August 17, 2024 • 40 mins
The Reserve Bank of New Zealand cut the Official Cash Rate for the first time since the beginning of 2020.
Chief Economist Kelvin Davidson joins Tim Beveridge to discuss what this means for the housing market.
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Speaker 1 (00:05):
You're listening to the Weekend Collective podcast from News Talk sedbum.
Speaker 2 (00:13):
Down, Sadly Bottom and welcome back to the Weekend Collective.
(00:36):
I'm Tim Beverages. This is the one Ruthfradio Show. We
want your calls eight hundred and eighty ten eighty text
nine to nine two. And if you miss any of
the previous hours or the subsequent hours, you're always go
back and check out a podcast. Look for the Weekend
Collective on iHeartRadio, A great place to start with that one.
Now joining us today for the One Rufradio Show is
our special guest. He is chief economist at Core Logic
(00:57):
and it's Calvin Davidson. Gay, Calvin, how are you going? Oops?
And I'm not sure he can hear me yet. No,
I can hear Calvin, but he can't hear me yet.
So we've just got to I'll just just put you
back on a hold there for a second, just reconnecting
through to Wellington with Calvin Davidson.
Speaker 3 (01:14):
There.
Speaker 2 (01:14):
What we're going to be chatting about with Calvin and
it is, as I mentioned before, as the RBNZ the
Reserve Bank in New Zeld has dropped the OCR twenty
five basis points to five point two five percent. You
will have heard from Brad Olsen, our economist on the panel,
just the political sort of side of that and whether
you know it was a big turnaround and why it
(01:37):
was a big turnaround, et cetera. But and Adrian All
was like, well, well, well he signaled in July things
might change, et cetera. But we want to talk about
what's going to happen with the property market. And let's
just see if we've got Calvin there, Calvin and we
got you there. No, he can't hear, Okay, I might
just yep. My producers is going to go and see
if she can sort that out while I chat a
(01:58):
bit more about the market, because I have a vested interest,
I guess, and we all do have vested interest. I'm
fixing in about another week. And I deliberately actually was
holding off for the OCR because I was, to be honest,
I was pretty much convinced, if I was going to
bet on it, that the OCR was going to be reduced.
But of course the bank's got had got ahead of
it a little bit. So I'm not sure even that
(02:20):
the rate that I was offered has dropped by twenty
five points. I think it's dropped by point one of
a percent or something because the banks, I think we're
probably having a having a think about how they were
getting ahead of the game basically, and I think they
probably called it. But anyway, I think we've got Calvin
now if you speak now, Kelvin, there we go. Anyway,
(02:42):
how are you very well?
Speaker 4 (02:44):
Yes, yep, looking forward to a good chat.
Speaker 2 (02:46):
Hey, the OCR just quickly. Did you see that one coming?
Speaker 5 (02:52):
Well, I mean it was, it was definitely on the cards.
I personally thought they might wait a little bit longer.
But you can easily see the case for why they'd
cut the OCR too. So so no major surprise economies,
week inflations heading back to target, and they just felt
the risks of delaying that cut were bigger than cutting early,
so they decided to cut early. And we saw the
(03:13):
banks reacting even in advance of the cut anyway, and
so we're just looking at an outlook now.
Speaker 4 (03:18):
Wh're more were tried to head it down.
Speaker 2 (03:20):
Just quickly because you said you thought that they would
hold on to it. I'm guessing you thought they would
hold onto it because of the rhetoric that we've heard
from Adrian or and I know you might not want
to get particularly involved in it. But is that the
reason you thought they would hold onto it just because
of what we've generally heard from the Reserve Bank over
the last three months.
Speaker 4 (03:40):
Yeah, I suppose so.
Speaker 5 (03:41):
I mean, there's there's certainly been a lot of commentary
over the last few days that it wasn't so much
this latest decision probably wasn't the outlier.
Speaker 4 (03:48):
This was the right thing to do.
Speaker 5 (03:49):
The outlier was what they said three months ago, which
might even raise the OCI. Again, that's the one in
hindsight that looks a bit weird. But yeah, I thought
they'd probably hang on just because they could then see
we don't get the official Q three inflation numbers until
the sixteenth October.
Speaker 4 (04:05):
I just felt they might.
Speaker 5 (04:06):
Want to wait to have that number in the bag
inflations back in the one to three percent target band
before cutting. They actually wanted to sort of see the
whites of the eyes of inflation before cutting, but not
pretty confident it's going to get there. So I think
that the case for cutting was also pretty strong.
Speaker 2 (04:22):
Okay, so from what he I've sort of got lost
in all the detail because I've heard a few interviews
and all that we won't dig into it too much.
But from the announcement of the cut in the OCR
and the other words that Adrian or used, what can
we take as our expectation as to what the as
to where those rates are headed. Because obviously the banks
(04:45):
reckon they're heading down because all the long term interest
rates are cheaper than the sixth month, so the banks
are convinced it's going to be cheaper. How are you
confident in the same respect.
Speaker 5 (04:56):
Yeah, I mean, well, I guess you have to take
the Reserve Bank at face value, and okay, there's been
some things they've said which were wrong in the past
few months, but I think you take their forecast track
at face value, and that has the official cash rate
coming down to a round about four percent perhaps in
a year's time, and then going a little bit below
that thereafter too. So yeah, there's there's a good chance
(05:18):
that we see another one point twenty five one point
five percent off the official cash rate in the next
kind of twelve to eighteen months. That will flow through
to mortgage rates. There's other influences of course on mortgage rates,
not just the official CACH rate.
Speaker 4 (05:31):
You've got sort of competitive behavior amongst the.
Speaker 5 (05:33):
Banks you've got offshore financing rates that matter a lot too,
But certainly from here I think, and it's not just
the reserve banks for us, that's what you see for
the struggling economy. It's what you see with inflation back
and target. Everything's pointing towards lower interest rates, that the
economy needs low interest rates and that it's going to
come through.
Speaker 2 (05:51):
Can you explain then, just with offshore financing rates, how
much they play a part in what the banks you know,
are doing with interest rates versus the reserve bank. Just
for the lay person, including me obviously, what role do
they both play?
Speaker 4 (06:09):
Yeah, well, so the.
Speaker 5 (06:10):
Official cash rate has a very significant influence on say,
the floating rates the short end of the curve is
it's called the floating rates, and perhaps the sort of
six month fixed rates. I guess where as you get
further out along those terms three four, five year fixed rates,
the international markets play a much bigger part in that
because that the banks are borrowing offshore basically to fund
those longer term fixed interest rates here, so what happens
(06:33):
offshore matters a lot for those those longer term fixes.
There's other things, of course, it's the banks are also
competing to win turn deposits or the funds from savers,
so they have to sort of take that into account
as well. But certainly the offshore financing rates and borrowing
in those wholesale markets plays a role right across the
term and mortgages, but certainly have the longer ends.
Speaker 4 (06:54):
That's important.
Speaker 2 (06:55):
Now, I guess you know, as an economist, well, you
may make your own sort of private predictions. Economists are
generally a bit nervous about making predictions about what's going
to happen to the market. But I guess we what okay,
So let me phrase it this way. I do. I
do just want to ask you, what do you think
it's going to do the market? Actually, what the hell?
Let's just do that. What's it going to do with
the market coming? I was going to pussy foot around
(07:15):
and ask you what lessons from history and all that
sort of stuff, But what's your take on what the
economy is doing, combined with the ocr combined with the
levels of unemployment. Is this really going to make much
of a difference to the market, Because my gut says, bugger.
Speaker 5 (07:31):
All, yeah, I think when you look at it from
a fundamental perspective, there's there's still a lot of challenges
for the housing market. I mean, I've got to say
I wouldn't roll out in the short term a bit
of a bounce, because we've seen it all before. People
do get a sentiment lift from even a relatively small
change of mortgage rates. They feel happier, They might feel
like they can start to trade properly again, or at
(07:51):
least start to prepare for that.
Speaker 4 (07:52):
You'll hear the.
Speaker 5 (07:53):
Phrase fomo coming out again. Probably the fear of missing out.
Speaker 3 (07:56):
Oh god.
Speaker 5 (07:57):
I think it's that psychological impact which could cause a
bit of a short term bounce. But sentiment can only
take you so far, and then you get back into
the reality of more white rates are still actually quite high. Okay,
they're going to come down over a period of time,
but they're still quite high. Affordability is very stretched. The
labor market is weakening, so a period of rising unemployment
will not be favorable for the housing market, you wouldn't think.
(08:19):
And then we've got restrictions on debt to income ratios
which we haven't had before. And yes, there's an allowance
there for banks to lend outside the dt I rules.
You can still get into new build properties, So investors
may well be still looking at new builds outside the
dt I rules, so it might not be so much
of a restraint there. But certainly DTIs are a big
change from what we've had in the past, and we'll.
Speaker 4 (08:40):
Restrict the market.
Speaker 5 (08:41):
So now now the dts aren't doing anything right now,
but as those mortgage rates fall, there's when DTIs kick in.
So there's there's certainly a lot of challenges possibility of
a near term bounds driven by sentiment, but those those
sort of fundamentals are still restricted for the housing market.
Speaker 2 (08:56):
I think, So, what are the lessons of the data
from history? Because cool logic, let's your guys, bag is
data data, and so there are there historical sort of
comparisons to be drawn with small changes in the interest
rate going you know, where people might have thought it
was unaffordable. Are there any lessons we can look at
(09:17):
going back, because all I can remember is a market
that's been generally nuts and nothing much before that.
Speaker 5 (09:24):
Yeah, well that's and that's the thing that's in the
back of my mind too, is that you know, we
can talk about the fundamentals, we can talk about affordability
and DTIs and stretch labor market.
Speaker 4 (09:34):
But we have seen it all before. Interest rates do.
Speaker 5 (09:37):
Play a pretty important role in terms of obviously the
direct impact on household finances, but also that sentiment boost.
And there's been plenty of times in the past where
economists have pointed to affordability measures in the housing market
and said, well, can't get anywhere. So, I mean, this
is as stretch as the market can get. And then
five years later we look back and say, well, actually
that was wrong, wasn't it. It got even more stretched.
(09:59):
So you know, I'm reluctant to say this time is different.
That's why I just couldn't rule out a bit of
a ounce. But the fundamentals are still restrictive, and the
dtiys are different. That's something we haven't had.
Speaker 2 (10:10):
And look's tt I stand for again, that's the.
