The NZ Property Market Podcast
Brought to you by cotality, formerly CoreLogic. Each week co-hosts Nick Goodall and Kelvin Davidson will bring you all the latest news, stats and insight to keep you up to date with everything to do with the NZ residential property market. Including sales volumes, house price indices, buyer activity, interest rates, loan-to-value ratio restrictions and all of the macro economic factors that influence our largest asset class. Contact us on twitter @NickGoodall_CL or @KDavidson_CL
The NZ Property Market Podcast
Pain increasing, first home buyers remaining, rents increasing
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Firstly, our apologies for the late upload of this week's episode, we had some technical difficulties with the file. But, onto the episode...
This week, Nick and Kelvin kick-off the pod with a look at CoreLogic's latest Pain & Gain report, including a bit of detail that is often missed in the usual media coverage.
Switching gears, we’ll discuss the latest Buyer Classification trends and the shifting dynamics between stronger and weaker buyer groups. Get ready to unravel the implications of these changes using the Reserve Bank's June new lending origination data. Plus, discover how a shift towards longer loan terms might offer a much-needed security blanket for borrowers.
We'll also shed light on the rising rental prices, driven by net migration and decreasing vacancy rates. And as a cherry on top, we'll wrap up with a closer look at the Reserve Bank's projections for the official cash rate (OCR). We’ll ponder the possible delay in the first OCR cut and the risks of non-tradable inflation.
Sign up for news and insights or contact on LinkedIn, Twitter @NickGoodall_CL or @KDavidson_CL and email nick.goodall@cotality.co.nz or kelvin.davidson@cotality.co.nz
Kia ora and welcome to the New Zealand Property Market podcast brought to you by Core Logic, produced by Agence TV, on the 14th of August 2023. I'm here to research and a good ol', and I'm joined by Chief Cornwallis, kelvin Davidson. Kelvin, how are you, mate? How's your weekend?
Speaker 2:Yeah, pretty good, pretty good. Not much to report on the with an our own household, I guess, but my brother and sister-in-law had a new baby over in Australia. So that was sort of the highlight really. And you know a lot of FaceTime and the kids were pretty excited, wanting to see photos, wanting to go visit straight away, and I was like, hang on, just call your jets, but we can't go just yet. So now it's pretty exciting, that's their third little girl. So yeah, we have to go visit at some stage. It's a bit weird, being sort of you know them in Australia and us here, so it makes it a bit harder. But yeah, pretty exciting. You remember some of those cool little things about babies. But also taking a step back and like you know what glad it's not me, because pretty happy with that too and just that bit older now. So yeah, that's about the one Like how about you?
Speaker 1:Yeah, all good mate. Yeah, plenty of sport to watch, of course. And went to the last Wellington game here on Friday afternoon, which was a good one, spain obviously beating the Netherlands in that game. So we got a bit of extra football, with extra time being played on that one. And then we had the cool fireworks display here in Wellington as well, which is great, and we had a pretty sweet view from the office here and everyone brings their families in, so that was a fun night. And then, yeah, the World Cup again on Saturday night with the Australian team going to that dramatic pill they shoot out was pretty incredible as well. So amazingly intense game and probably went the way that most people want, I think, in terms of a host nation staying in it and reaching a semi-finals for the first time. So that was pretty epic.
Speaker 1:And then, from a rugby perspective and our household, we have the good old household derby in the NPC, where my team, the Northland Tudifar, plays my wife's team, the Southland Stags. So we had that yesterday afternoon, but happily, you know, the tension seems to be less these days. I remember there were times in the past where Northland lost. I wouldn't talk to my wife for a good, good afternoon, and maybe this one also was good that it finished in a 15-year-old stalemate. Despite having 10 minutes of golden point extra time, still got no winner. So a bit of an anti-climatic damn squib at the end of it as well, but probably best for household tensions.
Speaker 1:And now we're just trying to bring the kids in to pick a team or not, and they seem to pick the blue team because our color's better, so I'll take that as a victory anyway, mate, and we just have all four of us ganging up on Corina. But yeah, otherwise, mate, it's just good progress in the house renovations as well. Painting should start this week, so that definitely feels like a pretty big milestone. So, yeah, it's all will go really Last one.
