Professional Investment Services

2012 NZ Round Up

The Money Market

This morning (9 am on 7 December 2012) the money markets were at the following levels:

Official cash rate 2.50% (unchanged)
90 day bill rate 2.65 (up from 2.63)
1 year swap rate 2.62 (up from 2.57)
3 year swap rate 2.80 (unchanged)
10 year bond rate 3.56 (up from 3.27)
Kiwi dollar 0.8314 (up from 0.8165)

2012 in Review

This year has been similar, in many ways, to 2011. One positive area was on the deposit side. More people are investing in the finance company sector, as they are operating under a much tighter regulatory regime. It is giving finance companies more funds to lend, which is good for those wanting to borrow. It also allows finance companies to extend their mortgage product range. The lending side is still a little quieter than most would like but we believe that the active Auckland property market in 2012 will encourage more investors, housing renovators and builders to re-enter the market in 2013

2013 Crystal Ball

While it is always hard to predict the future, having interests in the finance sector allows us to spot certain trends. Things seem to be continuing in pretty much the same way as they did in 2012.

A low interest environment will continue throughout 2013 which is not only apparent in the mortgage market, but also evident in the corporate and Government sectors with bond investors accepting lower yields.

Unemployment will either remain at current levels or possibly get a little worse and until we start to see some real growth occurring things will remain this way.

Our dollar should remain at the current levels for some time which will continue to make it difficult for kiwi exporters.

Expect further Government cost cutting and a reduction in state employee numbers as a part of this current fiscal policy. Next year will be the only year the Government can do this, as in the following year there will be an election and we know Politicians don’t like sacking people in an election year.

Real Estate Issues

The Auckland City Council is looking at putting a blanket heritage order on all houses built before 1940. This has serious implications as it will deprive home owners the right to do as the wish with their own properties.

It will most likely affect values (just look at values around Cornwall park relevant to other areas of similar quality). Many of the houses built during this period have seen better days and owners have deferred maintenance programs, some are in need modernising and some are just not suited for the 21st century and introducing heritage controls will, in my opinion, turn these into eyesores.

NZ is still a Good Place to be Born

Top of the list in a recent survey by the Economist magazine on the best countries in which to be born was Switzerland, followed by Australia and then a number of Scandinavian countries. The good news was that New Zealand ranked eighth out of the eighty in the survey. Nigerian ranked the lowest. New Zealand did well, considering countries such as the UK ranked number twenty-seven, France at twenty-six and Germany at sixteenth. Even the USA was at number fifteen. Indicators used were things such as levels of crime, trust in public institutions, family health, life expectancies etc.