Speaker 5 (10:12):
Debt to income ratio. So that's the maximum debt you
can have in relation to your income. And so it's
sets for owner occupiers and seven for investors.
Speaker 4 (10:20):
Now there is an.
Speaker 5 (10:21):
Allowance outside those rules that people can still take advantage of,
and new builds are exempt, So those those are ways
that people could still buy property outside those DTIs, but
they are new and it's something we haven't had before,
so in that sense, you can say this time is different,
So that's something to watch for sure.
Speaker 2 (10:39):
How much do you think sentiment really does get affected
by these announcements and how much is the market I mean,
this is a difficult quest, but how much is the
market influenced by sentiment?
Speaker 3 (10:50):
Yeah?
Speaker 5 (10:51):
I think a lot in the short term. I can't
sort of put a percentage on it as such, but
a sentiment plays a very key role. If you tend
to see that if people think the house prices will
go up, they probably will go up. You know, That's
just what we've seen historically. And I think interest rates,
even relatively small changes can can drive there as well.
This direct impact on finances, but also the sort of
(11:12):
psychological impact.
Speaker 4 (11:13):
So yeah, pretty significant.
Speaker 5 (11:15):
But I mean, I wouldn't say I'm outright bullish on
housing by any means, because there are still some pretty
big restraints there. And the other thing I haven't mentioned
yet is the high stock of listings. There's a lot
of choice out there, so it's definitely a buyer's market.
So you would think in that kind of environment, and
especially when you're take into account, it's a buyer's market.
But it's only for those buyers who can get the finance,
(11:36):
so that you wouldn't think that's an environment where prices
will rise particularly strongly. Now potentially a good opportunity for buyers.
You can get job the money that's right, and or
get a.
Speaker 4 (11:46):
Better property than what you otherwise might have done.
Speaker 5 (11:49):
So this is the thing about housing. There's always two
sides to it. You people will some people celebrate rising prices,
others don't.
Speaker 2 (11:55):
So well, yeah, that's right. What about the What about
the state of the economy, because aren't there We're looking
for some figures that are into we might be in
recessional or how is the economy looking right now? Because
it's all very well, they have cheap interest rates, but
if the economy is stinks, then how does that play in?
Speaker 5 (12:17):
Yeah, so there's I don't think there's any doubt where
we're in recession. I mean, in some senses we've been
in recession.
Speaker 6 (12:22):
For you.
Speaker 5 (12:22):
You can argue about the technicalities of two quarters of
form there, which is the technical definition of recession. But
I think if you asked most people on the street,
they would say, well, actually we've been in recession for
a long time, you know, don't worry about your technical definitions.
It's feels recessionary and it's gone that way for a while,
and I think that's probably going to continue because just
at the point where people might start to save a
(12:43):
little bit on their mortgages, and keep in mind, it
won't flow through straight away because people will already be
on fixed rates from a period of time in the
past and they've got to wait for that term to
expire so they can get the new lower rates, So
that's going to take some time. And just at the
point where mortgage rates start falling, this is when we
start to see job losses. So that sort of prolongs
(13:03):
the feelings like of recessionary environment across the economy. And
this is why the Reserve Bank at it really with
this interest rate cutter, is because you look at things
like traffic movements and house sales and manufacturing activity, services activity,
all of this timely indicators that we get kind of
monthly or weekly whatever it is, have a have all
(13:25):
been pretty soft, so it's kind of it's a real
time decision. I guess they've said, Okay, what are we
seeing right now? It looks pretty recessionary, so we no
inflation's coming down when we need some interest, right relief.
Speaker 2 (13:35):
Okay, look, we want to take your calls. One hundred
eighty ten and eighty. So everyone's been hanging around around
for a reversal in that or change in the ACI,
and it's been finally announced by the ABNST. It's been
dropped by twenty five basic basis points to five point
two five percent. Simple question is how has it affected
how will it affect the market and in your plans
(13:58):
with regards to the market, do you think that it
will see that the sentiment will play a bit of
a role and people will be like so relieved that
it's dropped down, it's going to make a big prison
going to see some sort of surge or do you
think it's going to be a bit more muted And
more specifically, how does it defeit your plans when it
comes to working out how you're going to structure your mortgage.
You're going to go short, going to go long? But yes,
how will it affect the market? Give us your reckons
(14:19):
on eight hundred eighty ten eighty text on nine two
nine two. I'm with Calvin Davidson. He's the principal economist
at Core Logic, and if you've got any questions for Calvin,
he'll know from an economist's point of view, he's not
going to give you any specific financial advice. But if
you want to run an idea or thought past him
and see what he reckons, and give us a call.
Eight hundred eighty ten eighty it's twenty one past four
(14:41):
news Talks.
Speaker 6 (14:41):
I'd be.
Speaker 3 (14:44):
Gone.
Speaker 2 (15:00):
Let's welcome back to the Weekend Collective. This is one
where AFRAIDI sha, we'd love to take your cause. I
one hundred and eighty ten A text nine to nine two.
I'm Tim Beverage. My guest is I think I said
principal economist. Maybe it's chief economist at Core Logic, Calvin Davidson.
Are they the same thing?
Speaker 5 (15:14):
Right?
Speaker 2 (15:14):
Is there one principle and the chief I don't know.
Speaker 4 (15:17):
I don't know either. It's just a title. Really.
Speaker 2 (15:20):
Oh that's good. I was just checking because I think
Brad Olson, who we had on our panel as principal
economist at Informetrics, whereas your chief or the other way around. Anyway. Actually,
just before we get into it, because so we've got
a few interesting texts questions to run by you about
the ocr but because core Logic, you specialize in analyzing
data and collecting. What is your particular role as chief
(15:43):
economist at a company like core Logic.
Speaker 4 (15:45):
Yeah, so, I mean in many ways, I'm an end
user of our data just like anybody else.
Speaker 5 (15:51):
Were data and analytics team behind the scenes that compile
it all and cleanse it and make sure it's usable,
and then it basically goes into all of our products
and services, which I'm really an end user of. So
just like any other client of care Logic, I guess
just that I have a bit more internal excess. So
really I sort of describe my job as there's three things.
I did a lot of media work, presenting to our clients,
(16:13):
helping our clients with sort of one off request that
sort of thing, and writing reports. So a lot of
my weeks spent on summarizing the market various articles, publications.
So yeah, I guess it's about education really and just
like an end user of our data like anybody else.
Speaker 2 (16:31):
Yeah, what's the most significant thing you've observed and with
the reports you've been writing for core Logic in the
last couple of months.
Speaker 5 (16:37):
Well, the most recent on we did was around housing affordability,
and it was actually very timely in the sense that
it came out on the same day as the official
cash rate decision. And so we've still got big issues
with housing affordability in New Zealand. For some things have
got better, some of those measures we look at have
got better, but they're still worse than so called normal,
and other measures are actually pretty stretched. And then when
(16:59):
it comes to cash costs for housing, whether that's paying
mortgage or paying rent, those things are pretty much at
record highs.
Speaker 4 (17:07):
So there's a lot of strain on people. Now.
Speaker 5 (17:09):
Yes, slower and mortgage rates will help, but there's there's
still a lot of straining there in terms of paying
their mortgage and especially if obviously if people are losing jobs.
So yeah, housing affordability is one we always look at
the composition of the market, who is buying. We've seen
a lot of strength first home buyers. Lately mortgaged investors
have been quieter than normal, So there's there's always that
monitoring of different buyer groups. So yeah, all facets of it.
Speaker 2 (17:33):
Really, because I saw I think it was having look
at your the coreological affordability, well, I saw a stat
that the AVERA tell me if I'm wrong here, because
I'm just going from memory, but the average or the
median is one of those, and mortgage payments more than
half of the median income, which to me was a
status like, oh my lord, that is that is colossal,
(17:57):
which tells us we've still got a long way to
go with affordability.
Speaker 4 (18:01):
Yep, that's right.
Speaker 5 (18:01):
Yes, fifty four percent of the median household income is
going towards servicing a new mortgage.
Speaker 4 (18:07):
Now, an important thing there is to recognize that it's
a recently new mortgage.
Speaker 5 (18:11):
It's going to eighty percent LVR or twenty percent deposit,
so it's really capturing somebody who's just into the housing
market and has still got a lot of debt, so
that that fifty four percent won't imply to everybody. People
have been paid down, some paid down some debt. But
when you look at that number that's through time is okay,
fifty four percent is a meaningful number, but you also
(18:31):
need to look at it in a long run context.
And really the point is whether it's fifty four or
sixty four or forty four, the point is that's it's
basically as high as it's ever been. So when it
comes to servicing debt, there's still a lot of pressure
out there.
Speaker 2 (18:45):
Okay, let's take some calls.
Speaker 5 (18:46):
I e.
Speaker 2 (18:46):
One hundred and eighty ten and eighty Matthew, Good afternoon.
Speaker 7 (18:50):
How are you doing good?
Speaker 2 (18:51):
Thanks?
Speaker 7 (18:52):
Yeah, I just got a question. So bond government bond rates.
You know, they have an option and people been and
those interesting rates the government accepts for But how does
that relate to there's a reserve bank and the interest
rates that they the OCO rate.
Speaker 5 (19:16):
Okay, yeah, certainly no expert on public finances, that's for sure,
But I mean, whichever interest rate you're looking at, whether
it's a yield on a bond, or whether you get
a turn deposit at the bank, or whether you're borrowing,
all of those things that are sort of interrelated, and
everyone's competing for the money. I mean the government basically.
The way I think about it is, the government is
trying to distribute those bonds, sell those bonds are competing
(19:40):
for your money basically in a wider interest rate environment,
so they have to be competitive. When interest rates go up,
you'll tend to see the interest rates charged on government
bonds go up, or the yields and other words go up,
and then they'll be coming down when wider interest rates
coming down. That's my understanding at least anyway, So yeah,
it could be that those government bond interest rates come
(20:01):
down as well.
Speaker 7 (20:03):
Okay, yes, so then the bid for the bonds put
the interest rates higher than the o c R. So
what it's saying then is that there's there's not a
lot of confidence in government bonds, so the interest rate
goes up. Does that mean to say that the the
rate might follow that, Well, No, I think.
Speaker 4 (20:25):
I'd probably look at it the other way around.
Speaker 5 (20:27):
Is the official case rates sort of the the key
rate in the economy, and everything else will sort of
stem from that.
