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Aussies and NZers: Four seasons in one protest


karaddin

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1 hour ago, Jeor said:

RBA hikes interest rates by 0.25% (defying expectations that it would be either a 0.15% or 0.4% hike to fit in with the traditional 0.25% incremental strategy given the previous rate was 0.10%).

This is the beginning of a fairly relentless hiking cycle that won't stop until at least 2% but potentially go much further. I think the fixed rate mortgages will hold off some of the effects so it will be hard for the RBA to judge down the track whether things are going to plan or not.

I think this has potentially torpedoed the Morrison government's chances at the election - it undermines their claim to better economic management, although some might make the nuanced claim that 0.1% rates were obviously an emergency situation and that rates are being hiked shows the economy is in generally good shape.

RBA have heavily signaled that there is more to come sooner rather than later. If each month comes with a 25 point raise for the rest of the year, we'll hit 2%.

I just find it dumb though that governments have turned rates into a political issue. "Rates will be lower under us cus we're so good wif da economee" is so fucking stupid. As much as I hope the LNP loses in 3 weeks, this rate rise realistically shouldn't have an impact on the election even though it will.

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While I wholeheartedly agree that it shouldn't be an issue in that way, on this one I'm not going to have much sympathy for the coalition. They're the ones that made it a political issue by claiming they could control it. Live by the sword, die by the interest rate hike etc.

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Yes, definitely a moment of political schadenfreude, though inflation targeting is clearly the realm of the central bank, which as I mentioned months ago has been asleep at the wheel.

And even from that point of view, you could argue that the Reserve has performed better than its peers, many of which are seeing even higher rates of inflation despite being oil exporters (e.g. Canada).

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As for the political impact, I don't get the impression that older voters will care as much about interest rate rises - most of them will have fairly low mortgage balances (if any) and they'll probably only care about the possibility of the stock market tanking their super balances.

What will be interesting is how this affects younger voters. I was fortunate to get into the housing market in the last downturn (I bought my apartment in 2009 after the GFC) and that got me on the ladder. I suspect for young people wanting more affordability and who don't yet own property, they would quite like the idea of the housing market being spooked by rate rises and causing a property crash. On the other hand, for a young person who has just bought at the top of the market and has a large balance owing, rate rises are going to be an absolute killer.

I also wonder whether many small businesses will find things tough with inflation and higher rates. If they can't pass on prices without destroying their own demand, and if they've taken on business loans, they might be in trouble here.

One thing's for sure, the easy money times are definitely coming to an end...

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I have a friend and a son, both of whom I lent a bit of money to for buying new builds in Auckland. They pretty much did buy at the peak of the market and prices are softening for the first time in a very long time. Fortunately for my friend this is almost certainly going to be their forever house, so riding out a period of negative house price growth won't be too much of a problem. For my son, this is his first house and highly unlikely to be the last. It may be a little while before they can move up in the market.

It will be interesting to see the effect of the drop in prices coming at the same time as a lot of building material is hard to come by and higher in price. We still have a housing shortage, but the combination of building material inflation and declining house prices might put a dampener on new housing.

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15 hours ago, The Anti-Targ said:

We still have a housing shortage, but the combination of building material inflation and declining house prices might put a dampener on new housing.

Yes, this is the real kicker - we already have supply shortages in Sydney, a fall in housing prices and inflation in building materials is really not going to help the supply problem. With these kind of structural issues the downturn probably won't last too long.

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The other thing I meant to say is that my son's house was meant to be finished and ready to occupy in November. But because some materials have become straight up unavailable and the builders forced to source "equivalent or better" to replace the materials the move in date has been pushed out to at least March 2023.

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Article in the news yesterday noting that a 1kg block of Woolworths tasty cheese in Aus goes for about $8.50-$9, while in NZ the same branded block of tasty cheese is $18.50.

Some pathetic excuse that NZ people have to pay international market rates for dairy. Kind of weird that a block of cheese almost everywhere in the world is cheaper than here, so how does that international market prices thing work then?