Speaker 2:Yeah, I can't really hit that thing with my wife because she's from Southland too. I'm from Canterbury, we're going to have a Canterbury, southland thing, but she's actually probably spent more of her life in Canterbury. So you know there's actually she probably supports Canterbury, if she's supported anybody. So yeah, not quite the same dynamic, but interesting to hear 15-0,. Yeah, the old school slugfest in the rain, I believe, was it. So, yeah, good times.
Speaker 1:Pretty much. I did try and claim that we scored two tries. They scored none, so surely we went on my count back.
Speaker 1:but she was having none of the time in the territory or something Should be the count back. But yeah, good, friendly in-house banter, but we better move on, mate, and get into it. It seems like we've got quite a bit to cover off this week, so let's start off. I know we talked about it last week, but we did have the Payne Gain report that we put out for Q2 sales, or resales, of course, that were sold in that quarter, that we previously had a sale price for. We did touch on it last week. But is there anything in particular you wanted to cover off in either the detailery, the coverage or the conversations you had following that release, mate?
Speaker 2:Yeah, not a huge amount. I guess just some of the caveats that sometimes don't necessarily come out in the press coverage. This kind of analysis looking at gains and losses the media really loves it because they can highlight the biggest profit makers and the biggest loss makers. It gets people drawn in. But below that there's some softer things and some things that I guess toned down those headlines and a whole period is definitely part of it. Pretty much Within these numbers it's pretty clear that if you've held for 10, 15, 20 years, of course you're going to make a resale profit. That's just almost inevitable. The losses and we have seen an increase in proportion of properties being resold for a loss or a selling price lower than what they paid but pretty much all of those had a short-haul period of 2 years and what's happened in the past 2 years?
Speaker 2:Well, the market's gone down 13, 15%, so of course the likelihood of you making a loss is greater. So probably that whole period distinction didn't quite come out, which I always try and reiterate. And also, people look at the size of resale profits median $290,000 we had in Q2, and say, well, gee, that's come down, but it's still massive, isn't it? That's great for anybody reselling. I always try and point out that for an owner occupy yes, you might have made on paper $290,000, but everything else has gone up as well and generally you're going to have to just recycle all of that back into the next purchase. So it's not necessarily you might look on paper like a big profit and it's all good. It's not a cash one for all of such, it's probably recycled into the next purchase. Different for an investor of course they could potentially sell it and realise their cash.
Speaker 2:But yeah, there's a few caveats that I think. Just maybe some firms don't necessarily come through. I suppose, just in terms of those loss-making resales could be financial strain. We can never be sure. I suspect some of those sales will have been people intended to hold for longer, but our interest rates hit 7%. They've repriced and hit some financial strain. But you would think there's some of that. But also it can happen for less headline-grabbing reasons. Maybe people move to Australia or got divorced or whatever, which obviously isn't great either. But it might not necessarily be the impact of interest rates.
Speaker 2:So again, I suppose, just putting some of those sort of softer lenses on, I guess and yeah, just then thinking ahead there could well be more pain as well. This indicated lags to some degree because it really reflects again old period, reflects when you bought versus when you sold. And even if house prices now do flatten off and maybe start to increase a bit, anybody selling in the next six or nine months who bought at the peak will still be looking at a market that's lower than where it was. So then there's probably still a probability of making a loss. So yeah, we could still see a bit more pain coming through. Even if the market does flatten off and even start to recover a little bit, we might still see a percentage of sales being made at a loss. So yeah, a few caveats in there. It's definitely weakening in terms of that resale performance, but it's not weak perhaps because old period matters. So yeah, that's my overall tax.