Speaker 4 (20:33):
But yes, if if there is.
Speaker 5 (20:36):
Reduced sluggish demand for government bonds, then they might have
to look at pushing up the interest rates, or the
markets will do that, push up those interest rates to
try and entice buyers in.
Speaker 6 (20:45):
You know.
Speaker 5 (20:45):
That's that's just the way sort of markets were now
expect in the interest rate, we're environment, we're in there.
Speaker 4 (20:50):
It's probably going to go the other way.
Speaker 5 (20:52):
But yes, if there's not a lot of confidence in
those products, then then you kind of have to up
the return to get the money in. That's that's that
you'll see that in all sorts of air set markets.
Speaker 2 (21:01):
It's interesting that that that question came up then, and
it's not quite your bad in terms of relating to
property and things. But it's interesting that in the last
few months on our Money Show that there's been more
discussion with people about bonds because people were less enamored
with the property market. So it does tie into that
a little bit that we've I mean, I've been doing
the Money Show for a few years on here and
(21:22):
we've almost I can't remember us ever discussing bonds in
any detail except in the last few months. And I mean,
I guess that is relevant from the point of view
of the market and where people are putting their money,
and that you were saying that that would be consistent
with what you said about the lack of interest from
investors still in the market. I guess that people are thinking, oh,
you know what, maybe I'll just sent money somewhere else
(21:44):
where it's a bit safer and not so stressful and
en't have to worry about property managers and tenants and
all that sort of thing. Is there anything in that, Yeah.
Speaker 4 (21:52):
That's right.
Speaker 5 (21:53):
Yeah, we've certainly seen over the past few years the
amount of money held in turn, deposits has gone up
a lot, as I don't want if the government bond
market that closely, but I suspect there will have been
money pouring into government bonds as well. The thing with
property investment right now and lots of people still make
it work properly. Investing isn't dead by any means. There
will still be people wanting to buy property as investment rentals,
(22:14):
which we need because there's still going to be people
wanting rental properties. The issue just right now for a
new investor is the cash top ups. The rents won't
cover the mortgage, and falling mortgage rates will help, but
typically you're having to put in hundreds of dollars a
week to top up that property, so it's you're having
to subsidize it, as well as the fact that a
lot of people go interest only so they're not paying
(22:34):
down any debt. And of course your top ups could
have been money you invest somewhere else, so it's sort
of a double whamyon that you're not making the return
and potentially having it in the turn to posit for example,
So it's tricky at the moment.
Speaker 4 (22:48):
Those top ups are the problem.
Speaker 2 (22:49):
Well, that was actually that was some other work that
you guys had done, wasn't it of them? I must
have seen the headlines for that. That the gap between
what you're getting as an investor and what you're having
to put in is the widest it's been as well.
Was that something else you guys had gone mentioned on recently?
Speaker 4 (23:05):
Yep?
Speaker 5 (23:05):
Yeah, yeah, so that I mean, if you look at
a fairly to now, yields on rental properties differ a lot,
and it's obviously a case specific, but you take an
average and let's call it sort of three and a
half four percent, and you're looking at a mortgage rate. Okay,
they're coming down, but let's call it seven percent for arguments,
So that gap, yeah, that's however you define it, that
(23:25):
gap is as wide as real lessance two thousand and eight.
So what that amounts to in real terms, there's dollars
that you've got to invest into that property to keep
it going on a week to week basis, to top
up the rent basically and cover the mortgage. So that's
I think that's really the hurdle for people at the moment.
Speaker 2 (23:43):
That's the interesting issue, and this is not something you'll
be able to comment on, but I'm remembering how it
came up because we're chatting with Ashley Church and I said,
given that that's the equation for new investors, it's hard
for them to say that they haven't bought the property
for anything other than capital gain, because you're not doing
it for the rental. But that's that's an issue for
a tax expert, of course. But I just throw that
in there to remind us up where the genesis of
(24:04):
that idea came from.
Speaker 6 (24:05):
Hey, just.
Speaker 2 (24:08):
Another question that somebody's come up with. What an impact
does the result of the US election have? This person
suggested that if the Democrats get in, it'll be high
interest rates. That's but does the American election have any
particular outcome for us economically here and especially in the
lending environment.
Speaker 5 (24:27):
Yeah, I mean there's going to be all sorts of
channels in which that can filter out around global markets
and impact New Zealand. You know, there's a lot of
discussion on the moment around our trade channels. In particular
if well, if the opposite party one and put in
place some tariffs, you know, that's going to damage our
economic performance in terms of exporting, which your feedback into
reduced incomes here and pressure on household budget. So you know,
(24:50):
we operate in a big, wide world and we're sort
of buffeted by it a lot of times. I think,
probably on the interest rate front. You know, the outlook
in America as understanding it is pretty similar to to elsewhere.
We've all been fighting inflation, we've all had high interest rates.
Now we're just at that turning point. Preps, we're okay,
not all central banks are cutting yet, but some have started,
(25:11):
and certainly the commentary and chat around the US is
that they're going to start looking at that as well.
So I think there's lots of different channels ways that
this thing can flow through. But they're probably looking at
lower interest rates too, So that will feature into those
wider global markets in terms of falling interest rates and
the whole wholesale funds, and that potentially lowers those rates
(25:32):
for our fixed mortgages, as we talked about earlier.
Speaker 2 (25:35):
Okay, another text question here him. My name is Nick.
My mortgage is due to be refixed at the beginning
of October. I fixed for a year last October, and
my acts went from two point eight nine to seven
point one to nine more blimey. I was thinking of
fixing for six month term and hoping the rates continue
to drop. They're asking what you would suggest, and I
can always give the the disclaimer right now, the no
(25:56):
specific financial advice. But I guess if you are fixing
a mortgage right now, Calvin, I'm going short up for
six months, that seems to be the prevailing sort of wisdom.
Speaker 5 (26:09):
Yeah. I mean, absolutely no financial advice down to the individual.
But what we are seeing in the figures is that
most people are fixing short. Some still fixed for a year,
but there is certainly a preference for six months or
a year, so, in other words, fairly short horizons. I
suspect some people might be thinking about floating at the
moment for a little while, just to see how things go.
Really floating comes at it, well, it comes at a
(26:30):
much higher cost, so you don't want to do it
for too long, probably, but it just gives people that
flexibility they can kind of weigh things up and see
where they're at. But certainly either a six or twelve
month fixed seems to be what people are opting for.
Makes sense in an environment where we are looking at
lower interest rates that you sort of ride that wave
down and okay, you can't write it down perfectly because
(26:51):
you do have to fix for some sort of period
of time, and in the meantime those rates might get lower,
but at least shorter fixes are are certainly what people
are doing and ultimately down to the individual.
Speaker 4 (27:01):
But that's what we are seeing.
Speaker 2 (27:03):
Yeah, okay, so hopefully that's of some out right. Let's
get another call Julian, good.
Speaker 6 (27:07):
Afternoon, Good afternoon, big fire like your space anyway, said that,
I just wanted to know those brick nations that are
trying to get out of this US dollar, how does
that affect our New Zealan economy? Does at all play
any role in any way?
Speaker 2 (27:27):
Sorry? Say that again? Countries that are trying to what
disconnect from the US dollar something?
Speaker 6 (27:33):
So these bricks nations, the bricks.
Speaker 2 (27:39):
Yeah, they they're the ones who more connected with China
and Russia, are they?
Speaker 4 (27:43):
Yes?
Speaker 6 (27:43):
They don't want to trade in the US dollars. Does
that have an effect on the New Zealand dollar?
Speaker 3 (27:48):
Oh?
Speaker 2 (27:48):
Okay, right there we go.
Speaker 5 (27:49):
What are you Calvin Well experit on currencies either? But yeah,
I mean it's so global connected. I mean the US
dollar is still the reserve currency. I suspect that of
some I mean, you know, if China doesn't want to
trading dollars or doesn't want to sort of participate in
the global economy and the way it has, I think
(28:10):
that would flow through. But yeah, I mean, ultimately, the
exchange rates are just a relative price, and you know
it's going to on certain some ways. If our dollar
falls of rises, it either impacts the exports or imports,
So there's always sort of two sides to the coin.
Speaker 4 (28:28):
But yeah, I probably don't have too much wise to
say on that. It's not my particular.
Speaker 2 (28:34):
Area, not your bag, baby, as Austin Powers would say. Right,
We're going to take a moment. It's twenty two to
five News Talk ZB. Yes, welcome back to the one
roof radio show. I'm Tim Bevers. To My guest is
the chief economist from care Logic, Calvin Davidson. Calvin, just
(28:55):
a question around affordability. There's an article in the New
Zealand here or talking about in Auckland that, in fact,
I think the conclusion is that if you are one
person buying in Auckland, you'd need an income to comfortably
afford a mortgage of three hundred thousand dollars a year.
Speaker 5 (29:11):
How do you.
Speaker 2 (29:11):
I mean, we've can talk about affordability going up and
going down. How do we actually define what affordability is?
Speaker 5 (29:18):
Well, And this is the thing whenever I talk about
housing affordability, I try to stress them. Like I said before,
I mean, I figure of fifty four percent of median
household income required to service that loan.
Speaker 4 (29:30):
It's a meaningful number.
Speaker 5 (29:31):
But actually, housing affordability is not a not a binary concept.
Hoo's to say what's affordable and what's not. It's sort
of a spectrum, and you need to look at different
markets versus other markets, and those markets through time, and
how does affordability compare to what it was ten, fifteen,
twenty years ago. So it's very difficult to say yes,
that house is affordable or no, it's not affordable, because
(29:54):
it's down to the individual circumstances, and there are definitions
out there people try to come up with. Well, what's
the sort of benchmark of how much of your income
means that you're comfortable. If you're dedicating that percentage towards housing,
you can still live a comfortable lifestyle. And there is
a kind of rule of thumb that if you're spending
(30:14):
thirty percent or less of your income on a mortgage
that's sort of comfortable. Anything above that it starts to
become a bit of a stretch. But that's going to
differ a lot for different people, and ultimately what it
doesn't take into account as people's preferences. You might be
happy dedicating forty or fifty percent of your income to
your mortgage and you're fine with it. You might not
(30:34):
do many other things and that's what you want to do.
You might want to pay down that debt quickly, perhaps,
for example. So I think it's a very it's a
very tricky area and ultimately you know the individual will choose.
