Bernard Hickey providing a great insight into the future of NZ economy and property market at the invitation of Alistair Helm, www.devonportproperty.nz

1. Welcome
An Evening with Bernard Hickey
Alistair Helm 021 610 510
Licensed Real Estate Professional
www.DevonportProperty.nz

2. “A journopreneur with a passion for
building a sustainable news
business that helps keep New
Zealand's democracy and
economy healthy and vibrant”

3. Under new management
Alistair Helm, Devonport, May 2018

4. Not just politically
Alistair Helm, Devonport, May 2018

5. Will Kiwibuild, lower
migration, 5 year bright
line test, a CGT (maybe),
Adrian Orr, the foreign
buyers’ ban and a higher
OCR end the party in
Auckland real estate?
Probably not.Alistair Helm, Devonport, May 2018

6. • Today’s news from Adrian Orr
• The migration outlook
• The interest rate outlook
• The housing supply outlook
• The new Government’s plans
• Auckland, Kiwibuild, foreigners
• Also CGT and negative gearing
• The longer and bigger picture
Alistair Helm, Devonport, May 2018

7. Adrian Orr’s first decision
Alistair Helm, Devonport, May 2018

8. • His easiest decision in 12 years
• OCR on hold ”for some time.”
• Outlook is balanced
• Could hike or cut. It depends.
• But forecast hike delayed again
• By 3 months to Sept 2019
• He’s relaxed about the Kiwi
• So it fell to 69.2 USc
Alistair Helm, Devonport, May 2018

9. Rates low for even longer
Alistair Helm, Devonport, May 2018

10. Inflation is soooo dead
Alistair Helm, Devonport, May 2018

11. Even in its 12th
year of growth
Alistair Helm, Devonport, May 2018

12. • So how is this possible?
• Record high terms of trade
• Global economy growing 3%
• Firing on all six cylinders
(US/EU/JP/China/AU/SEA)
• EU and Japan still printing
• China GDP still growing 6.5%
• Lending still growing xx%
Alistair Helm, Devonport, May 2018

13. Inflation is dead, dead, dead
Alistair Helm, Devonport, May 2018

14. • So how is this possible?
• Record high terms of trade
• Global economy growing 3%
• Firing on all six cylinders
(US/EU/JP/China/AU/SEA)
• EU and Japan still printing
• China GDP still growing 6.5%
• Lending still growing xx%
Alistair Helm, Devonport, May 2018

15. Migration slowed wage growth
Alistair Helm, Devonport, May 2018

16. So many young and cheap ones
Alistair Helm, Devonport, May 2018

17. It’s not Kiwis coming home
Alistair Helm, Devonport, May 2018

18. A truly massive shock
Alistair Helm, Devonport, May 2018

19. Construction labour shock?
Alistair Helm, Devonport, May 2018

20. • Don’t expect migration to drop
• Forecasters wrong repeatedly
• Asia’s growing middle classes
• Food, education, travel & property
• Australian relationship changing
• NZers are second class citizens
• NZers are working it out
• The PM is an urban liberal
• Still waiting on tighter migration
Alistair Helm, Devonport, May 2018

21. Our crazily high currency
Alistair Helm, Devonport, May 2018

22. Over-production in China, EU
Alistair Helm, Devonport, May 2018

23. Will Kiwibuild swamp prices?
Alistair Helm, Devonport, May 2018

24. • RMA not changing
• Neither is infrastructure funding
• Councils won’t borrow to build
• Neither with the Labour Govt
• So they’ll faff around for 10 yrs
• Infrastructure bonds
• Funded by value capture uplift
• Congestion charging
• No housing commission yet
Alistair Helm, Devonport, May 2018

25. • Don’t forget the power of inertia
• And of NIMBY owners and voters
• Less than 15% of young renters
• Vote in Auckland Council elections
• Over 60% of old owners vote
• Endless brownfield fights
• Eg. Three Kings. Unitec.
• The scale builders aren’t there yet
• Or the big pre-fab factories
Alistair Helm, Devonport, May 2018

26. Huge infrastructure deficits
Alistair Helm, Devonport, May 2018

27. • Bright line test extends to 5 years
• Negative gearing will be attacked
• CGT for rentals after 2020?
• Really? A small business disaster
• A dirty little secret of New Zealand
• Land tax beyond the family home?
• Foreign buyers’ ban impact
• But plenty of money slips in
Alistair Helm, Devonport, May 2018

28. China’s money supply
Alistair Helm, Devonport, May 2018

29. Aren’t higher rates the bursting
pin? Not any more
Alistair Helm, Devonport, May 2018

30. Plenty of equity. LVRs way down
Alistair Helm, Devonport, May 2018

31. • The LVR restrictions worked
• Plenty of headroom for rate spike
• Or any slump in prices
• Banks have much more capital
• And they are much more liquid
• Stress tests show could hand
• A 40% fall in Auckland prices
• Without breaking a sweat
Alistair Helm, Devonport, May 2018

32. A very, very long view
Alistair Helm, Devonport, May 2018

33. January 9, 2007
Alistair Helm, Devonport, May 2018

34. A world changed and
accelerated and atomised
Alistair Helm, Devonport, May 2018

35. Moore’s law
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36. Moore’s law turns 50
Alistair Helm, Devonport, May 2018

37. The costs keep falling
Alistair Helm, Devonport, May 2018

38. • Second half of chessboard
• 1971 chip Intel 4004 chip
• 2015 Core i5 chip
• 3,500 times faster
• 90,000 X energy efficient
• 60,000 times cheaper
• If 71 Beetle improved as much
• 300,000 mph and 2 mln mpg
Alistair Helm, Devonport, May 2018

39. An amazing machine
Alistair Helm, Devonport, May 2018

40. Watt’s steam engine
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41. Bigger, thinner, faster
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42. All for US$242.50
Alistair Helm, Devonport, May 2018

43. Myanmar goes mobile
Alistair Helm, Devonport, May 2018

44. Not much green time
Alistair Helm, Devonport, May 2018

45. Music deflation
Alistair Helm, Devonport, May 2018

46. Pay TV deflation
Alistair Helm, Devonport, May 2018

47. Taxi deflation
Alistair Helm, Devonport, May 2018

48. Telco deflation
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49. Hotel deflation
Alistair Helm, Devonport, May 2018

50. • In summary
• Inflation is low. Growth is solid
• Household incomes rising 5% +
• An interest rate spike is unlikely
• A huge supply spike is unlikely
• A migration crash is unlikely
• A major tax switch is unlikely
• Auckland a great place to live
Alistair Helm, Devonport, May 2018

51. • Thank you
• Questions
• Challenges
Alistair Helm, Devonport, May 2018