We’re feeling the impact of border control, particularly in tourism, without the usual flush of international tourists over summer. The trans-Tasman bubble will help but it’s no magic bullet.

And we’re hearing more and more about supply issues – getting imports in and exports out. Firms are finding it harder to get both skilled and unskilled labour. Keeping up with demand is a common complaint, but okay, that’s a better problem than not enough demand.

Australia v New Zealand

The strength of the housing market has put it in the sights of the Reserve Bank and the Government, with an array of initiatives to slow momentum, and more to come.

Housing is Issue No.1 for New Zealanders, says the IPSOS Issues Monitor. It’s the top concern in New Zealand (60 per cent), but it’s a concern for just 22 per cent of Australians. I’d say that wedge has a migration exodus to Australia written all over it – if we don’t tackle our housing problems.

We’ll all be watching auction clearance rates closely in the coming months to see if housing is slowing after the recent initiatives.

Annual growth figures will continue to show a strong market. The real story will be in the monthly movements in house prices, volumes, and average days to sell.

Hi-ho, hi-ho, it’s off to work we go

There are just under 200,000 people registered for the jobseeker benefit, but numbers have been easing. Part of this is seasonal work, but the move is in the right direction.

The GDP figures might be mixed, but the unemployment rate has fallen to 4.7 per cent, jobs ads are higher than pre-COVID and the IRD says tax revenue is better than expected.

Party like there’s no tomorrow

Your house is worth more.

House prices across the country were up 2.7 per cent in March and 9.3 per cent in the three months ended March. Over the year, the increase was 24 per cent, with most regions showing 20 per cent-plus annual increases.

The number of houses sold was up 31.2 per cent, compared to the same month a year ago.

Rent lament

Watch the rental figures closely. Government initiatives will slow housing, but the real battleground for many is what happens to rents, which are a big living expense for many.

Landlords are facing higher costs, like interest soon no longer being deductible. The temptation is to pass these costs on.

What tenants can afford to pay will hold this back. But the fear of some sort of rent freeze or a cap on rents may encourage landlords to lift rents while they can.

This would be a perfect example of the law of unintended consequences, and bad news for the very groups the government’s trying to help.

Rents in the regions are rising faster than in Auckland. That gives us a hint of where the real housing shortages are.

Pack a bag

The annual migration gain – people coming in – dropped to 17,400 at the end of February. It’ll drop below 10,000 in the March figures.

Migration has dropped from 5,000 a month to just 700 a month. That means less demand for houses.

A record 41,000 new homes have been consented in the past year. We still have housing shortages, but this is a big up-tick.

Opening the trans-Tasman bubble might help tourism, but eyes are on whether Kiwis decide to jump across the ditch. Australian firms also can’t get skilled staff.

Slug-flation

Firms are being slugged by rising costs.

ANZ’s Business Outlook survey shows firms are facing huge cost pressures and they plan to pass on price rises in a way we haven’t seen for decades.

How much they can do so will be a key issue shaping the path of inflation over the coming year, and another factor is how long the Reserve Bank can be patient.

After undershooting their inflation objective for a long time, a blip in inflation above 2 per cent will be looked through, as long as it’s not just a blip. And we won’t know the answer to that this year.

Low interest rates linger

Patience: That’s the mantra from the Reserve Bank, believing it will take time to achieve its employment and inflation objectives. That means low interest rates for a very long time.

We’re hoarding money

Low short-term interest rates are one of the factors holding borrowing rates down.

Bank funding costs have also fallen, because more people are hoarding money in transaction and savings accounts (for basically zero interest) with less in term deposit accounts.

That switch will unwind at some stage, meaning we need to be alert to the potential for borrowing rates to rise faster than wholesale interest rates or the Official Cash rate.

But unwinding it will need a jump in deposit rates above the rate of inflation, and for money in transaction accounts to be properly put to work.