Speaker 1:Yeah, that's good and I think you know, break the question as to you know why do we produce the report in the first place, and I think it is a good proxy measure for the market. But we know again, as you say, definitely lags the actual market, and the fact that we're likely to see pain probably increase for a few more quarters at least, while we think the market is probably essentially bottomed out already, probably shows that quite clearly. So I suppose then, the reason you know we do look at this is it does show you some quite interesting insights in terms of comparisons to previous downturns. We can look at how much that negative effect is there. We can look differences between properties, different locations, different buyer or owner types as well, and I think that's where we try to tease out that detail, to understand what's going on some of those markets and especially how it compares to historic performance and definitely well worth you know what's going over and to get some of that detail and find out what's relevant for you. So do go look at the full report.
Speaker 1:My advice is always, you know, don't just read the headlines, don't just read the coverage. We've got the full article and which is a summary of the report itself plus the report, and then you can easily download and go and look at that detail for yourself to, you know, interpret it for what's relevant for you as well. So definitely worthwhile taking that time, rather than just sticking to a headline which can either focus on the negatives and talk about how much pain is there, or can absolutely just say well, there's a lot of people making a $290,000 profit out there, so there's no pain in the market. You know, there's no drama in the market. So, yeah, again, it's always about that perspective and what the watch page that goes to the source itself and not always rely on someone else covering the report for their, their, their, their angle to really understand what's going on there. So I think it's a good call out.
Speaker 2:Yeah, I mean that's in the end. Most people still sell for a profit, at least now. Keeping in mind owner occupies is not really a profit. It has to be recycled. But now we're still. 93% of resales in the second quarter were were made at a price above what they're originally paid.
Speaker 2:So so it's still, you know it's still a high percentage. It was 99% if you go back to the peak of the market. So it has come down. But yeah, again, just reflects all period. If you've held eight, 10 years, yes, you're still going to be ahead. So, yeah, vital piece of it for me to keep in mind, Great great.
Speaker 1:Well good, and we updated our bifurcation data at the end of last week as well for July. Pretty much more of the same trends continuing. We don't always put a full release out on its own with us. I'm sure this will feature in the upcoming chart pack which I know is being published this week as well, where we usually have a bit of a bifurcation focus and the release as well as looking at what's happening with sales volumes. That can be quite a good one to include in that release. Is there anything you want to talk about preempting that chart pack coming up this week or on the bifurcation data itself? Kelvin.
Speaker 2:It's like same same again really. We're still seeing relative strength, first home buyers in terms of market share and cash multiple property owners are still kind of hanging there as well. Cash investors on the flip side, those movers relocating on occupiers and mortgage multiple property owners are stored by quieter, by their own standards. So, yeah, there's those sort of stronger groups, relatively stronger groups, and then relatively weaker groups, which has kind of been the case for a little while now. I suppose, in terms of where we go next.
Speaker 2:I've still got my eye on those those relatively weaker groups because they've been stronger in the past, and in particular the mortgage multiple property owners. We know there's some stuff coming up potentially that might sort of change things around a little bit for them. We've talked about a lot of things. We labored the point last week or the week before, so lots of factors for investors to look at. But so that is a that is a group, I suppose is those weaker groups that I'm sort of keeping an eye on, because they could be the ones that start to pick up. You know, you get a few more listings, movers start to relocate a bit more investors. Perhaps they see interest in accountability come back. That might sort of switch things around for some of them. So, yeah, it was. It was more of the same for now, but yeah, there's some interesting times coming up for some of those groups that are weaker. So yeah, look out for them in the chat.
Speaker 1:Yeah, I like that and again, I suppose we always focused on inflection points, right changes and trends. And if we did see a lift to any of those groups that have been otherwise quite weak or which which then on flip side, might see first hand bias facing more competition and by less share of properties, that might be a sign that there is some strength in the market to come. And likewise, we do sort of overlay this with listings data and I know that we've seen in Australia there's been a lift and investors list in their property which they're talking about could be a sign that they are struggling to keep up with mortgage payments as well and the high cost of owning property If you do have a lot of debt on that property as well. So I think, yeah, there's there's sort of good things to watch with this one and again we can look at that by a property type and region and value and all that stuff as well, and on the flip side, overlay that with listings to see where there might be some potential pain in the market, where we might see some continued weakness in some parts as opposed to you know what we think would essentially reach the bottom and maybe some growth comes and we might see some continued weakness if there are people you know, a lift and supply which might lead to more weakness and prices to, so it's a really good lens to put on that line. I like it.