But what isn't really up for debate is that it's
still stretched. We have expensive housing in either.
Speaker 2 (30:53):
What are house prices? What have they been doing up
until now?
Speaker 5 (30:57):
Well we've seen over the last well there's a little
bit of a bounce in house prices tail end of
last year. I think there was a sentiment driven thing.
People were perhaps looking forward to our interest rates, They
still felt secure in their jobs. House prices that go
up a bit. I think when you look at hindsight,
it was driven by sentiment because nothing had really changed.
Then I think we get into this year and reality
(31:17):
keped in again and we hadn't seen those morbitrade falls. Okay,
they're coming through now, but it's taken some time and
job security has fallen. So in the past we've recorded
on AAR index a fall of two and a half
percent nationally, and house prices last four to five months.
Other areas of down, mow cones down sort of four
or five percent, some areas, of course flat or even up,
(31:38):
so there's always that variability. But mark has definitely gone
pretty soft. There's a lot of listings that's a buyer's market.
You know, those credit rules are still playing a role,
so it's pretty quiet out of their sales activities quite low,
and house prices are slipping. So there were a lot
of people sort of looking forward to spring, I guess,
the busy season and just seeing where the market truly.
Speaker 2 (31:58):
Lies, because I think Tony Alexander has put it out
that he reckons house prices will be up by the
end of the year. When he used to be on
our show, he always used to sort of add a
word of caution that he'd made lots of predictions in
his career and made some spectacularly wrong ones. So he's
got a sense of humor about those sorts of things.
But what's your sense? Do you be coause Hume's Does
(32:18):
an economist get sick of people asking for predictions, because
you know that's different, it's sort of a different game,
except you're probably in possession of more facts than the
average bear.
Speaker 5 (32:29):
Yeah.
Speaker 4 (32:29):
I mean, no one's got a crystal ball, do they.
Speaker 5 (32:30):
I think you do have to have a degree of
humility when you're trying to make predictions, because often they
will be wrong. It's about I guess giving people an
indication of direction. That's I think that's the best I
could hope to do, is will it be up or down?
I don't know how much, but at least giving some
sort of indication of travel. I think that's that's a
reasonable way of reasonable approach. So yeah, I mean by
(32:51):
the end of the year, I wouldn't be surprised if
house prices are a bit higher than they are now.
I think we'll see that potentially a bit of a
sentiment boost from those lower interest rates, not to mention
the direct impact of saving a bit of cash, and
that can potentially mean that people a bit more for
houses than otherwise would have done. As well as that
sentiment boost, but I don't think it'll be particularly meaningful
(33:11):
because you've got that weaker labor market.
Speaker 4 (33:13):
Affordability is still the problem.
Speaker 5 (33:15):
There's lots of listings, and the other thing with in
regards to listings is that we might see some investors
starting to sell because bright line tests was shortened. Going
back sort of six weeks back to the first of July,
bright line tests was shortened, there's people who would have
been on the hook for capital gains tax who now
aren't thinking, Yeah, you know what, I'm going to get
out of this loss making venture and sell that property.
(33:36):
Now it's not obvious yet, but there could be some
people looking to do that, adding some more listenings to
the market which has already got quite sitting there. So yeah,
I wouldn't be surprised if house prices are a little
bit higher.
Speaker 4 (33:49):
But we're not talking boom or anything.
Speaker 2 (33:51):
Like that, because I guess that's the frustrating things. You
can't serve a sentiment. You can just see how our
market reacts to small changes. But do you ever have
is there any way of sort of measuring sentiment apart
from your general reckons, because for instance, my reckon would
be that the more people you talk to, there's more
people who are quite pessimistic about are you know that
yield thing? You're having to put so much money into it.
(34:13):
The investing equation is quite different to what it was
when it seemed that if you'd made a decision to
buy ten years ago, just just buy whatever, just buy
and you've got it made. Whereas it doesn't feel that
that sentiment or optimism it's going to take a lot
to restore. That would be my guess.
Speaker 5 (34:29):
Yeah, yeah, I mean I mentioned Tony Alexander, he'd actually
does a lot of surveys of ministate agents, of bankers,
of people out there in the market, and so that
those are pretty good indicators as good as we've got
really of sentiment in the market, and those things I
think wouldn't I mean, I wouldn't be surprised if they
start to turn around a little bit and the dreaded
or credit depending on your point of view of the fomo,
(34:53):
that phrasers probably start. So, yeah, there are measures of sentiment.
There's a few other things you can look at as well,
but it's not a complete mystery.
Speaker 2 (35:04):
Yeah, So I won't my breath for the data on sentiment.
It's a bit difficult to measure anyway, we'll come back
in just a moment. It's twelve minutes to five News
to talk to z B. Yes, welcome back to the
One Roof radio show. By the way, if you've missed
any of the previous hour, my fascinating discussion wish that
with Calvin Davidson, the chief economist from core Logic. You'd
go and check out the podcast. But right now it's
nine minutes to five.
Speaker 1 (35:26):
The one Roof Quantity of the Week on the Weekend Collective.
Speaker 2 (35:31):
Yes, the one roof properly of the week. As I say,
every time, it's like taking a little bit of a holiday.
You just go and check out someone else's digs. And
this one is a fascinating looking building. A house should
I say Ninkharka street marka Wanaka where the asking price
is well, they say nine five hundred, so they're asking
(35:51):
for a million bucks, but not five hundred dollars off
that makes it Does it feel cheaper?
Speaker 3 (35:55):
I don't know.
Speaker 2 (35:55):
It still sounds like a million bucks anyway. It's four bedroom,
one bathroom. It's built for the environmentally conscientious and those
who appreciate different architecture, which it certainly is if you
check out the photos on the One Roof website. This
home is sunny and spacious with the wonderful outlook beyond
the garden into the mountains and Lake Wanica. It's got
us look. It's basically around it looks like sort of
(36:15):
a grain silo in a way, or a storage and
when I say that, it's quite pretty. But it's got
that round cylindrical shape, gorgeous around viewing room lounger. The
timber belt highlights the homes connections to its surroundings. I
think we sent this through to your Calvin. Did you
check it out the One Roof properly of the week, Yes,
it did.
Speaker 3 (36:33):
Yes.
Speaker 5 (36:34):
The first thing I thought was sort of a Lord
of the Rings style I brought to mine, kind of
a hobbit sort of vibe.
Speaker 4 (36:40):
Definitely the timber inside.
Speaker 5 (36:41):
And yeah, not personally, not something i'd buy, but I'm
sure a lot of people like that kind of thing.
I wonder where you put your square furniture in.
Speaker 4 (36:49):
A round house? That was as what came, Oh, great
property for people that are into it.
Speaker 2 (36:55):
Actually, that is it's interesting. That is an interesting take
that you thought about the furniture because well, is it octagonal?
I think I haven't counted how many sides, maybe more
than that. But hey, by the way, are you better
too if you want if you want to put a
property on you want a million, do you think the
nine nine nine, five hundreds are doing it for you?
Speaker 5 (37:15):
I mean, I'm like you, I just I'd probably just
see it as a million. But I think there is
a there is a good bit of marketing science around
the psychology of pricing, and you know, even just even
just ninety nine dollars versus.
Speaker 4 (37:27):
One hundred, I think there is a psychological element there.
So yeah, it's probably some science behind it, and we've I.
Speaker 2 (37:33):
Found the answer to we put the couch. Of course,
it's not against the wall. It's in the middle of
the room because it does have a really lovely looking
kitchen and living room there. Although that's cylindrical ceiling is
definitely quite quite fascinating. Anyway, Calvin, if people want to
check out the information, you provide a lot of data
data to the market, of course, but people want to
check out the work that core Logic does, Yeah.
Speaker 4 (37:56):
Call Logic dot co, dot zed.
Speaker 5 (37:57):
The standard website is a great place to go for
all our written stuff goes up on there. We also
have our own podcasts so people might want to check
that out, and and Property Market podcast originally titled you
Get What It does what it says on the tin
and yeah either or else. You know, our various media appearances.
We're always out there somewhere. I'm trying to promote our
(38:18):
business and also educate the market.
Speaker 2 (38:21):
Yeah. Actually, just the on your reports that come out
as well, is the affordability report was the report that
you put out? Was that is it a monthly affordability
report or is that was just the focus of the
last sort of report you put out.
Speaker 5 (38:34):
No, our housing affordability reports only done every six months,
so as affordability measures do tend to move fairly slowly,
so we failed a six month interval. As useful there
and it gives us starting to other things of course
as well in the meantime. So yeah, that's but we're
always updating the data. We always have those metrics available,
just written reports six monthly.
Speaker 2 (38:55):
And if people want to check out Core Logic call
Logic dot co dot nz would be right, wouldn't it.
Speaker 3 (39:00):
There?
Speaker 2 (39:01):
Hey, Calvin, thanks so much for your time. Matie you're
going to be watching the All Blacks tonight.
Speaker 4 (39:05):
Certainly, am, certainly am. Yeah, I'll be getting ready with
that straight after this.
Speaker 2 (39:08):
Of course you've got an excuse not to be at
the game because you're in Wellington, whereas Brad Oustin's come
all the way up. He's in Auckland with tickets to
the game, but at the moment he's going, oh it
looks a bit wet for me to go. So anyway,
either way, we'll I'll be watching.
Speaker 4 (39:21):
I'll be on my couch with a glass red wine.
Speaker 2 (39:24):
Good on you, Hey, thanks so much mate. We'll look
forward to next time. Anyway, if you missed any of
that hour, you can go and check out our podcast
on the look for the Weekend Collective on iHeartRadio if
you like, and we'll be back shortly with the Parents Squad.
Sarah Chatwan joins us, talking about how do you stop
teenagers from doing dumb things? And you know, where do
(39:45):
you sort of balance between the authoritarian stance and slowly
maybe the more cooperative stance of parenting. How do you
balance that as they get a little bit older. We
chatting about that and other things on The Parents Squad,
which is next this is News Talk ZB. So have
you ever see a man and a cowboy?
Speaker 4 (40:05):
Can you think to yourself, I can use some of that.
Don't waste your time just giving this your life. There's
a lot of like you.
Speaker 3 (40:15):
Excuse me, you look like you me, You look like
you all me walty. Come on a baby, and don't
live from looking me up and down across Israel. I'm
(40:36):
drugging ready. You look like you love me. I'm drugging ready,
and you look like you love me.
