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Bernard Hickey, Devonport May 2018 : Alistair Helm

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Bernard Hickey providing a great insight into the future of NZ economy and property market at the invitation of Alistair Helm, www.devonportproperty.nz

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Bernard Hickey, Devonport May 2018 : Alistair Helm

  1. 1. Welcome An Evening with Bernard Hickey Alistair Helm 021 610 510 Licensed Real Estate Professional www.DevonportProperty.nz
  2. 2. “A journopreneur with a passion for building a sustainable news business that helps keep New Zealand's democracy and economy healthy and vibrant”
  3. 3. Under new management Alistair Helm, Devonport, May 2018
  4. 4. Not just politically Alistair Helm, Devonport, May 2018
  5. 5. Will Kiwibuild, lower migration, 5 year bright line test, a CGT (maybe), Adrian Orr, the foreign buyers’ ban and a higher OCR end the party in Auckland real estate? Probably not.Alistair Helm, Devonport, May 2018
  6. 6. • Today’s news from Adrian Orr • The migration outlook • The interest rate outlook • The housing supply outlook • The new Government’s plans • Auckland, Kiwibuild, foreigners • Also CGT and negative gearing • The longer and bigger picture Alistair Helm, Devonport, May 2018
  7. 7. Adrian Orr’s first decision Alistair Helm, Devonport, May 2018
  8. 8. • His easiest decision in 12 years • OCR on hold ”for some time.” • Outlook is balanced • Could hike or cut. It depends. • But forecast hike delayed again • By 3 months to Sept 2019 • He’s relaxed about the Kiwi • So it fell to 69.2 USc Alistair Helm, Devonport, May 2018
  9. 9. Rates low for even longer Alistair Helm, Devonport, May 2018
  10. 10. Inflation is soooo dead Alistair Helm, Devonport, May 2018
  11. 11. Even in its 12th year of growth Alistair Helm, Devonport, May 2018
  12. 12. • So how is this possible? • Record high terms of trade • Global economy growing 3% • Firing on all six cylinders (US/EU/JP/China/AU/SEA) • EU and Japan still printing • China GDP still growing 6.5% • Lending still growing xx% Alistair Helm, Devonport, May 2018
  13. 13. Inflation is dead, dead, dead Alistair Helm, Devonport, May 2018
  14. 14. • So how is this possible? • Record high terms of trade • Global economy growing 3% • Firing on all six cylinders (US/EU/JP/China/AU/SEA) • EU and Japan still printing • China GDP still growing 6.5% • Lending still growing xx% Alistair Helm, Devonport, May 2018
  15. 15. Migration slowed wage growth Alistair Helm, Devonport, May 2018
  16. 16. So many young and cheap ones Alistair Helm, Devonport, May 2018
  17. 17. It’s not Kiwis coming home Alistair Helm, Devonport, May 2018
  18. 18. A truly massive shock Alistair Helm, Devonport, May 2018
  19. 19. Construction labour shock? Alistair Helm, Devonport, May 2018
  20. 20. • Don’t expect migration to drop • Forecasters wrong repeatedly • Asia’s growing middle classes • Food, education, travel & property • Australian relationship changing • NZers are second class citizens • NZers are working it out • The PM is an urban liberal • Still waiting on tighter migration Alistair Helm, Devonport, May 2018
  21. 21. Our crazily high currency Alistair Helm, Devonport, May 2018
  22. 22. Over-production in China, EU Alistair Helm, Devonport, May 2018
  23. 23. Will Kiwibuild swamp prices? Alistair Helm, Devonport, May 2018
  24. 24. • RMA not changing • Neither is infrastructure funding • Councils won’t borrow to build • Neither with the Labour Govt • So they’ll faff around for 10 yrs • Infrastructure bonds • Funded by value capture uplift • Congestion charging • No housing commission yet Alistair Helm, Devonport, May 2018
  25. 25. • Don’t forget the power of inertia • And of NIMBY owners and voters • Less than 15% of young renters • Vote in Auckland Council elections • Over 60% of old owners vote • Endless brownfield fights • Eg. Three Kings. Unitec. • The scale builders aren’t there yet • Or the big pre-fab factories Alistair Helm, Devonport, May 2018
  26. 26. Huge infrastructure deficits Alistair Helm, Devonport, May 2018
  27. 27. • Bright line test extends to 5 years • Negative gearing will be attacked • CGT for rentals after 2020? • Really? A small business disaster • A dirty little secret of New Zealand • Land tax beyond the family home? • Foreign buyers’ ban impact • But plenty of money slips in Alistair Helm, Devonport, May 2018
  28. 28. China’s money supply Alistair Helm, Devonport, May 2018
  29. 29. Aren’t higher rates the bursting pin? Not any more Alistair Helm, Devonport, May 2018
  30. 30. Plenty of equity. LVRs way down Alistair Helm, Devonport, May 2018
  31. 31. • The LVR restrictions worked • Plenty of headroom for rate spike • Or any slump in prices • Banks have much more capital • And they are much more liquid • Stress tests show could hand • A 40% fall in Auckland prices • Without breaking a sweat Alistair Helm, Devonport, May 2018
  32. 32. A very, very long view Alistair Helm, Devonport, May 2018
  33. 33. January 9, 2007 Alistair Helm, Devonport, May 2018
  34. 34. A world changed and accelerated and atomised Alistair Helm, Devonport, May 2018
  35. 35. Moore’s law Alistair Helm, Devonport, May 2018
  36. 36. Moore’s law turns 50 Alistair Helm, Devonport, May 2018
  37. 37. The costs keep falling Alistair Helm, Devonport, May 2018
  38. 38. • Second half of chessboard • 1971 chip Intel 4004 chip • 2015 Core i5 chip • 3,500 times faster • 90,000 X energy efficient • 60,000 times cheaper • If 71 Beetle improved as much • 300,000 mph and 2 mln mpg Alistair Helm, Devonport, May 2018
  39. 39. An amazing machine Alistair Helm, Devonport, May 2018
  40. 40. Watt’s steam engine Alistair Helm, Devonport, May 2018
  41. 41. Bigger, thinner, faster Alistair Helm, Devonport, May 2018
  42. 42. All for US$242.50 Alistair Helm, Devonport, May 2018
  43. 43. Myanmar goes mobile Alistair Helm, Devonport, May 2018
  44. 44. Not much green time Alistair Helm, Devonport, May 2018
  45. 45. Music deflation Alistair Helm, Devonport, May 2018
  46. 46. Pay TV deflation Alistair Helm, Devonport, May 2018
  47. 47. Taxi deflation Alistair Helm, Devonport, May 2018
  48. 48. Telco deflation Alistair Helm, Devonport, May 2018
  49. 49. Hotel deflation Alistair Helm, Devonport, May 2018
  50. 50. • In summary • Inflation is low. Growth is solid • Household incomes rising 5% + • An interest rate spike is unlikely • A huge supply spike is unlikely • A migration crash is unlikely • A major tax switch is unlikely • Auckland a great place to live Alistair Helm, Devonport, May 2018
  51. 51. • Thank you • Questions • Challenges Alistair Helm, Devonport, May 2018

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