Speaker 1:From a lending perspective, kelvin, I know we've got June new lending origination data from the Reserve Bank. This is where we sort of be focusing on more recent data, said will newly recently provided from the Reserve Bank more insight into what terms people are choosing. I've certainly seen that switch to some of the longer terms come through, haven't we? I know one year itself still remains probably the most popular overall. The huge proportion of those going to that has reduced and I wonder if it was a bit of a vote for certainty. People trying to say, man, I know in straights I'm lucky to go much higher, they could even drop in the future, but it's just nice to know how much you pay when you mortgage. And then they have that over a long period of time which then you can adjust your discretionary spending habits outside of that as well as, potentially, that that focus on the lower actual rate now as well, which can be so pushed towards those longer terms. So that's, that's the insight from that. Was there anything else you picked up looking at that Reserve Bank data?
Speaker 2:Yeah, I suppose just put some, put some numbers on it. You still see most people fix it in June. Of that, of those new loans that were being written, still 80% are fixing, about 20% floating. So most people are still fixing but there's been a shift within that fixed proportion towards, let's say, those longer term. So if you look back in March, 60% of new loans were written for up to two years on a fixed basis and only 5% for three years. Now come forward, three months were into June. 45% are fixing for up to two years, so that went from 60% of loans to 45%.
Speaker 2:The share fixing for three years went from 5% to let's call it 15%. So a reduction in the proportion of people fixing for one to two years and an increase in the proportion fixing longer than that. So yeah, like you say, there's probably a certainty element, and here me people are. Now I've seen interest rates rise so much. I just want to fix it somewhere and get some certainty here. And the three, the three year rates are cheaper. We've seen that inverted curve where those three, four, five year fixed rates are now lower than the one and two year rates, which is which is pretty rare and it's quite start when you see it on a chart. So so yeah, there's probably an element of how I can get a bit more certainty and I can do it relatively cheaply compared to those one year rates. So so people are pushing out those terms and going sort of a three year fix. Now the caveat as well, you know, is there a risk you overpay in three years time If more than two rates have fallen pretty sharply in the meantime. But I guess you know if things are challenging right now in terms of finances and just take the cheapest rate, save me money now. I worry about the future, which is uncertain. I worry about it down the track. So so, yeah, an element of that.
Speaker 2:But it's interesting to just to see. I guess you know economists are always looking to see the theory playing out in reality and it's interesting just to see the way that people do react If, if mortgage rates are cheaper in three year term. Well, you know, it looks like people shift for the three year term. So I'm the interesting to see that player and you have to keep an eye on it.
Speaker 2:But I suspect also, like we pointed out before, these loans relate to all these figures, relate to new loans. It's not necessarily relating to all that repricing on existing loans. So this is a small segment of the overall market, I guess. But I suspect that anybody doing new loan right now you know the incentives for them are probably pretty similar to the incentives for somebody repricing existing loan. So I suspect you'd probably see something similar that those people rolling off Older, older rates onto the new rates they could well be fixing for three years to so see. It'll be interesting to see what's going on, you know, within the banks and whether they could tell us about some of those things. But yeah, certainly for now there is that bit of a shift towards longer terms.
Speaker 1:Yeah, and maybe I should play that price hunting. It really is just get the rate that's going to keep my payments as low as possible, considering I'm already dealing with a pretty significant jump, no doubt, from my old rate to the new rate and just pick the lowest and say figure out what the house out late. So there's probably something in that one as well. All good, mate. And the other key release last week was around rental price data from Stats New Zealand. I saw rents were rising and even accelerating actually, which pretty much is exactly as you foretold. So, yeah, what's happening with that data, mate?
Speaker 2:Yeah, well, I mean I won't sort of claim any sort of great insight around that. I mean you know it always looked like there was a fair chance that rental growth could accelerate. You just look at net migration. We've obviously had a bit growth in population. Probably you would think that your average new migrant to the country will probably go renting at least for a start, figure out their job situation.
