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Economy Update

Economy Update

The Australia RBA has reviewed their cash rate in view of the slowing economy. It is now becoming apparent that this country has mismanaged its biggest resources investment boom in decades and is now potentially looking towards a new government to change this situation.

China’s weak data has been a concern to the markets and a reduction in projected growth is forecast for this year. China’s reduced projected demand of coal and iron ore is directly affecting the Australian markets. However, business confidence still remains unchanged in a recent BNZ Business Confidence survey in New Zealand.

This is having a positive flow on effect on migrant flow between NZ and Australia reducing NZ net loss significantly over the last months of data. The net loss a year ago was 39,622, while the current net loss is 32,862.

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IF YOU WATCH ONE VIDEO THIS YEAR, THIS HAS GOT TO BE IT!

how the GFC occurred

It’s not often you get the chance to  learn while sitting in a silver tube in the sky but that’s what happened recently!  I grazed through the channels and found series of three documentaries that purported to explain  how the Global Financial Crisis  occurred.

Now, you have to set aside the occasional references to 1940-50s economic philosopher Ayn Rand…but hell, this doco shows up the idiocy of the world economic order. Just watch the first one….and make a good coffee, put your feet up and don’t let anyone interrupt you till it’s finished.

http://rutube.ru/tracks/4465754.html?&bmstart=1000

STATS, STATS, STATS!

Immigration focus

 Hmmm. Media was all over the immigration stats earlier this week, focusing on the bare numbers that said slightly more people left the country this past month than  came in…yep, a first. So….time to get knickers in knots?

Hell no!

The reality? Right at the end of the piece, the journo added that more Brits [no doubt led by the Irish I mentioned last week], came in than any other group…as has been the case for the past 10 years, but guess what? More of them than have come in for 18 months and the trend us upward!

Now, same stats finished with the comment that  Indian and South African immigrants were next behind the Brits and hey, they too were incoming a close to record levels.

So yes, there a lots of Kiwis heading across the ditch. Sad but true and mostly young or blue collar.  Now think long and hard about  this.  It’s not blue collar workers that get into NZ.  Average age 37. Married. Two children. Upper quartile income from home nation. Professional or business leader. Definitely food for though…..

TOUGH TIMES IN EURO WORLD…SO WHERE IS NZ?

Euro zone challenges

It’s pretty sure that the 17 or so nations tied in some way to the Euro are going to have a fairly rough ride…so what does that mean for us?

We know that presently the migration figures are pretty much even…in and out…we know the Irish are arriving in larger numbers, that expat Kiwis want to bring money back here even if they are staying away, and that it likely won’t be long before people across Europe start deciding to take their investment money, and themselves maybe, somewhere else.

 

Here are some thoughts on the actual economic position NZ might attain, retain:

http://i.stuff.co.nz/business/market-data/5941106/European-crisis-worsens-New-Zealand-outlook

EXTENSION OF RETIREMENT AGE WILL HAVE ITS EFFECTS

Oz realty guru, John McGrath makes some predictions of the effect on real estate of delaying the retirement age, mainly the short term shortage of good sized family homes.  Baby boomers not retiring, empty-nesters not down sizing, retirees holding on to their houses for longer – this all has a flow on effect to the real estate market worldwide.

Check out his full story here:

http://www.switzerbroker.com.au/the-experts/john-mcgrath/how-delayed-retirement-affects-property/

India to overtake China?

I read a very interesting treatise last evening where the economies of China and India were compared and some predictions offered. No need to rabbit on; put simply, everything the Chinese make they export. Almost all that the Indians manufacture is consumed at home.

China and India compared

So? Well, Chine relies on other nations’ consumption and as 60% of what they make goes to USA and they’ve stopped spending, as has Europe, their economy is rushing sideways and in some sectors, backwards. Not good news for the Aussies and other selling raw materials to them. Still good for NZ though, as the huge demand for food in China has outstripped their ability to produce.

India though is different; what they make they consume internally. In fact, demand for almost everything you might imagine is such that import pressure is constant. Again, some NZ food products and byproducts.

The author of the article conjetcured that the Indian manufacturing and IT sectors could well become world dominant within three years while China would slow and stagger. NZ, he felt, and this was an Aussie writing, would do just fine. Nice.

WHAT IS HAPPENING IN REAL ESTATE IN UK AND AUSTRALIA?

Some interesting learnings from my fleeting visits to England and Australia lately; both markets are troubled, the UK flat for several years now, with flat line values in all areas except London, where, within an hour of the centre, there is still value growth and yes, the leading sales professionals are doing almost as well as they did five years ago. The market is back by half compared with those good old days.

Real Estate around the Globe

Across the ditch and things are going downhill in most markets…both numbers and prices, although good property in Sydney and Melbourne still attract strong offers. Auction clearance rates are certainly coming back and exceptional  bargains are being seen at discretionary venues as was the case here… at  prime tourist spots….Port Douglas, Cairns, Surfers etc.

What interested me most though was, through discussions with a wide variety of people in the industry and in both countries, that in the cities and especially those with traffic issues, small offices in retail streets and main thoroughfares are the current focus; four through six staff, management functions back at a base elsewhere and the rationale? People walk to most places or catch cabs….so, offices are no more than a comfortable walk away from anyone.

To give you an example, one group is targeting a further 150 ‘small format’ offices in the city but only half that number in the rest of the state where they favour larger, regional offices. Other groups support offices with effectively sole trading areas, so these are larger is size and further apart.

In London, the market is dominated by several very large and often family-owned companies with up to 100 offices, though several  with 50.

Everyone is seeking to double their property management portfolios and most focusing on internal growth with known landlords.

What was pleasing I guess, and this is the competitive streak in me, is that we are without doubt through the mill further than either country. While we all wonder what the Euro-mess is going to deliver,  we are to some degree, outside it and do have products many buyers across the world want…so just maybe we are more secure. When industry slows, nobody buys coal, gas or ores…but they still gotta eat!

All commented that NZ as an investment market cropped up from time to time in their offices…and we know  there are some cashed up Aussies poking around and if you read up on move2nz.com you will see their reports on increased enquiry from the UK.