Speaker 1 (40:56):
For more from the Weekend collective, listen Life to News Talks.
It'd be weekends from three pm, or follow the podcast
on iHeartRadio.
You're listening to the Weekend Collective podcast from News Talk sedbum.
Speaker 2 (00:13):
Down, Sadly Bottom and welcome back to the Weekend Collective.
(00:36):
I'm Tim Beverages. This is the one Ruthfradio Show. We
want your calls eight hundred and eighty ten eighty text
nine to nine two. And if you miss any of
the previous hours or the subsequent hours, you're always go
back and check out a podcast. Look for the Weekend
Collective on iHeartRadio, A great place to start with that one.
Now joining us today for the One Rufradio Show is
our special guest. He is chief economist at Core Logic
(00:57):
and it's Calvin Davidson. Gay, Calvin, how are you going? Oops?
And I'm not sure he can hear me yet. No,
I can hear Calvin, but he can't hear me yet.
So we've just got to I'll just just put you
back on a hold there for a second, just reconnecting
through to Wellington with Calvin Davidson.
Speaker 3 (01:14):
There.
Speaker 2 (01:14):
What we're going to be chatting about with Calvin and
it is, as I mentioned before, as the RBNZ the
Reserve Bank in New Zeld has dropped the OCR twenty
five basis points to five point two five percent. You
will have heard from Brad Olsen, our economist on the panel,
just the political sort of side of that and whether
you know it was a big turnaround and why it
(01:37):
was a big turnaround, et cetera. But and Adrian All
was like, well, well, well he signaled in July things
might change, et cetera. But we want to talk about
what's going to happen with the property market. And let's
just see if we've got Calvin there, Calvin and we
got you there. No, he can't hear, Okay, I might
just yep. My producers is going to go and see
if she can sort that out while I chat a
(01:58):
bit more about the market, because I have a vested interest,
I guess, and we all do have vested interest. I'm
fixing in about another week. And I deliberately actually was
holding off for the OCR because I was, to be honest,
I was pretty much convinced, if I was going to
bet on it, that the OCR was going to be reduced.
But of course the bank's got had got ahead of
it a little bit. So I'm not sure even that
(02:20):
the rate that I was offered has dropped by twenty
five points. I think it's dropped by point one of
a percent or something because the banks, I think we're
probably having a having a think about how they were
getting ahead of the game basically, and I think they
probably called it. But anyway, I think we've got Calvin
now if you speak now, Kelvin, there we go. Anyway,
(02:42):
how are you very well?
Speaker 4 (02:44):
Yes, yep, looking forward to a good chat.
Speaker 2 (02:46):
Hey, the OCR just quickly. Did you see that one coming?
Speaker 5 (02:52):
Well, I mean it was, it was definitely on the cards.
I personally thought they might wait a little bit longer.
But you can easily see the case for why they'd
cut the OCR too. So so no major surprise economies,
week inflations heading back to target, and they just felt
the risks of delaying that cut were bigger than cutting early,
so they decided to cut early. And we saw the
(03:13):
banks reacting even in advance of the cut anyway, and
so we're just looking at an outlook now.
Speaker 4 (03:18):
Wh're more were tried to head it down.
Speaker 2 (03:20):
Just quickly because you said you thought that they would
hold on to it. I'm guessing you thought they would
hold onto it because of the rhetoric that we've heard
from Adrian or and I know you might not want
to get particularly involved in it. But is that the
reason you thought they would hold onto it just because
of what we've generally heard from the Reserve Bank over
the last three months.
Speaker 4 (03:40):
Yeah, I suppose so.
Speaker 5 (03:41):
I mean, there's there's certainly been a lot of commentary
over the last few days that it wasn't so much
this latest decision probably wasn't the outlier.
Speaker 4 (03:48):
This was the right thing to do.
Speaker 5 (03:49):
The outlier was what they said three months ago, which
might even raise the OCI. Again, that's the one in
hindsight that looks a bit weird. But yeah, I thought
they'd probably hang on just because they could then see
we don't get the official Q three inflation numbers until
the sixteenth October.
Speaker 4 (04:05):
I just felt they might.
Speaker 5 (04:06):
Want to wait to have that number in the bag
inflations back in the one to three percent target band
before cutting. They actually wanted to sort of see the
whites of the eyes of inflation before cutting, but not
pretty confident it's going to get there. So I think
that the case for cutting was also pretty strong.
Speaker 2 (04:22):
Okay, so from what he I've sort of got lost
in all the detail because I've heard a few interviews
and all that we won't dig into it too much.
But from the announcement of the cut in the OCR
and the other words that Adrian or used, what can
we take as our expectation as to what the as
to where those rates are headed. Because obviously the banks
(04:45):
reckon they're heading down because all the long term interest
rates are cheaper than the sixth month, so the banks
are convinced it's going to be cheaper. How are you
confident in the same respect.
Speaker 5 (04:56):
Yeah, I mean, well, I guess you have to take
the Reserve Bank at face value, and okay, there's been
some things they've said which were wrong in the past
few months, but I think you take their forecast track
at face value, and that has the official cash rate
coming down to a round about four percent perhaps in
a year's time, and then going a little bit below
that thereafter too. So yeah, there's there's a good chance
(05:18):
that we see another one point twenty five one point
five percent off the official cash rate in the next
kind of twelve to eighteen months. That will flow through
to mortgage rates. There's other influences of course on mortgage rates,
not just the official CACH rate.
Speaker 4 (05:31):
You've got sort of competitive behavior amongst the.
Speaker 5 (05:33):
Banks you've got offshore financing rates that matter a lot too,
But certainly from here I think, and it's not just
the reserve banks for us, that's what you see for
the struggling economy. It's what you see with inflation back
and target. Everything's pointing towards lower interest rates, that the
economy needs low interest rates and that it's going to
come through.
Speaker 2 (05:51):
Can you explain then, just with offshore financing rates, how
much they play a part in what the banks you know,
are doing with interest rates versus the reserve bank. Just
for the lay person, including me obviously, what role do
they both play?
Speaker 4 (06:09):
Yeah, well, so the.
Speaker 5 (06:10):
Official cash rate has a very significant influence on say,
the floating rates the short end of the curve is
it's called the floating rates, and perhaps the sort of
six month fixed rates. I guess where as you get
further out along those terms three four, five year fixed rates,
the international markets play a much bigger part in that
because that the banks are borrowing offshore basically to fund
those longer term fixed interest rates here, so what happens
(06:33):
offshore matters a lot for those those longer term fixes.
There's other things, of course, it's the banks are also
competing to win turn deposits or the funds from savers,
so they have to sort of take that into account
as well. But certainly the offshore financing rates and borrowing
in those wholesale markets plays a role right across the
term and mortgages, but certainly have the longer ends.
Speaker 4 (06:54):
That's important.
Speaker 2 (06:55):
Now, I guess you know, as an economist, well, you
may make your own sort of private predictions. Economists are
generally a bit nervous about making predictions about what's going
to happen to the market. But I guess we what okay,
So let me phrase it this way. I do. I
do just want to ask you, what do you think
it's going to do the market? Actually, what the hell?
Let's just do that. What's it going to do with
the market coming? I was going to pussy foot around
(07:15):
and ask you what lessons from history and all that
sort of stuff, But what's your take on what the
economy is doing, combined with the ocr combined with the
levels of unemployment. Is this really going to make much
of a difference to the market, Because my gut says, bugger.
Speaker 5 (07:31):
All, yeah, I think when you look at it from
a fundamental perspective, there's there's still a lot of challenges
for the housing market. I mean, I've got to say
I wouldn't roll out in the short term a bit
of a bounce, because we've seen it all before. People
do get a sentiment lift from even a relatively small
change of mortgage rates. They feel happier, They might feel
like they can start to trade properly again, or at
(07:51):
least start to prepare for that.
Speaker 4 (07:52):
You'll hear the.
Speaker 5 (07:53):
Phrase fomo coming out again. Probably the fear of missing out.
Speaker 3 (07:56):
Oh god.
Speaker 5 (07:57):
I think it's that psychological impact which could cause a
bit of a short term bounce. But sentiment can only
take you so far, and then you get back into
the reality of more white rates are still actually quite high. Okay,
they're going to come down over a period of time,
but they're still quite high. Affordability is very stretched. The
labor market is weakening, so a period of rising unemployment
will not be favorable for the housing market, you wouldn't think.
(08:19):
And then we've got restrictions on debt to income ratios
which we haven't had before. And yes, there's an allowance
there for banks to lend outside the dt I rules.
You can still get into new build properties, So investors
may well be still looking at new builds outside the
dt I rules, so it might not be so much
of a restraint there. But certainly DTIs are a big
change from what we've had in the past, and we'll.
Speaker 4 (08:40):
Restrict the market.
Speaker 5 (08:41):
So now now the dts aren't doing anything right now,
but as those mortgage rates fall, there's when DTIs kick in.
So there's there's certainly a lot of challenges possibility of
a near term bounds driven by sentiment, but those those
sort of fundamentals are still restricted for the housing market.
Speaker 2 (08:56):
I think, So, what are the lessons of the data
from history? Because cool logic, let's your guys, bag is
data data, and so there are there historical sort of
comparisons to be drawn with small changes in the interest
rate going you know, where people might have thought it
was unaffordable. Are there any lessons we can look at
(09:17):
going back, because all I can remember is a market
that's been generally nuts and nothing much before that.
Speaker 5 (09:24):
Yeah, well that's and that's the thing that's in the
back of my mind too, is that you know, we
can talk about the fundamentals, we can talk about affordability
and DTIs and stretch labor market.
Speaker 4 (09:34):
But we have seen it all before. Interest rates do.
Speaker 5 (09:37):
Play a pretty important role in terms of obviously the
direct impact on household finances, but also that sentiment boost.
And there's been plenty of times in the past where
economists have pointed to affordability measures in the housing market
and said, well, can't get anywhere. So, I mean, this
is as stretch as the market can get. And then
five years later we look back and say, well, actually
that was wrong, wasn't it. It got even more stretched.
(09:59):
So you know, I'm reluctant to say this time is different.
That's why I just couldn't rule out a bit of
a ounce. But the fundamentals are still restrictive, and the
dtiys are different. That's something we haven't had.
Speaker 2 (10:10):
And look's tt I stand for again, that's the.
Speaker 5 (10:12):
Debt to income ratio. So that's the maximum debt you
can have in relation to your income. And so it's
sets for owner occupiers and seven for investors.
