Tony Alexander's Weekly Overview
This week I have been busy with the annual Japan New Zealand Business Council conference in Auckland plus compiling the monthly BNZ Confidence Survey and getting ready to release the results of the monthly BNZ-REINZ Residential Market Survey tomorrow. So I’ll keep this week’s Overview to the essentials – those being…
• Nothing has come along to change my view that the NZD will remain an elevated currency for a number of years.
• NZ growth will be very well underpinned for the next few years by a construction boom emanating from many sources and Asian growth assisting exports.
• The Reserve Bank’s next monetary policy change will be a tightening in (current best guess) a year’s time but before then I would keep an eye out for an attractive long term fixed rate and lock in a goodly portion of my mortgage.
• House prices will rise, especially in Auckland, because of a shortage of stock (same story there for many years).
• Farmland prices will also rise and the dairy sector continue to expand due to investors seeking exposure to the sector on the back of long term product demand out of Asia.
• The NZ labour market will tighten up rapidly from mid-2013 causing problems for firms without developed access to foreign and ex-pat people.
• The net migration flow for NZ will turn positive in a few months and settle firmly into positive territory for many years on the back of three long term trends of the cycle with Australia turning, UK and European people escaping an expected extended period of woe over there, and rising Asian middle class size boosting numbers shifting here – and on top of that there is the boost from builders coming in to rebuild Christchurch.
• New Zealand’s income per capita growth is constrained not by rules and institutions but our Kiwi-centric couture and poor connectivity with foreign scientists, managers, capitalists, policy-makers, and entrepreneurs.