Speaker 2:You know what part of the country they like, maybe they've got family linkages, all these things. So I suspect there was always a fair chance that people would start off renting and that would put pressure on rental start. We were thinking last week about how the vacancy rates also come down. There's not many rental listings out there, so demand's gone up, supply's still pretty tight. What would you expect to see?
Speaker 2:Well, rents kind of going up, and yeah, we've been talking about it. I mean there have been others too. But yeah, in the latest figures, statute New Zealand last week reported 4.1% growth in rents in the year to July. Now it's not off the charts. There was a period after COVID where it was running more at 6% or 7%, so you know, still lower than that, but it has picked up. There was a slowdown after that post-COVID peak and then accelerated. Then it slowed but it looks like now we're emerging into a faster period of growth and, like I say, consistent with that vacancy rate coming down, high demand, tight supply and also incomes are going up. That's something which Reserve Bank highlighted in a paper last week.
Speaker 2:A big sort of academic exercise into what drives rents in New Zealand Across that wider group of government agencies that are investigating housing markets, treasury and HUD. I believe that's the three the Housing and Urban Development.
Speaker 1:Group, I think it's called, which is, yeah, housing and Urban Development, treasury and Reserve Bank. So yeah, just a good, decent, smart group, obviously. But you run us through the insight that they pushed out.
Speaker 2:Yeah. So they pretty much said there's a bunch of things in there and they're not saying that other things don't matter. But pretty much what they highlighted in their release was the two things that matter most for rents incomes and the supply and demand picture. So there are other things in there. They said that mortgage rates matter to some extent and to the extent that landlords cost go up a little bit, they might try and pass that on. There has been some kind of influence there. But pretty much their research said it's all about the tenants' incomes and about the general supply and demand picture If you don't even know, if rental properties low and behold, rents go up.
Speaker 2:And if tenants are earning more, rents tend to go up. So those are the two things they said that really matter and I think, like I just talked about, we're seeing that come through in actual rents now. We've had wage growth, we've had a tightening rental market and we're seeing rents go up.
Speaker 1:So it all kind of fits.
Speaker 2:I think and from here on it probably suggests more of the same We'll talk about migration soon. But it might be slowing a little bit, but it's still quite high. Their labor market's still quite tight. So, yes, wage growth itself might be slowing a bit, but it's still going to stay positive. So yeah, I think there is a case for things that rents do continue to rise at a relatively strong rate. You know, it might bring some landlords back in. Good for them, I guess, but obviously not so good for tenants. It's the old two sides of the housing market thing.
Speaker 2:So just that first sign that's coming through and I think that those drivers are there for further growth as well.
Speaker 1:Yeah. I mean you should be happy here, mate. Like you know, it's like economics 101 playing out perfectly in the rental market. Yes, you know, maybe you can't claim all the credit or whatever, but you were just going along the theory. That makes sense that, yep, supply, demand and income are the key ones there. So you know, it must be a little bit reassuring to see that economics actually plays out as you expect in theory and reality once you get to the market. So claim it for sure.
Speaker 2:Yeah, you know it doesn't work all the time, you know economists have been wrong before. But yeah, it is sometimes good to see that theory playing out in reality, that's for sure. And I think also we've talked about it a bit of fear, but through the years, about how our research has said that it's the long run trend for rental growth is more about kind of what tenants can afford than what landlords' costs are. It's more about that tenant side and ability to pay rather than what it might cost to operate the property. And I think that's just backed up by this Reserve Bank or the housing working groups research as well. So, yeah, yeah it's good to see the theory playing out, but not so good if you're a tenant, I guess. No, of course, of course.
