which I have learnt so far from the farmers, along with what I am saying to them about their operating environment, and the dairy outlook in particular.

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Sporadic 9 June 3 2015

Wednesday June 3rd 2015

The Wind Shifts Direction
Since the start of this year there have been developments which will boost the pace of economic growth, and developments which will retard it. On balance the negative side dominates, hence the downward movement in the NZ dollar and interest rates, and the rising need for nimbleness and focus from most businesses.

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Sporadic 8 – May 12 2015

Tuesday May 12th 2015

Eight Records Driving Auckland House Prices
It has become fashionable to blame the rise in Auckland house prices and decline in affordability on either Asian buyers, under-building, consenting issues, speculators or so on. Each person’s bias in cause attribution generates their own solution to the issue. However in Sporadic 8 we run through 8 factors at record or near record levels which should help build an understanding that no solution is possible. The price rises will continue, affordability will worsen, accommodation shortages for low income families will intensify for perhaps another 2 – 3 years.

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Sporadic 7 – May 5 2015

Tuesday May 5th 2015

Auckland Housing Shortage Again
Auckland has a housing shortage, and as illustrated last week, you can generate a large estimate of it very easily. In this issue of Sporadic we calculate the under-building of houses in Auckland since 1996, show how you can produce your own estimate of the shortage, graph the correlation between annual under-building and house price changes, and also graph the continuing rise in that under-building since 2002. The price implications of this simple analysis are clear. We also look at the two recent periods when Auckland house prices fell and postulate what it is that will cause the next period of decline.

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Sporadic 6 – 29 April 2015

Wednesday April 29th 2015

Auckland Housing Shortage is How Big?
Just how big is the housing shortage in Auckland? Common estimates in the media range from near 7,000 to 30,000. But what if we calculated how many houses Auckland would need to give the same 2.58 persons per dwelling occupancy rate as the rest of the country? The number is big.

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Sporadic 5 – April 23 2015

Thursday April 23rd 2015

The Effects of NZ Business Culture
A survey recently released shows that in spite of an improved economy and outlook more SME owners want to either sell their business or stop growing in order to better balance work and home life. This is a key reason why our economy fails to produce the many larger companies we need in order to boost exports and rise sustainably back up the OECD ladder. In this Sporadic issue we look at work we did back in early-2011 examining NZ business culture and how it works to impede business and economic growth.

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