1. The news that mattered this morning

Actual business confidence fell to a five year low in the June quarter, while house values also fell. Phil Twyford opened registrations of interest for first home buyers interested in Kiwibuild. He set the upper income threshold for couples at $180,000 and said buyers could sell after three years, which was two years earlier than Labour promised before the election.

Couples on $180k can buy

Housing Minister Phil Twyford announced he had opened registrations for KiwiBuild buyers this morning and detailed the conditions for buyers and how long they have to hold the property.

Eligible buyers had an equal chance to buy a KiwiBuild home at cost price through a ballot system, but would have to hold on to the homes for at least three years. Labour had promised to ban selling for five years in its pre-election policy.

Kiwibuild would be open to first-home buyers or ‘second chancers’, New Zealand citizens and permanent residents or those who ordinarily reside in New Zealand.

Buyers with an income below $120,000 for sole purchasers and $180,000 for couples would be accepted.

“For instance a couple of teachers may have a combined income of between $150,000 and $170,000. For a nurse and police officer earning upwards of $120,000, and for an engineer living alone, $90,000. A decade ago these families would have been able to afford a home, but they are now locked out of the market," Twyford said.

“In the first year we will deliver 1000 KiwiBuild homes, with the full ramp up of production reaching 5000 homes by June 2020 and 10,000 homes by June 2021," he said.

Business confidence a problem

Now it's more than just a political bias.

NZIER's business confidence survey for the June quarter confirmed the trend seen in the ANZ monthly surveys that business' 'own activity' measures of business confidence have fallen to five year lows.

Unlike the measures of how businesses think the economy is doing, the measures of 'own activity' are much more closely correlated to GDP growth. The fall in the June quarter suggested growth was softening towards two percent from over three percent. Both the Reserve Bank and Treasury had been forecasting three percent plus as recently as May.

The survey of seasonally adjusted experienced domestic trading activity found a net seven percent saw improvement, down from 15 percent the previous quarter to the lowest level since 2013. Expectations for own activity in the next three months also deteriorated, falling to a net 13 percent from a net 16 percent, which was the lowest since 2016.

See my comment piece on Newsroom Pro on why it's time the Government reacted to this cooling with a debt-funded construction stimulus and interest rate cuts.

Dairy prices fell overnight

Dairy product prices fell five percent at the Global Dairy Trade auction overnight, led by a larger-than-expected drop in whole milk powder after Fonterra forecast a 1.3 percent rise in milk collections for the season.

Production in May was up 6.6 percent from a year ago, but the season has yet to fully start.

The GDT price index fell 5.0 percent from the previous auction two weeks ago. This was the eighth fall in the last 10 auctions.

House values fell in June

New Zealand house values fell in June in a slower market that Quotable Value says reflects restrictions placed on buyers by the central bank and government.

National residential property values fell 0.3 percent in the three months through June and the nationwide average now sits at $675,680, QV reported this morning. The annual increase was 5.7 percent or 4.6 percent adjusted for inflation, QV said. The Auckland region did marginally better in the quarter, with property values falling 0.2 percent to an average $1.05 million in the past quarter although they are only up 0.8 percent year-on-year, QV said.

"The data very much confirms what we’re seeing, with values continuing to moderate or drop after a sustained period of growth leading into winter," QV general manager David Nagel said in the embargoed statement. He said after a period of growth in property values sellers "can sometimes have an inflated, even unrealistic, view of the value of their property" and this was contributing to slower average time to sell.

"It’s a buyer’s market. The Reserve Bank's LVR restrictions, as well as new government regulations, have reduced investor demand," Nagel said. "This has had the effect of reducing competition, giving buyers more time to do their due diligence before purchasing. As a result, regions such as Auckland are seeing an increasing number of sales through negotiation as opposed to auction as vendors show more flexibility in order to sell their property in a less buoyant market."