Speaker 4 (10:20):
Now there is an.
Speaker 5 (10:21):
Allowance outside those rules that people can still take advantage of,
and new builds are exempt, So those those are ways
that people could still buy property outside those DTIs, but
they are new and it's something we haven't had before,
so in that sense, you can say this time is different,
So that's something to watch for sure.
Speaker 2 (10:39):
How much do you think sentiment really does get affected
by these announcements and how much is the market I mean,
this is a difficult quest, but how much is the
market influenced by sentiment?
Speaker 3 (10:50):
Yeah?
Speaker 5 (10:51):
I think a lot in the short term. I can't
sort of put a percentage on it as such, but
a sentiment plays a very key role. If you tend
to see that if people think the house prices will
go up, they probably will go up. You know, That's
just what we've seen historically. And I think interest rates,
even relatively small changes can can drive there as well.
This direct impact on finances, but also the sort of
(11:12):
psychological impact.
Speaker 4 (11:13):
So yeah, pretty significant.
Speaker 5 (11:15):
But I mean, I wouldn't say I'm outright bullish on
housing by any means, because there are still some pretty
big restraints there. And the other thing I haven't mentioned
yet is the high stock of listings. There's a lot
of choice out there, so it's definitely a buyer's market.
So you would think in that kind of environment, and
especially when you're take into account, it's a buyer's market.
But it's only for those buyers who can get the finance,
(11:36):
so that you wouldn't think that's an environment where prices
will rise particularly strongly. Now potentially a good opportunity for buyers.
You can get job the money that's right, and or
get a.
Speaker 4 (11:46):
Better property than what you otherwise might have done.
Speaker 5 (11:49):
So this is the thing about housing. There's always two
sides to it. You people will some people celebrate rising prices,
others don't.
Speaker 2 (11:55):
So well, yeah, that's right. What about the What about
the state of the economy, because aren't there We're looking
for some figures that are into we might be in
recessional or how is the economy looking right now? Because
it's all very well, they have cheap interest rates, but
if the economy is stinks, then how does that play in?
Speaker 5 (12:17):
Yeah, so there's I don't think there's any doubt where
we're in recession. I mean, in some senses we've been
in recession.
Speaker 6 (12:22):
For you.
Speaker 5 (12:22):
You can argue about the technicalities of two quarters of
form there, which is the technical definition of recession. But
I think if you asked most people on the street,
they would say, well, actually we've been in recession for
a long time, you know, don't worry about your technical definitions.
It's feels recessionary and it's gone that way for a while,
and I think that's probably going to continue because just
at the point where people might start to save a
(12:43):
little bit on their mortgages, and keep in mind, it
won't flow through straight away because people will already be
on fixed rates from a period of time in the
past and they've got to wait for that term to
expire so they can get the new lower rates, So
that's going to take some time. And just at the
point where mortgage rates start falling, this is when we
start to see job losses. So that sort of prolongs
(13:03):
the feelings like of recessionary environment across the economy. And
this is why the Reserve Bank at it really with
this interest rate cutter, is because you look at things
like traffic movements and house sales and manufacturing activity, services activity,
all of this timely indicators that we get kind of
monthly or weekly whatever it is, have a have all
(13:25):
been pretty soft, so it's kind of it's a real
time decision. I guess they've said, Okay, what are we
seeing right now? It looks pretty recessionary, so we no
inflation's coming down when we need some interest, right relief.
Speaker 2 (13:35):
Okay, look, we want to take your calls. One hundred
eighty ten and eighty. So everyone's been hanging around around
for a reversal in that or change in the ACI,
and it's been finally announced by the ABNST. It's been
dropped by twenty five basic basis points to five point
two five percent. Simple question is how has it affected
how will it affect the market and in your plans
(13:58):
with regards to the market, do you think that it
will see that the sentiment will play a bit of
a role and people will be like so relieved that
it's dropped down, it's going to make a big prison
going to see some sort of surge or do you
think it's going to be a bit more muted And
more specifically, how does it defeit your plans when it
comes to working out how you're going to structure your mortgage.
You're going to go short, going to go long? But yes,
how will it affect the market? Give us your reckons
(14:19):
on eight hundred eighty ten eighty text on nine two
nine two. I'm with Calvin Davidson. He's the principal economist
at Core Logic, and if you've got any questions for Calvin,
he'll know from an economist's point of view, he's not
going to give you any specific financial advice. But if
you want to run an idea or thought past him
and see what he reckons, and give us a call.
Eight hundred eighty ten eighty it's twenty one past four
(14:41):
news Talks.
Speaker 6 (14:41):
I'd be.
Speaker 3 (14:44):
Gone.
Speaker 2 (15:00):
Let's welcome back to the Weekend Collective. This is one
where AFRAIDI sha, we'd love to take your cause. I
one hundred and eighty ten A text nine to nine two.
I'm Tim Beverage. My guest is I think I said
principal economist. Maybe it's chief economist at Core Logic, Calvin Davidson.
Are they the same thing?
Speaker 5 (15:14):
Right?
Speaker 2 (15:14):
Is there one principle and the chief I don't know.
Speaker 4 (15:17):
I don't know either. It's just a title. Really.
Speaker 2 (15:20):
Oh that's good. I was just checking because I think
Brad Olson, who we had on our panel as principal
economist at Informetrics, whereas your chief or the other way around. Anyway. Actually,
just before we get into it, because so we've got
a few interesting texts questions to run by you about
the ocr but because core Logic, you specialize in analyzing
data and collecting. What is your particular role as chief
(15:43):
economist at a company like core Logic.
Speaker 4 (15:45):
Yeah, so, I mean in many ways, I'm an end
user of our data just like anybody else.
Speaker 5 (15:51):
Were data and analytics team behind the scenes that compile
it all and cleanse it and make sure it's usable,
and then it basically goes into all of our products
and services, which I'm really an end user of. So
just like any other client of care Logic, I guess
just that I have a bit more internal excess. So
really I sort of describe my job as there's three things.
I did a lot of media work, presenting to our clients,
(16:13):
helping our clients with sort of one off request that
sort of thing, and writing reports. So a lot of
my weeks spent on summarizing the market various articles, publications.
So yeah, I guess it's about education really and just
like an end user of our data like anybody else.
Speaker 2 (16:31):
Yeah, what's the most significant thing you've observed and with
the reports you've been writing for core Logic in the
last couple of months.
Speaker 5 (16:37):
Well, the most recent on we did was around housing affordability,
and it was actually very timely in the sense that
it came out on the same day as the official
cash rate decision. And so we've still got big issues
with housing affordability in New Zealand. For some things have
got better, some of those measures we look at have
got better, but they're still worse than so called normal,
and other measures are actually pretty stretched. And then when
(16:59):
it comes to cash costs for housing, whether that's paying
mortgage or paying rent, those things are pretty much at
record highs.
Speaker 4 (17:07):
So there's a lot of strain on people. Now.
Speaker 5 (17:09):
Yes, slower and mortgage rates will help, but there's there's
still a lot of straining there in terms of paying
their mortgage and especially if obviously if people are losing jobs.
So yeah, housing affordability is one we always look at
the composition of the market, who is buying. We've seen
a lot of strength first home buyers. Lately mortgaged investors
have been quieter than normal, So there's there's always that
monitoring of different buyer groups. So yeah, all facets of it.
Speaker 2 (17:33):
Really, because I saw I think it was having look
at your the coreological affordability, well, I saw a stat
that the AVERA tell me if I'm wrong here, because
I'm just going from memory, but the average or the
median is one of those, and mortgage payments more than
half of the median income, which to me was a
status like, oh my lord, that is that is colossal,
(17:57):
which tells us we've still got a long way to
go with affordability.
Speaker 4 (18:01):
Yep, that's right.
Speaker 5 (18:01):
Yes, fifty four percent of the median household income is
going towards servicing a new mortgage.
Speaker 4 (18:07):
Now, an important thing there is to recognize that it's
a recently new mortgage.
Speaker 5 (18:11):
It's going to eighty percent LVR or twenty percent deposit,
so it's really capturing somebody who's just into the housing
market and has still got a lot of debt, so
that that fifty four percent won't imply to everybody. People
have been paid down, some paid down some debt. But
when you look at that number that's through time is okay,
fifty four percent is a meaningful number, but you also
(18:31):
need to look at it in a long run context.
And really the point is whether it's fifty four or
sixty four or forty four, the point is that's it's
basically as high as it's ever been. So when it
comes to servicing debt, there's still a lot of pressure
out there.
Speaker 2 (18:45):
Okay, let's take some calls.
Speaker 5 (18:46):
I e.
Speaker 2 (18:46):
One hundred and eighty ten and eighty Matthew, Good afternoon.
Speaker 7 (18:50):
How are you doing good?
Speaker 2 (18:51):
Thanks?
Speaker 7 (18:52):
Yeah, I just got a question. So bond government bond rates.
You know, they have an option and people been and
those interesting rates the government accepts for But how does
that relate to there's a reserve bank and the interest
rates that they the OCO rate.
Speaker 5 (19:16):
Okay, yeah, certainly no expert on public finances, that's for sure,
But I mean, whichever interest rate you're looking at, whether
it's a yield on a bond, or whether you get
a turn deposit at the bank, or whether you're borrowing,
all of those things that are sort of interrelated, and
everyone's competing for the money. I mean the government basically.
The way I think about it is, the government is
trying to distribute those bonds, sell those bonds are competing
(19:40):
for your money basically in a wider interest rate environment,
so they have to be competitive. When interest rates go up,
you'll tend to see the interest rates charged on government
bonds go up, or the yields and other words go up,
and then they'll be coming down when wider interest rates
coming down. That's my understanding at least anyway, So yeah,
it could be that those government bond interest rates come
(20:01):
down as well.
Speaker 7 (20:03):
Okay, yes, so then the bid for the bonds put
the interest rates higher than the o c R. So
what it's saying then is that there's there's not a
lot of confidence in government bonds, so the interest rate
goes up. Does that mean to say that the the
rate might follow that, Well, No, I think.
Speaker 4 (20:25):
I'd probably look at it the other way around.
Speaker 5 (20:27):
Is the official case rates sort of the the key
rate in the economy, and everything else will sort of
stem from that.
Speaker 4 (20:33):
But yes, if if there is.
