After Monday’s poor session in which it finished second from bottom on our one-day performance table, the Kiwi Dollar had an even worse day on Tuesday, sharing bottom spot with the GBP. A high in the Asian session of USD.7270 was as good as it got for the flightless bird which then tumbled to a low just under 0.7230 in the European afternoon before a modest rally to 0.7240. The AUD/NZD cross -which last week was on a 1.04 ‘big figure’ for a couple of hours - almost touched 1.06 before closing in New York around 1.0590.
In economic news, the Real Estate Institute of New Zealand (REINZ) said that the median house price for New Zealand rose 1.8% in March 2018 to reach a new record high of $560,000 up from $550,000 in March 2017. Prices in Auckland fell 2.2% year-on-year to $880,000 but this was compared to March 2017 which saw the region experience the record price of $900,000. The REINZ said, “March was a very strong month from a price perspective with record prices achieved for New Zealand, New Zealand excluding Auckland, Gisborne, the Hawke’s Bay and Wellington. Looking at the whole country, median house prices increased in 13 out of 16 regions.” The number of properties sold in March across the country fell by 9.9% when compared to the same time last year with 7,768 properties sold in comparison to 8,622 in March 2017 which was the highest month for sales volume in 2017.
The International Monetary Fund has criticized New Zealand’s ban on home sales to foreigners, saying it’s unlikely to improve housing affordability. After concluding its annual Article IV mission to New Zealand, the IMF said that, “Foreign buyers seem to have played a minor role in New Zealand’s residential real estate market recently... If the government’s broader housing policy agenda is fully implemented, that would address most of the potential problems associated with foreign buyers on a less discriminatory basis.” Proposed changes to the Overseas Investment Act, which the government says will bring New Zealand into line with neighboring Australia, will classify residential land as “sensitive,” meaning non-residents or non-citizens can’t purchase existing dwellings without the consent of the Overseas Investment Office. While non-resident foreigners will be allowed to invest in new construction, they will be forced to sell once the homes are built. Elsewhere in the report, the IMF notes that economic growth should remain around 3 percent in the near term, with risks broadly balanced and on monetary policy it warns against both precautionary further easing or premature tightening. The New Zealand Dollar opens in Asia this morning at USD0.7340 and AUD/NZD1.0590.