Speaker 1:And I just think that the housing market itself, you know, in terms of values of houses, prices being paid, I think that's where it doesn't quite follow typical economic theory and that's where I think it's because consumer behavior is so much harder to predict and also it's also tied to so much around how much you can borrow as well, which keeps it really interesting. And I suppose that's where the analyst and me comes in to get into a bit more of the detail about what does sort of make that market tick over. But the rental market certainly looks like it follows along a much tighter theory than what the housing market itself does. But anyway, mate, let's take a look ahead at what's coming up this week. It's of course going to be a big week, you know. We haven't even had a surprise. We've got this far. Do we mention it before, maybe not? We've got the monetary policy statements coming out from the Reserve Bank on Wednesday afternoon to a clock. But of course the good thing this time around is that it is the one that comes with all the updated forecasts. So it's going to be all about those forecasts, as in when.
Speaker 1:I'm expecting a change to the OCR. In fact it's hardly even being discussed anywhere within commentary or the market at all, but the OCR track will be of real interest. Will there be another Lyft forecasted? You know, like some of the other bank economists are talking about later in this year, that we see a Lyft in the OCR, while others are talking about there's more likelihood that we're going to need to see cuts to the OCR some stage next year.
Speaker 1:So to what degree did the official forecast and Reserve Bank relate to that? We'll show one of those two things or neither of those two things happening maybe, as well as, of course, the key forecasts that they expect to happen around inflation, our economy and GDP, employment market and, of course for us, what happens with house prices as well. So your sort of preview of what to expect this week. I think you know from our conversations previously we're expecting maybe another relative non-event, but anything you wanted to sort of talk about, what you'll be looking for, which way they might swing on the OCR forecast or anything you want to talk about now.
Speaker 2:Yeah, so I took to a clock. Wednesday is the latest decision that they say a big set of forecast, updated numbers and where they think things will go, the actual decision. I mean, yes, it's pretty much nailed on that they won't do anything, They'll keep the OCR at five and a half. Yeah, I don't know those big picture forecasts. I just don't think much has changed since last time. I could just imagine them keeping them pretty much the same. You know, forecasting like the sort of flat-ish economy, maybe a sort of mild dip into recession, the labor market sort of slowly easing back, but more about a rising labor force rather than sort of job losses. Can imagine them keeping that view that the house prices are, yes, at a trough but also the recovery won't be that fast either. I can imagine all those things kind of broadly staying the same, inflation not falling back quickly but slowly trending down, you know, maybe reaching target second half next year. So yeah, I sort of I mean not events probably a good way, but I think it's still very important about the actual decision itself. It might sort of come and go pretty quickly. Thank you, Watching the language, what they might say or not say, is pretty usual if there is air bank?
Speaker 2:I hope so, I guess. Yeah, in terms of the official cash rate, yeah, there's. I suppose there is a chance and if some of the bank economists are right, there's a chance that the Reserve Bank might actually push up that OCR projection. I gotta say I'd be surprised about that. They might do, but I think they'll probably keep it where they had it last time.
Speaker 2:The thing I suppose I'd probably look out for is could they push back the timing of the first OCR cut? Maybe, you know, and if they do that it could be interpreted as a sign that we're just still a little bit iffy about inflation here. We'll kind of send a pretty strong signal that we're not done yet and we, or at least our concerns, haven't faded yet, and so we'll push back the timing of that first OCR cut. You know, some people might interpret that as an increased risk, but actually at some point we might get another increase. So that would probably be the thing for me. I'd be watching. I've got the first cut at the moment penciled in for, I think, sort of Q3 next year. So you know, maybe if they pushed that first cut back to Q4 next year, something like that, that might be worth paying attention to, and it could be interpreted as a sign that you know, they've still got some concerns maybe that non-tradable inflation or domestic inflation is still a mystery for them.
Speaker 2:So I don't expect too much. I don't think, you know, we necessarily see much change in sort of financial markets or mortgage rates themselves. You know, I think this will sort of come and go, but there is an interest on, yeah, just exactly what they project around that OCR.
Speaker 2:Could, they actually increase it a bit, or could they push back the timing of the first cut? Both of those things might amount to the same thing, which is just a bit more concerned that it might not have ultimately peed. So so, yeah, there's still some risks, if anything. If you want to look at in terms of risk, I think we're still sort of looking at that scenario where maybe the risks to the OCR are a little bit more to the upside. But yeah, for me I just don't see enough has changed since last time for them to really really push through any major forecast changes really. But I don't know, it can be wrong. We'll see you here at the concert.