Speaker 5 (20:36):
Reduced sluggish demand for government bonds, then they might have
to look at pushing up the interest rates, or the
markets will do that, push up those interest rates to
try and entice buyers in.
Speaker 6 (20:45):
You know.
Speaker 5 (20:45):
That's that's just the way sort of markets were now
expect in the interest rate, we're environment, we're in there.
Speaker 4 (20:50):
It's probably going to go the other way.
Speaker 5 (20:52):
But yes, if there's not a lot of confidence in
those products, then then you kind of have to up
the return to get the money in. That's that's that
you'll see that in all sorts of air set markets.
Speaker 2 (21:01):
It's interesting that that that question came up then, and
it's not quite your bad in terms of relating to
property and things. But it's interesting that in the last
few months on our Money Show that there's been more
discussion with people about bonds because people were less enamored
with the property market. So it does tie into that
a little bit that we've I mean, I've been doing
the Money Show for a few years on here and
(21:22):
we've almost I can't remember us ever discussing bonds in
any detail except in the last few months. And I mean,
I guess that is relevant from the point of view
of the market and where people are putting their money,
and that you were saying that that would be consistent
with what you said about the lack of interest from
investors still in the market. I guess that people are thinking, oh,
you know what, maybe I'll just sent money somewhere else
(21:44):
where it's a bit safer and not so stressful and
en't have to worry about property managers and tenants and
all that sort of thing. Is there anything in that, Yeah.
Speaker 4 (21:52):
That's right.
Speaker 5 (21:53):
Yeah, we've certainly seen over the past few years the
amount of money held in turn, deposits has gone up
a lot, as I don't want if the government bond
market that closely, but I suspect there will have been
money pouring into government bonds as well. The thing with
property investment right now and lots of people still make
it work properly. Investing isn't dead by any means. There
will still be people wanting to buy property as investment rentals,
(22:14):
which we need because there's still going to be people
wanting rental properties. The issue just right now for a
new investor is the cash top ups. The rents won't
cover the mortgage, and falling mortgage rates will help, but
typically you're having to put in hundreds of dollars a
week to top up that property, so it's you're having
to subsidize it, as well as the fact that a
lot of people go interest only so they're not paying
(22:34):
down any debt. And of course your top ups could
have been money you invest somewhere else, so it's sort
of a double whamyon that you're not making the return
and potentially having it in the turn to posit for example,
So it's tricky at the moment.
Speaker 4 (22:48):
Those top ups are the problem.
Speaker 2 (22:49):
Well, that was actually that was some other work that
you guys had done, wasn't it of them? I must
have seen the headlines for that. That the gap between
what you're getting as an investor and what you're having
to put in is the widest it's been as well.
Was that something else you guys had gone mentioned on recently?
Speaker 4 (23:05):
Yep?
Speaker 5 (23:05):
Yeah, yeah, so that I mean, if you look at
a fairly to now, yields on rental properties differ a lot,
and it's obviously a case specific, but you take an
average and let's call it sort of three and a
half four percent, and you're looking at a mortgage rate. Okay,
they're coming down, but let's call it seven percent for arguments,
So that gap, yeah, that's however you define it, that
(23:25):
gap is as wide as real lessance two thousand and eight.
So what that amounts to in real terms, there's dollars
that you've got to invest into that property to keep
it going on a week to week basis, to top
up the rent basically and cover the mortgage. So that's
I think that's really the hurdle for people at the moment.
Speaker 2 (23:43):
That's the interesting issue, and this is not something you'll
be able to comment on, but I'm remembering how it
came up because we're chatting with Ashley Church and I said,
given that that's the equation for new investors, it's hard
for them to say that they haven't bought the property
for anything other than capital gain, because you're not doing
it for the rental. But that's that's an issue for
a tax expert, of course. But I just throw that
in there to remind us up where the genesis of
(24:04):
that idea came from.
Speaker 6 (24:05):
Hey, just.
Speaker 2 (24:08):
Another question that somebody's come up with. What an impact
does the result of the US election have? This person
suggested that if the Democrats get in, it'll be high
interest rates. That's but does the American election have any
particular outcome for us economically here and especially in the
lending environment.
Speaker 5 (24:27):
Yeah, I mean there's going to be all sorts of
channels in which that can filter out around global markets
and impact New Zealand. You know, there's a lot of
discussion on the moment around our trade channels. In particular
if well, if the opposite party one and put in
place some tariffs, you know, that's going to damage our
economic performance in terms of exporting, which your feedback into
reduced incomes here and pressure on household budget. So you know,
(24:50):
we operate in a big, wide world and we're sort
of buffeted by it a lot of times. I think,
probably on the interest rate front. You know, the outlook
in America as understanding it is pretty similar to to elsewhere.
We've all been fighting inflation, we've all had high interest rates.
Now we're just at that turning point. Preps, we're okay,
not all central banks are cutting yet, but some have started,
(25:11):
and certainly the commentary and chat around the US is
that they're going to start looking at that as well.
So I think there's lots of different channels ways that
this thing can flow through. But they're probably looking at
lower interest rates too, So that will feature into those
wider global markets in terms of falling interest rates and
the whole wholesale funds, and that potentially lowers those rates
(25:32):
for our fixed mortgages, as we talked about earlier.
Speaker 2 (25:35):
Okay, another text question here him. My name is Nick.
My mortgage is due to be refixed at the beginning
of October. I fixed for a year last October, and
my acts went from two point eight nine to seven
point one to nine more blimey. I was thinking of
fixing for six month term and hoping the rates continue
to drop. They're asking what you would suggest, and I
can always give the the disclaimer right now, the no
(25:56):
specific financial advice. But I guess if you are fixing
a mortgage right now, Calvin, I'm going short up for
six months, that seems to be the prevailing sort of wisdom.
Speaker 5 (26:09):
Yeah. I mean, absolutely no financial advice down to the individual.
But what we are seeing in the figures is that
most people are fixing short. Some still fixed for a year,
but there is certainly a preference for six months or
a year, so, in other words, fairly short horizons. I
suspect some people might be thinking about floating at the
moment for a little while, just to see how things go.
Really floating comes at it, well, it comes at a
(26:30):
much higher cost, so you don't want to do it
for too long, probably, but it just gives people that
flexibility they can kind of weigh things up and see
where they're at. But certainly either a six or twelve
month fixed seems to be what people are opting for.
Makes sense in an environment where we are looking at
lower interest rates that you sort of ride that wave
down and okay, you can't write it down perfectly because
(26:51):
you do have to fix for some sort of period
of time, and in the meantime those rates might get lower,
but at least shorter fixes are are certainly what people
are doing and ultimately down to the individual.
Speaker 4 (27:01):
But that's what we are seeing.
Speaker 2 (27:03):
Yeah, okay, so hopefully that's of some out right. Let's
get another call Julian, good.
Speaker 6 (27:07):
Afternoon, Good afternoon, big fire like your space anyway, said that,
I just wanted to know those brick nations that are
trying to get out of this US dollar, how does
that affect our New Zealan economy? Does at all play
any role in any way?
Speaker 2 (27:27):
Sorry? Say that again? Countries that are trying to what
disconnect from the US dollar something?
Speaker 6 (27:33):
So these bricks nations, the bricks.
Speaker 2 (27:39):
Yeah, they they're the ones who more connected with China
and Russia, are they?
Speaker 4 (27:43):
Yes?
Speaker 6 (27:43):
They don't want to trade in the US dollars. Does
that have an effect on the New Zealand dollar?
Speaker 3 (27:48):
Oh?
Speaker 2 (27:48):
Okay, right there we go.
Speaker 5 (27:49):
What are you Calvin Well experit on currencies either? But yeah,
I mean it's so global connected. I mean the US
dollar is still the reserve currency. I suspect that of
some I mean, you know, if China doesn't want to
trading dollars or doesn't want to sort of participate in
the global economy and the way it has, I think
(28:10):
that would flow through. But yeah, I mean, ultimately, the
exchange rates are just a relative price, and you know
it's going to on certain some ways. If our dollar
falls of rises, it either impacts the exports or imports,
So there's always sort of two sides to the coin.
Speaker 4 (28:28):
But yeah, I probably don't have too much wise to
say on that. It's not my particular.
Speaker 2 (28:34):
Area, not your bag, baby, as Austin Powers would say. Right,
We're going to take a moment. It's twenty two to
five News Talk ZB. Yes, welcome back to the one
roof radio show. I'm Tim Bevers. To My guest is
the chief economist from care Logic, Calvin Davidson. Calvin, just
(28:55):
a question around affordability. There's an article in the New
Zealand here or talking about in Auckland that, in fact,
I think the conclusion is that if you are one
person buying in Auckland, you'd need an income to comfortably
afford a mortgage of three hundred thousand dollars a year.
Speaker 5 (29:11):
How do you.
Speaker 2 (29:11):
I mean, we've can talk about affordability going up and
going down. How do we actually define what affordability is?
Speaker 5 (29:18):
Well, And this is the thing whenever I talk about
housing affordability, I try to stress them. Like I said before,
I mean, I figure of fifty four percent of median
household income required to service that loan.
Speaker 4 (29:30):
It's a meaningful number.
Speaker 5 (29:31):
But actually, housing affordability is not a not a binary concept.
Hoo's to say what's affordable and what's not. It's sort
of a spectrum, and you need to look at different
markets versus other markets, and those markets through time, and
how does affordability compare to what it was ten, fifteen,
twenty years ago. So it's very difficult to say yes,
that house is affordable or no, it's not affordable, because
(29:54):
it's down to the individual circumstances, and there are definitions
out there people try to come up with. Well, what's
the sort of benchmark of how much of your income
means that you're comfortable. If you're dedicating that percentage towards housing,
you can still live a comfortable lifestyle. And there is
a kind of rule of thumb that if you're spending
(30:14):
thirty percent or less of your income on a mortgage
that's sort of comfortable. Anything above that it starts to
become a bit of a stretch. But that's going to
differ a lot for different people, and ultimately what it
doesn't take into account as people's preferences. You might be
happy dedicating forty or fifty percent of your income to
your mortgage and you're fine with it. You might not
(30:34):
do many other things and that's what you want to do.
You might want to pay down that debt quickly, perhaps,
for example. So I think it's a very it's a
very tricky area and ultimately you know the individual will choose.
But what isn't really up for debate is that it's
still stretched. We have expensive housing in either.
Speaker 2 (30:53):
What are house prices? What have they been doing up
until now?
