Dawn chorus: Fastest rise in 16 yrs
CoreLogic finds house price inflation in November fastest since 2004; Prices have doubled in Hamilton and Dunedin in last four years; 36 profitable foreign firms took $387m in wage subsidies
TLDR: CoreLogic data for November shows house value inflation accelerated to 2.1% in the month, which was the fastest rate since October 2004.
It found the ratio of house values to income jumped from 6.2 to 6.8 in the last year, while the average time it takes to save for a 20% deposit is now 9.0 years, up from 8.2 years in late 2019. The share of income needed to rent is rising too, rising from 19.8% in the September quarter of 2019 to 21.2% now.
Elsewhere, IRD has launched a crackdown on the 25% of landlords not complying with the bright line test for trading properties, while Newshub found 36 overseas-owned and profitable companies had claimed $387m of wage subsidies during the lockdowns.
In our political economy today
@CoreLogicNZ (used to be QV)'s house price index figures out this morning for November show prices rising at their fastest rate in 16 years corelogic.co.nz/news/property-…
IRD cracks down on residential property investors shirking bright line. IRD estimates up to 25% of investors might not have paid the relevant tax.
The gap is opening further every day between full-time salary earners in the head offices and the gig economy contract workers and part-timers, who get none of this sort of thing.
In the global political economy overnight
S&P Global has agreed to acquire IHS Markit for about $44 billion, a landmark deal that would combine two of the largest providers of data to Wall Street
Signs o’ the times news
What child poverty means. 40,000 kids go to hospital every year with preventable diseases. 'Data from hospital admissions, the NZ Health Survey, & oral health bodies show child dental disease, respiratory conditions & skin infections are all on the rise.'
Here's one reason rents and prices have gone nuts in Wellington: a not-so-silent supply shock. The quaky and leaky building disasters took at least 40 apartment buildings out and destroyed confidence in apartment ownership.
Ya gotta love the behavioural economics of real estate advertising. Just put a yellow line around a bird's eye pic of your property. Voila! 'They are a red flag to developers, a sign that a property could sell well above vendor or buyer expectations.' oneroof.co.nz/news/38753
Notable other views
Interesting Malcolm McKinnon piece arguing Michael Joseph Savage wasn't transformational, or at least didn't start out that way in 1935. Suggests WWII allowed the really big changes.
Today's column is about a subject I've become slightly obsessed with this year - the long-run negative impact of property booms on productivity, via the misallocation of capital
BIS paper: Listed US firms that hold real estate are persistently less productive than non-holders. Rising RE values hence relax collateral constraints for inefficient firms, allowing expansion and reducing industry-level productivity.
Ngā Mihi
Bernard