Speaker 1:I like that and I think the good thing is that all their forecasts make it really easy to interpret because they have their old forecast line right next to the new one, so you can see how it changes. As you say, you know, you can read into some of the tone of their language as well, which is really good. So there's certainly a trick to a quick interpretation of this, which we generally try and do as well, to try and put out our own note afterwards, and we'll preempt a lot of that. But I do think that there's some good little tips there as to what to look out for. And I think you're right in terms of what's changed, and that has to be the starting point, right. What's changed in the six weeks since they last released a statement which didn't have the forecast, but at least we can look at the terminology and wording then. And the answer is not much. And the six weeks before that, of course, three months ago, you know what's changed since the last time they put up this full range of forecasts and you know, maybe this is over simplifying things, but it found out all the data releases and they talked about things being data dependent there were always. There's always sort of a it was all good, yeah, but it was yeah. But this came out and it was okay, yeah, but what about this? And so there was always sort of a caveat to all those releases coming out, and to me that's the perfect situation for them to continue on what has been their strongest, you know viewpoint was we're now in a wait and see period and to me there's been nothing changed in the last six weeks or 12 weeks that says they need to change that approach and we need to wait and see what happens with.
Speaker 1:You know the data that we get around, how the economy and inflation and all these things are performing, because with everything, it was always inflation came down a bit further than we expected, but domestic inflation and non-tradable was a little bit higher than we expected. So it's a yeah, it was good, but there's still something else to be worried about. So we'll wait and see on that one. You know employment data. So a little bit of a tick up in unemployment, yeah, but it was also because we had more people coming into the labor market, so it hasn't loosened as much as we thought. So everything had that kind of a little pretty good. But there was something else to still remain cautious of, and to me what does that say? Let's wait and see until we've got more clarity, more data, more information before we make any key decisions up down sideways forecast one way or the other.
Speaker 1:So I just that's kind of where I'm landing with this, and maybe that flows through to the commentary as well. So, yeah, really interesting one. Despite it maybe being in an event. An event is still interesting because it might provide some certainty at a time where, you know, we were still sort of hanging by the, the every word of the reserve bank, because it is so impactful in terms of their read on inflation, how that flows through to expectations on OCR, then that flows through to mortgage rates and then you know away we go. So you're always intriguing and I like your your couple of things to look out for there as well. All right, mate, we'll move us forward. There's a few more releases coming this week. Do you want to run through the other key ones you're watching for the rest of this week?
Speaker 2:Yeah, that one is. There's our own chart which we have talked about briefly already. So so that'll that'll come out and cover off like this occasion and some some sales volumes in there as well. No doubt the Renistral Institute have, we thought, possibly a chance. They've published this morning. They haven't, so that looks like it will be tomorrow isn't Tuesday, depending on when you listen. So looking out there for sales volumes again, has that picked up via state agents? And then also what their index has done. So you keep an eye on just a little bit of volatility below the surface there. But I'm interesting to see if their index has risen again after last month's rise.
Speaker 2:Net migration we've got that coming out for June. That's probably going to be out right now actually. So expecting net migration to maybe slow that recent or to show in that recent slowing trend a bit more. Now it's still very high but it is showing signs of just just tailing off a little bit as departures pick up and also as those new arrivals slow down a little bit. So you know, maybe just signs of that, that turning point for net migration and then continue to slow down. But it's still very high.
Speaker 2:So still boosting property demand, still bursting population. You know we've talked about the rent one backs there. So yeah, I'm just interested to see what that's told us when we get off the call. And yeah, then the Reserve Bank of New Zealand DTI figures, or debt to income ratio lending for April to June link for me this is probably the key one for the week. I'm really, really invested in these numbers at the moment is think debt to income ratio is this consultation around possible caps on DTIs next year is probably still not getting the coverage it needs. I mean, it might not happen, of course, but be honest to see this is a pretty big landscape shift if it isn't reduced really does change the game for some borrowers.