For certain, the Aussie version could be imported to NZ and sold for $12/kg. Of course why would Woolworths import Aussie cheese to sell cheaply when it can price gouge by keeping Aussie cheese out? There are no impediments whatsoever to importing dairy products from Australia, and since Woolworths Aus owns one of the only 2 supermarket companies in NZ they are making the decision not to import their own Aus branded cheese to sell in their own NZ branded supermarkets.

I ain't loyal to NZ products when I am being price gouged by almost 100% compared to potential competing imported brands.

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Why would you need to import the Aussie cheese, Mainland is a NZ cheese and its also only $9.50 for a 400g block at Woolworths. Or are you talking larger blocks than 400g? Definitely seems like NZ is getting screwed over there.

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1Kg blocks of Woolworths brand (i.e. "budget") cheese was the comparison. You'd think we don't need to import dairy since we produce 1900% more than the domestic demand. But when business is motivated by profit rather than a desire to provide people with affordable and nutritious food, and business has an effective monopoly in an insignificant market then it is motivated to charge as much as it can for the inconvenience of supplying that small annoying market and the only check on that unbridled pursuit of profit is competition. So the answer there to import budget brand cheese to keep the local robber barons honest.

Curious about the Mainland brand though. We don't have the 400g blocks, but the 500g Mainland blocks are a similar price. So on exchange rate that makes it cheaper in NZ. Still according to the article the budget 1kg cheese is cheaper than the 400g Mainland in Aus. And it's that people on a tight budget option that's missing. I can afford an $18 block of cheese, though I'm not happy about paying that much.

Go vegan I hear someone saying. Not sure it's cheaper calorically, not unless all you eat is potatoes and beans. Try getting quality fresh fruit and vege and you pretty much need to be upper middle income to enjoy a varied and decent vegan lifestyle.

I feel like we are pretty good with eggs. If you don't care about animal welfare you can get a dozen eggs for $4.50 or $5. If you like your chickens to have modest living quarters then it's $6-$7 for a dozen.

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*sigh*

Trying to make home ownership more "affordable" by putting more money into it....again.

FFS I really wish parties would just leave the housing market alone.  Allowing FHBs to dip into their super is probably the worst policy of this kind yet though. FHBs are mostly in their 20s/early 30s and don't have much super anyway and it's just going to create more issues down the track when they retire with a smaller nest egg. Not to mention it'll likely push up prices beyond the meager amounts of super they have anyway, so they'll end up actually worse off.

Talk about lose-lose.

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You want to keep house price inflation to manageable levels, you build more houses and provide some tax relief or something to mitigate the build cost. Of the govt just builds a shitload of houses itself for renters.

Adequate housing, IMO, should be a right that the govt guarantees to every resident. Can't really be left to the market to provide a guaranteed right, since we can see from the neo-lib economics decades it hasn't worked.

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Successive govts here haven't left it to the market though - they pump it up every time a correction comes looming (like it is now with IRs heading upwards) with silly incentives. It's half the reason housing affordability has been at crisis point for so long.

Adequate and affordable housing should be a right I agree, just like it is with health and education. Something like Singapore's HDB system would be nice, but something like that would hit the private property market as it will pull a vast swathe of FHBs out of the market and no govt wants to do that.

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ScoMo is looking very desperate with these last minute policy thought bubbles. The super for FHB is a stupid idea. As @Skyrazer points out the FHB are unlikely to have much super anyway and they're going to lose all that stuff that would've compounded over 40 years. I wouldn't be surprised if this actually ends up costing the government money because it'll have to fund a few more pensions than normal.

The cold hard truth is that FHB are never going to have a good chance of getting into the market unless house prices actually fall in a significant way. And that is too much of a political pill for any party to swallow because the current Boomers and other generations have huge amounts of their wealth tied up in the property market. It's massive intergenerational inequity which is not good for wealth inequality and a healthy society.

I'm normally a Liberal voter but I say negative gearing really has to go - or at least limit it to only one extra property. And then some affordable housing and improved public transport access really needs to be built, but that's a longer game. COVID actually holds some promise in that direction (as it would be easier to encourage people to live out in more affordable suburbs if they didn't have to commute into work), but the work-from-home brigade is generally higher earning white-collar jobs, so there's something of a mismatch there. But either way there needs to be more affordable housing in the tenable locations.

