Good morning all to the inaugural Newsroom Pro 8 things at 8am email. Every weekday we'll highlight our top stories and pick out the key things you need to know from in and around our Newsroom offices in the Parliamentary Press Gallery and in Auckland. Hit reply to tell us what we missed and should be covering.
1. A regulatory squeeze...
As if the Auckland housing crisis wasn't enough of a problem for the Government and the economy, along comes a couple of independent regulators with other things on their minds to throw a spanner in the pipeline for new housing supply..
I report over at our sister site Newsroom.co.nz that banking regulators in Australia and New Zealand are putting the squeeze on banks lending to property developers and property buyers in Auckland.
I've been told the big four Australian banks have hit their limits for commercial property lending applied by the Australian Prudential Regulatory Authority, which has ramped up the pressure in the last week.
That APRA pressure to limit riskier lending also applies in Auckland and to residential property developments, particularly big apartment developments.
The Reserve Bank's Core Funding Ratio is also forcing banks here to put up their term deposit and mortgage rates, and is a factor in their tightening of lending criteria to developers and investors.
“They’re not doing any projects basically. We are being tarred with the Australian brush,” one Auckland apartment developer told me of the recent squeeze on funding.
“Something’s happened in Australia and that’s caused a policy change within the banks here.”
2. The electoral challenge...
The Government's main strategy for dealing with the Auckland housing supply crisis is to enable private developers to build the higher density and more affordable housing that first home buyers and renters can afford.
The political and economic pressure is intense, and is ramping up monthly with net migration into the city headed for 5,000 a month. Rents are now rising twice as fast as incomes in Auckland and employers are struggling to find workers who can afford to live in the city. Vulnerable children and their parents are struggling to find stable, affordable and healthy places to live. Turnover rates at some schools in poorer areas are approaching 50 percent.
Last winter's tales of packed out motel rooms, people living in cars and marae filled up with the homeless was a preview the Government will not want repeated in the months before September 23.
3. Carports wrapped in tarpaulins...
Another rarely reported symptom of Auckland's housing crisis is over-crowding in the poorer parts of South Auckland. It often means people jury-rig all sorts of structures to put people in.
These include carports wrapped in tarpaulins, caravans in front yards and porta-cabins plonked in driveways with extension cords running out from kitchen windows.
That's what we found on a recent drive around Mangere and Otara. The other feature was the number of cars parked outside these houses, which suggest multiple families living in the house and travelling to work all over Auckland.
The Hui's weekend programme on the controversies around The Tamaki Redevelopment also gave an early hint of the focus on Auckland's housing crisis in an election year.
4. But we're a rock star for house prices...
One of the warnings Standard and Poor's analysts gave in our article on the bank funding squeeze was that a slowdown in supply because of that squeeze could actually force another surge in prices.
Net migration is hitting fresh record highs and there is plenty of employment and income growth for those in a position to take out more mortgages and leverage up their pumped up equity.
Just how pumped up can be seen in Friday's highlighting by the Economist of New Zealand's runaway top-of-the-world performance in the house price race since 1980.
This is the other side of the electoral coin. For the 50 percent-plus of voters who own property, the Auckland Housing crisis is not necessarily a bad thing. Although, as this UMR poll from last year showed, 60 percent of Aucklanders and 55 percent of home owners in Auckland said they would actually prefer house values fell a bit or lot.
The Opposition's ability to highlight the fears of home owners about their kids and grandkids ability to get on the ladder (without massive parental support) will be a factor in the election result.
5. Massive Devonport housing development?
But with all the talk about the need for housing supply, one juicy prospect for developers could come sailing over the horizon, albeit with one caveat -- the risk of rising sea levels.
Newsroom's new National Affairs Editor Shane Cowlishaw has the scoop this morning on the Navy's re-consideration of moving the Devonport naval base, possibly to Whangarei.
Defence Minister Gerry Brownlee asked for a briefing on the cost of moving the naval base to Whangarei and was told one factor that might eventually force a move was rising sea levels. There's no immediate plan to move, but it's something planners and developers will feast their eyes on.
6. Does Bill need help from Bill?
Newsroom's Co-Editor Tim Murphy has a view on Bill English's stiff demeanour on television, and wonders whether someone like Bill Ralston could help soften him up.
"He’s a televisual turnoff waiting to happen - six months out from his first election as Prime Minister," Murphy writes.
"And for all his personal jollity, deep competence and policy pedigree, he has a problem with an uptight posture and rat-a-tat delivery that could cost his party a critical vote or two at the ballot box."
Who are they gonna' call?
"The way English presents on TV should be a priority for National’s finest communications minds. Ex broadcaster Bill Ralston is said to be in high demand as a presentational Svengali," Murphy writes.
7. Number of the day
Down 0.6 percent. That was the seasonally adjusted fall in retail spending via credit and debit cards in February, as reported by Statistics New Zealand.
Some of the initial signs of softness have been starting to seep into the economic data in recent weeks, particularly around manufacturing and light traffic movements. Economists have been lowering their December quarter GDP forecasts, but no one is suggesting a slump is imminent yet.
8. While you were sleeping...
But the economy will get some currency relief, it seems.
The New Zealand dollar has fallen sharply in the last fortnight and starts the week at 69.3 USc. It is down from 72 US cents as recently as the first week of March.
This is all about expectations the US Federal Reserve will hike its official cash rate on Thursday morning our time. Strong US jobs numbers on Friday night reinforced that expectation.
That put upward pressure on the US dollar, and therefore our currency fell. The Kiwi dollar also down substantially against the Australian dollar (now at 91.9 Aussie cents from 94.1 cents just a month ago), partly because of the relative softening of our own outlook in the last few weeks.
That's good news for exporters, but might put a few retailers under a bit more pressure and make those overseas winter holidays a bit less attractive.
Have a great day.