Speaker 5 (30:57):
Well we've seen over the last well there's a little
bit of a bounce in house prices tail end of
last year. I think there was a sentiment driven thing.
People were perhaps looking forward to our interest rates, They
still felt secure in their jobs. House prices that go
up a bit. I think when you look at hindsight,
it was driven by sentiment because nothing had really changed.
Then I think we get into this year and reality
(31:17):
keped in again and we hadn't seen those morbitrade falls. Okay,
they're coming through now, but it's taken some time and
job security has fallen. So in the past we've recorded
on AAR index a fall of two and a half
percent nationally, and house prices last four to five months.
Other areas of down, mow cones down sort of four
or five percent, some areas, of course flat or even up,
(31:38):
so there's always that variability. But mark has definitely gone
pretty soft. There's a lot of listings that's a buyer's market.
You know, those credit rules are still playing a role,
so it's pretty quiet out of their sales activities quite low,
and house prices are slipping. So there were a lot
of people sort of looking forward to spring, I guess,
the busy season and just seeing where the market truly.
Speaker 2 (31:58):
Lies, because I think Tony Alexander has put it out
that he reckons house prices will be up by the
end of the year. When he used to be on
our show, he always used to sort of add a
word of caution that he'd made lots of predictions in
his career and made some spectacularly wrong ones. So he's
got a sense of humor about those sorts of things.
But what's your sense? Do you be coause Hume's Does
(32:18):
an economist get sick of people asking for predictions, because
you know that's different, it's sort of a different game,
except you're probably in possession of more facts than the
average bear.
Speaker 5 (32:29):
Yeah.
Speaker 4 (32:29):
I mean, no one's got a crystal ball, do they.
Speaker 5 (32:30):
I think you do have to have a degree of
humility when you're trying to make predictions, because often they
will be wrong. It's about I guess giving people an
indication of direction. That's I think that's the best I
could hope to do, is will it be up or down?
I don't know how much, but at least giving some
sort of indication of travel. I think that's that's a
reasonable way of reasonable approach. So yeah, I mean by
(32:51):
the end of the year, I wouldn't be surprised if
house prices are a bit higher than they are now.
I think we'll see that potentially a bit of a
sentiment boost from those lower interest rates, not to mention
the direct impact of saving a bit of cash, and
that can potentially mean that people a bit more for
houses than otherwise would have done. As well as that
sentiment boost, but I don't think it'll be particularly meaningful
(33:11):
because you've got that weaker labor market.
Speaker 4 (33:13):
Affordability is still the problem.
Speaker 5 (33:15):
There's lots of listings, and the other thing with in
regards to listings is that we might see some investors
starting to sell because bright line tests was shortened. Going
back sort of six weeks back to the first of July,
bright line tests was shortened, there's people who would have
been on the hook for capital gains tax who now
aren't thinking, Yeah, you know what, I'm going to get
out of this loss making venture and sell that property.
(33:36):
Now it's not obvious yet, but there could be some
people looking to do that, adding some more listenings to
the market which has already got quite sitting there. So yeah,
I wouldn't be surprised if house prices are a little
bit higher.
Speaker 4 (33:49):
But we're not talking boom or anything.
Speaker 2 (33:51):
Like that, because I guess that's the frustrating things. You
can't serve a sentiment. You can just see how our
market reacts to small changes. But do you ever have
is there any way of sort of measuring sentiment apart
from your general reckons, because for instance, my reckon would
be that the more people you talk to, there's more
people who are quite pessimistic about are you know that
yield thing? You're having to put so much money into it.
(34:13):
The investing equation is quite different to what it was
when it seemed that if you'd made a decision to
buy ten years ago, just just buy whatever, just buy
and you've got it made. Whereas it doesn't feel that
that sentiment or optimism it's going to take a lot
to restore. That would be my guess.
Speaker 5 (34:29):
Yeah, yeah, I mean I mentioned Tony Alexander, he'd actually
does a lot of surveys of ministate agents, of bankers,
of people out there in the market, and so that
those are pretty good indicators as good as we've got
really of sentiment in the market, and those things I
think wouldn't I mean, I wouldn't be surprised if they
start to turn around a little bit and the dreaded
or credit depending on your point of view of the fomo,
(34:53):
that phrasers probably start. So, yeah, there are measures of sentiment.
There's a few other things you can look at as well,
but it's not a complete mystery.
Speaker 2 (35:04):
Yeah, So I won't my breath for the data on sentiment.
It's a bit difficult to measure anyway, we'll come back
in just a moment. It's twelve minutes to five News
to talk to z B. Yes, welcome back to the
One Roof radio show. By the way, if you've missed
any of the previous hour, my fascinating discussion wish that
with Calvin Davidson, the chief economist from core Logic. You'd
go and check out the podcast. But right now it's
nine minutes to five.
Speaker 1 (35:26):
The one Roof Quantity of the Week on the Weekend Collective.
Speaker 2 (35:31):
Yes, the one roof properly of the week. As I say,
every time, it's like taking a little bit of a holiday.
You just go and check out someone else's digs. And
this one is a fascinating looking building. A house should
I say Ninkharka street marka Wanaka where the asking price
is well, they say nine five hundred, so they're asking
(35:51):
for a million bucks, but not five hundred dollars off
that makes it Does it feel cheaper?
Speaker 3 (35:55):
I don't know.
Speaker 2 (35:55):
It still sounds like a million bucks anyway. It's four bedroom,
one bathroom. It's built for the environmentally conscientious and those
who appreciate different architecture, which it certainly is if you
check out the photos on the One Roof website. This
home is sunny and spacious with the wonderful outlook beyond
the garden into the mountains and Lake Wanica. It's got
us look. It's basically around it looks like sort of
(36:15):
a grain silo in a way, or a storage and
when I say that, it's quite pretty. But it's got
that round cylindrical shape, gorgeous around viewing room lounger. The
timber belt highlights the homes connections to its surroundings. I
think we sent this through to your Calvin. Did you
check it out the One Roof properly of the week, Yes,
it did.
Speaker 3 (36:33):
Yes.
Speaker 5 (36:34):
The first thing I thought was sort of a Lord
of the Rings style I brought to mine, kind of
a hobbit sort of vibe.
Speaker 4 (36:40):
Definitely the timber inside.
Speaker 5 (36:41):
And yeah, not personally, not something i'd buy, but I'm
sure a lot of people like that kind of thing.
I wonder where you put your square furniture in.
Speaker 4 (36:49):
A round house? That was as what came, Oh, great
property for people that are into it.
Speaker 2 (36:55):
Actually, that is it's interesting. That is an interesting take
that you thought about the furniture because well, is it octagonal?
I think I haven't counted how many sides, maybe more
than that. But hey, by the way, are you better
too if you want if you want to put a
property on you want a million, do you think the
nine nine nine, five hundreds are doing it for you?
Speaker 5 (37:15):
I mean, I'm like you, I just I'd probably just
see it as a million. But I think there is
a there is a good bit of marketing science around
the psychology of pricing, and you know, even just even
just ninety nine dollars versus.
Speaker 4 (37:27):
One hundred, I think there is a psychological element there.
So yeah, it's probably some science behind it, and we've I.
Speaker 2 (37:33):
Found the answer to we put the couch. Of course,
it's not against the wall. It's in the middle of
the room because it does have a really lovely looking
kitchen and living room there. Although that's cylindrical ceiling is
definitely quite quite fascinating. Anyway, Calvin, if people want to
check out the information, you provide a lot of data
data to the market, of course, but people want to
check out the work that core Logic does, Yeah.
Speaker 4 (37:56):
Call Logic dot co, dot zed.
Speaker 5 (37:57):
The standard website is a great place to go for
all our written stuff goes up on there. We also
have our own podcasts so people might want to check
that out, and and Property Market podcast originally titled you
Get What It does what it says on the tin
and yeah either or else. You know, our various media appearances.
We're always out there somewhere. I'm trying to promote our
(38:18):
business and also educate the market.
Speaker 2 (38:21):
Yeah. Actually, just the on your reports that come out
as well, is the affordability report was the report that
you put out? Was that is it a monthly affordability
report or is that was just the focus of the
last sort of report you put out.
Speaker 5 (38:34):
No, our housing affordability reports only done every six months,
so as affordability measures do tend to move fairly slowly,
so we failed a six month interval. As useful there
and it gives us starting to other things of course
as well in the meantime. So yeah, that's but we're
always updating the data. We always have those metrics available,
just written reports six monthly.
Speaker 2 (38:55):
And if people want to check out Core Logic call
Logic dot co dot nz would be right, wouldn't it.
Speaker 3 (39:00):
There?
Speaker 2 (39:01):
Hey, Calvin, thanks so much for your time. Matie you're
going to be watching the All Blacks tonight.
Speaker 4 (39:05):
Certainly, am, certainly am. Yeah, I'll be getting ready with
that straight after this.
Speaker 2 (39:08):
Of course you've got an excuse not to be at
the game because you're in Wellington, whereas Brad Oustin's come
all the way up. He's in Auckland with tickets to
the game, but at the moment he's going, oh it
looks a bit wet for me to go. So anyway,
either way, we'll I'll be watching.
Speaker 4 (39:21):
I'll be on my couch with a glass red wine.
Speaker 2 (39:24):
Good on you, Hey, thanks so much mate. We'll look
forward to next time. Anyway, if you missed any of
that hour, you can go and check out our podcast
on the look for the Weekend Collective on iHeartRadio if
you like, and we'll be back shortly with the Parents Squad.
Sarah Chatwan joins us, talking about how do you stop
teenagers from doing dumb things? And you know, where do
(39:45):
you sort of balance between the authoritarian stance and slowly
maybe the more cooperative stance of parenting. How do you
balance that as they get a little bit older. We
chatting about that and other things on The Parents Squad,
which is next this is News Talk ZB. So have
you ever see a man and a cowboy?
Speaker 4 (40:05):
Can you think to yourself, I can use some of that.
Don't waste your time just giving this your life. There's
a lot of like you.
Speaker 3 (40:15):
Excuse me, you look like you me, You look like
you all me walty. Come on a baby, and don't
live from looking me up and down across Israel. I'm
(40:36):
drugging ready. You look like you love me. I'm drugging ready,
and you look like you love me.
Speaker 1 (40:56):
For more from the Weekend collective, listen Life to News Talks.
It'd be weekends from three pm, or follow the podcast
on iHeartRadio.
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