Speaker 2:So, yeah, these, these latest numbers coming out Wednesday, on Tuesday, and this will be for April through to June. Now we have seen the share of lending going out at a high DTI already come down. So I have mortgage rates are a natural restraint here. You know if mortgage rates go up you simply can't get that much debt from from a given income, so the loans you can get will be smaller. So those loans in relation to your income have come down simply as mortgage rates have gone up. So we have already seen it come under some kind of control. So so I'd expect to see more of the same in the April to June or Q2 numbers, that the high DTI lending will stay pretty quiet.
Speaker 2:But, yes, still still a fascinating data set. Because of that, that consultation that's going on, you know we could be surprised anytime by a reserve bank email saying well, here's what the limit will be new builds, exemptions for those. Is there a speed limit system? We still don't know. You know this whole thing's been talked about. We don't know if they'll see the DTI seven or eight or a thousand or two. We just we just don't know. We've got some insights but yeah, we can be surprised by that anytime.
Speaker 2:So really, really, the data itself might be a little bit dull, but certainly a pretty important set nonetheless, because of that consultation. And yeah, just to reiterate the different, when they do introduce DTIs, I see that's not really about the cycle, because that that lending has already come under control. It's more about that time at some point in the future when interest rates do fall and people start to have a bit more capacity to borrow again. Reserve bank will kind of be ahead of it and DTIs will be there. So the price has been more linked to income rather than so other criteria kind of restrains long run house price growth and also reins in how many properties somebody can own at any point in time, because now it's about your income. You can't keep buying until your income's grown. So, yeah, it's about that next cycle, but still still interesting thing is coming out.
Speaker 1:So, yeah, pretty invested in those numbers, yeah yeah, they'll be interesting and certainly look like a busy week ahead. I'll be recording the monthly video. I'm going to wait until after the reserve bank much policy statement comes out so we can ensure that we include some of the insights and my claim from that. So that will be out later in the week as well. But otherwise, better travel on for me this week. So, yeah, be good to be up there talking to a few more people as well and we'll see if there's any nice little tidbits that I get from being out there amongst the people in the regions to so particularly down in Queenstown on Thursday and then the Hawkes Bay for Friday and Saturday to so Friday. Listeners out there in those regions hope to see you on my travels and certainly keen to hear what's going on in your local areas. So always get some decent insight from that Cool anything else on your mind?
Speaker 2:No, it just occurred to me the last week you were recording from Hamilton Island, so yeah, how time has flown.
Speaker 1:I think it was a bit of a come back down to earth. I'll tell you that, much like it wasn't as hot I probably expected it to be, and I think they up there recognize that it probably wasn't the best week of weather, but we still had some most days. After the rain cleared in the morning and it was much warmer than it was, and they came back to Wellington, it was about Wednesday night and it was in the low degrees and then it rained all the next day and I was like, okay, this is certainly a shuttering back down to earth, but you're certainly not complaining. The fact that I got to go in the first place is certainly great and hopefully all my colleagues are probably just talking about the podcast over there as well. Got us a few new listeners. So, yeah, if you are, if you are here as a new listener and we caught up last week a special shout out for those listeners too. So I'm always good to extend the group of people and we're not going to get a few guests signed over the next few months as well? Which will? Which will come around, so someone from those loan market groups or an NZFST advisor. I'm looking forward to having some yards and going to hearing about what's happening in the front line around different parts of the country from those broker perspective.
Speaker 1:But yeah, that's all good but we better close out for the day. But thanks, as usual, for your thoughts and insights and covering all the detail of so many different releases, and especially when we get to get into those nitty gritty economic ones. I appreciate that. Thanks again for listening. Please do make sure you actually subscribe to the show and hit that follow button so you get the new show every week into your podcast player. And do feel free to get in touch too for a few weeks, since we've heard many of those on the front line. So please do let us know what's going on in your world and we'll cover that off in our following podcast. This is Nick. Thanks again. My name is Nick, I'm Kelvin, I'm a listener and I'm a listener and I'm a property market podcast until we're back.