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I don't really know what kind of housing shortage there was before the 1980's but it seems to me back when we had a state housing scheme, where the govt actually built houses, entire suburbs in some places, some for rent and others for owner occupiers to buy there didn't seem to be many people without a home, and landlords didn't seem to complain over-much, and rents were not outrageous. However when the govt sold its state housing stock to landlords and property developers all of a sudden there was no longer any space for the govt to become a primary housing provider, except for a limited amount of high density city council owned flats / apartments. 

It's also pretty good for moteliers who can fill units for weeks on the govt's dime while homeless families are accomodated until a suitable and affordable home becomes available.

Interesting the idea of using super for FHBs to be able to afford a deposit is just being pulled out now in Aus. That was put in place here at least 10 years ago, maybe longer. So, maybe ScoMo got the idea off us. Most young people here see the super scheme as first and foremost a compulsory home deposit saving scheme, as opposed to having to put a completely separate home deposit savings plan in place which depending on how you do it may be easier to raid for other purposes and may not make as good a return unless you are actively managing it. In some respects it's not a terrible idea to put your early retirement savings into property. Even if things change to moderate house price inflation, property values will always go up, and usually at least keep pace with inflation. My son and fiancee withdrew from their super to buy their first home. Still had to make a withdrawal from the bank of Mum and Dad, on both sides though. They did have to choose to live in frikken' Auckland.

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It's a massive socio-economic issue that's become too ingrained culturally to properly fix. Guaranteeing affordable housing would come at the cost of home-owners and that's something this country just can not stomach (politically and electorally). And I'm saying this as a home-owner myself.

We don't want prices to crash as that would be disastrous, but govts should atleast be aiming to prevent prices outpace inflation while wages catch up. The 20% or so gain we saw over COVID is something that shouldn't be happening and it should be curtailed. That should be causing govts to freak out just like soaring food and petrol prices are.

Instead we have policies being put into place that are trying to achieve just that....

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15 minutes ago, The Anti-Targ said:

Interesting the idea of using super for FHBs to be able to afford a deposit is just being pulled out now in Aus. That was put in place here at least 10 years ago, maybe longer. So, maybe ScoMo got the idea off us. Most young people here see the super scheme as first and foremost a compulsory home deposit saving scheme, as opposed to having to put a completely separate home deposit savings plan in place which depending on how you do it may be easier to raid for other purposes and may not make as good a return unless you are actively managing it. In some respects it's not a terrible idea to put your early retirement savings into property. Even if things change to moderate house price inflation, property values will always go up, and usually at least keep pace with inflation. My son and fiancee withdrew from their super to buy their first home. Still had to make a withdrawal from the bank of Mum and Dad, on both sides though. They did have to choose to live in frikken' Auckland.

I don't consider NZ a good example to follow as housing affordability there is as borked as it is over here. I can understand the thought that retiring while owning your own home means a more secure retirement. But rising prices is kinda a zero-sum game in this regard - the most likely reason you'd sell the home you live in is to move and while it's great your home has gone up in value, so has the the place you want to buy, so you don't really end up ahead.

Not to mention we have worsening demographics with the ratio of young-to-old people slanting more and more to the latter. We desperately need people retiring with healthy supers.

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The usual logic is that, sure you are buying and selling in the same market (though there is something to be said about moving to a cheaper market in your retirement), but usually when you do that as part of your retirement you are moving to a smaller dwelling, possibly both in size of house and size of land. That means you can extract a bit of cash.

NZ is certainly not a good example of providing housing for all, and keeping house price inflation in check. It's basically as bad as Aus. 

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Just pushing the housing bubble further down the road. When it bursts so many people are going to end up screwed. But that's the current government all day long  - health, climate, housing. They just pretend the massive structural problems don't exist, kick the can down the road, and almost certainly make the pain worse when you're forced to act.

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