# New Zealand economy



## Julia (22 February 2006)

I've noticed you are from Whangarei, Ducati.
Over the last few months I've read several comments about the NZ economy being somewhat in the doldrums.  Asked a couple of friends there (who take little interest in such stuff) but they have said there is no drop off in real estate, at least in Christchurch.

As an ex-pat Kiwi, I'd be interested to hear your comments about how things are faring in the land of the long white cloud?

Julia


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## ducati916 (22 February 2006)

*Julia* 

Actually I am from London originally, however we have been here long enough to venture a few opinions, pin your ears back!

The average Kiwi is carrying far too high a ratio of personal debt.
House prices have far outstripped wages, and rental income, and are currently seriously overvalued.

Banks have lowered the lending criteria below all rational levels, and it is now possible to apply, and receive a 100% mortgage. Their reserves for losses have been lowered based on preceeding boom in housing, this leaves them particularly vulnerable to any downturn.

The ratio of fixed interest/variable interest is too low, somewhere in the region of 0.38, this bodes serious trouble down the road.

The Government are raising interest rates to combat the asset bubble in housing, but this is having serious consequences on the exchange rate, with the Kiwi somewhere around $0.68 -$0.70 $US which has destroyed the exporters, which is virtually the only major industry this country has.

Unemployment is suddenly on the increase, except for skilled positions, of which there is a net demand, but no qualified applicants.

In short, the pain is coming.

jog on
d998


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## wayneL (22 February 2006)

ducati916 said:
			
		

> *Julia*
> 
> Actually I am from London originally, however we have been here long enough to venture a few opinions, pin your ears back!
> 
> ...





Similar story right throughout the Angloshere really. The pain will be widespread.


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## Julia (22 February 2006)

D998 - thanks, interesting.  How would you describe the "mood of the people"?
Is there much of an awareness of possibly nearing the edge of a hard landing or is it the head in the sand stuff as evinced by my friends?
How much political will is there to take any necessary hard decisions?

Wayne:  yes, you're probably right.


Julia


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## ducati916 (23 February 2006)

*Julia* 



> How would you describe the "mood of the people"?
> Is there much of an awareness of possibly nearing the edge of a hard landing or is it the head in the sand stuff as evinced by my friends?
> How much political will is there to take any necessary hard decisions?




Depends on who you mix with I guess.
The people we mix with are pretty aware that there are "potential" problems, but they tend to have low or zero debt, smaller, or non-existant mortgages, and steady employment + alternate incomes.

Current affairs programs, real estate sales television programs are all starting to echo that there are problems, so the average person should be aware.

I would say the government are aware, but it is a bit of a sticky wicket.
Monetary policies are both inflammatory & curative.
Inflammatory to the exchange rate
Curative to house prices.........eventually.

So we'll see in the fullness of time how it pans out.
jog on
d998


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## ducati916 (23 February 2006)

Just in case there are any NZ based traders/investors there is a meeting tonight in Auckland, hosted by STANZ, and the guest speaker is;



> Presentation - David Burton will be speaking on trading methods he has learned from WD Gann. David Burton is an expert in WD Gann and analysing market cycles. WD Gann is perhaps the most controversial figure in technical analysis with his methods both touted as extraordinary through to miserable and of no relevance to financial markets. It will certainly be an interesting meeting with some lively debate




I shall be there with ZipZap, from Reef.
jog on
d998


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## happytrader (24 February 2006)

Julia said:
			
		

> D998 - thanks, interesting.  How would you describe the "mood of the people"?
> Is there much of an awareness of possibly nearing the edge of a hard landing or is it the head in the sand stuff as evinced by my friends?
> How much political will is there to take any necessary hard decisions?
> 
> ...




My NZ associates are not in the least bothered by a hard landing. As long as interest rates remain in the low range, (and there will always be  real estate bargains) as well as a market to rent to, no one care. They are all covering their backsides by investing across the asset classes, by locking in interest rates and tenancy as well as loss of income and landlord insurance as well as maintaining jobs and their work skills.  Ready for any weather.

Cheers
Happytrader


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