anz research new zealand economics anz property focus · pdf fileanz research new zealand...
TRANSCRIPT
ANZ RESEARCH
NEW ZEALAND ECONOMICS ANZ PROPERTY FOCUS
December 2015
INSIDE
The Month in Review 2
Property Gauges 3
Economic Overview 5
Mortgage Borrowing Strategy 6
Feature Article: Assessing the
Demand for Housing 7
Key Forecasts 12
CONTRIBUTORS
Cameron Bagrie Chief Economist
Telephone: +64 4 802 2212 E-mail: [email protected]
Twitter @ANZ_cambagrie
Mark Smith Senior Economist
Telephone: +64 9 357 4096 E-mail: [email protected]
THE WORM HAS TURNED
SUMMARY
Our monthly Property Focus publication provides an independent appraisal of recent
developments in the property market.
THE MONTH IN REVIEW
The RBNZ has cut the OCR by 100bps this year, returning the cash rate to record lows.
While the bias is still to lower rates yet, there are now upside risks to be mindful of too,
with the economic outlook more balanced. Less pressure to cut means 1 and 2 year fixed
rates could nudge up over coming months. November REINZ data showed a further
regulation-related impact on Auckland housing activity and prices, but showed the wider
regions are being supported by historically low mortgage interest rates, and last month’s
relaxation in non-Auckland LVR restrictions by the RBNZ. Dwelling construction is trending
up, but booming net immigration makes the number of new dwellings required a moving
target. Credit growth has followed the housing market and households are re-leveraging
off already high debt levels, although mortgage approvals growth is slowing.
PROPERTY GAUGES
House sales fell further in November, with Auckland prices and sales volumes down for a
second consecutive month as the tightening in LVR speed limits for Auckland investor
borrowing took effect. House prices in Auckland look stretched relative to both incomes
and rents, but nationwide prices are being supported by lower fixed mortgage interest
rates, tight dwelling supply, and booming net immigration. Other regions look well placed
to outperform our largest city in terms of price growth from here.
ECONOMIC OVERVIEW
Momentum across the economy has started to pick up. Challenges posed by low dairy
export prices, peaking earthquake rebuild activity, capacity bottlenecks in some sectors
and some deterioration in structural metrics are being offset by supportive financial
conditions and strength in construction, non-dairy agriculture, tourism, and housing
outside of Auckland. We expect 2.5% growth in 2016; that’s respectable. There are both
upside and downside risks, whereas three months ago the downside dominated. The OCR
looks set to stay at 2.5% for a while.
MORTGAGE BORROWING STRATEGY
This month saw the 25bps cut in the OCR result in a reduction in variable mortgage
interest rates, with limited moves for both standard and special fixed rates. The cheapest
part of the curve is for the one to two year tenor, where rates are at (or are close to)
multi-decade lows. Borrowers could choose to spread fixed terms across one to two year
tenors to stagger roll-overs, but we have a preference for the two-year rate, which offers
greater certainty at a historically low rate. With no OCR rises on the horizon, longer-term
rates offer more certainty, but don’t offer the same value at present.
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
In a follow-up article to last month’s analysis of New Zealand population trends we
examine what demographic changes mean for the supply and demand for housing, for
both the country as a whole and regional areas. Dwelling shortfalls are mostly centred
in the upper North Island but are emerging elsewhere, with household formation rates
running at historically high levels. As population growth slows, the moderation in the
demand for housing is expected to be regionally broad based, but more acute in some
regions, and comparatively milder in Auckland. Population trends and technological
change will no doubt evolve very differently than is assumed here. Nevertheless, the
analysis is useful for highlighting some of the ‘big picture’ issues.
ANZ Property Focus / December 2015/ 2 of 14
THE MONTH IN REVIEW
OCR cut by 25bps
and easing bias
retained
Auckland softens,
but most other
regions
strengthen
Strengthening
construction
trend evident for
most centres
Net immigration
inflows are
speeding up, not
slowing
Mortgage lending
strong; approvals
growth slowing
The RBNZ has cut the OCR by 100bps this year, returning the cash rate to record lows. While
the bias is still to lower rates yet, there are now upside risks to be mindful of too, with the
economic outlook more balanced. Less pressure to cut means 1 and 2 year fixed rates could
nudge up over coming months. November REINZ data showed a further regulation-related
impact on Auckland housing activity and prices, but showed the wider regions are being
supported by historically low mortgage interest rates, and last month’s relaxation in non-
Auckland LVR restrictions by the RBNZ. Dwelling construction is trending up, but booming
net immigration makes the number of new dwellings required a moving target. Credit growth
has followed the housing market and households are re-leveraging off already high debt
levels, although mortgage approvals growth is slowing.
RBNZ DECEMBER MPS
The RBNZ cut the cash rate by 25bps to 2.50%. A soft easing bias was retained, with the
Bank stating that it “will reduce rates if circumstances warrant” and that this will be
dependent on the flow of economic data. The 90-day bank bill profile was flat through till
the end of 2017 and the RBNZ presented four factors it is watching closely: stronger
consumer spending and net immigration on the upside, and an El Nino and a negative
export price shock on the downside. Its assessment was very balanced, which is leading
the market to reassess the probability of the OCR falling further, and is likely to result in 1
and 2 year fixed mortgage rates nudging up a tad.
REINZ, HOUSE SALES – NOVEMBER
November sales volumes fell 4.1% sa, which followed a 7.7% sa October fall. Annual
growth in sales volumes fell to 8.5%, the slowest since January. Auckland sales volumes
were down 13% sa compared to October (-14.7% y/y) and have fallen 29% since
September. Sales volumes excluding Auckland were up 0.5% sa from October (+26.2%
y/y), with strong growth evident from Waikato/BOP (+38% y/y) and Northland (+68%
y/y). The house price index rose 0.5% sa, with annual house price inflation slowing to
12.5%. Prices in Auckland fell for a second consecutive month and are down about 6% sa
since September, with changes to taxation and tighter LVR criteria for investors having an
immediate impact. The days to sell rose to an 8-month high (34.9), and a 15-month high
in Auckland (33.8).
STATISTICS NZ, BUILDING CONSENTS – OCTOBER
The number of residential dwelling consents rebounded 5.1% m/m in October from a
5.7% drop in September. Compositionally, the rebound in October was due to a lift in the
volatile multi-dwelling component, with the number of housing consents down 0.2%. In
the 12 months to December, a total of 26,450 residential consents were lodged – the
highest in a decade. The trend for the number of new dwellings consented in Auckland
was the highest since December 2004, with a strengthening trend for the Waikato, BOP,
and Northland, a declining trend for Wellington and a flat trend for Canterbury.
STATISTICS NZ, EXTERNAL MIGRATION – OCTOBER
There was a record net inflow of 6,210 PLT migrants (sa) in October, with the annual
inflow hitting a record high of 62,500 persons. Not only this, but the average inflow is still
accelerating, with the net inflow running at a record 69,300 person annualised pace.
RBNZ, HOUSEHOLD CREDIT GROWTH – OCTOBER
The value of mortgage lending to households rose 0.7% sa in October, with annual credit
growth strengthening to 7.9%. The three month annualised rate, at 8.2%, is the highest
since March 2008.
RBNZ, MORTGAGE APPROVALS – MID-DECEMBER
Approval values and numbers are 18% and 10% higher than this time last year respectively,
and are now slowing after picking up in recent months.
ANZ Property Focus / December 2015/ 3 of 14
PROPERTY GAUGES
House sales fell further in November, with Auckland prices and sales volumes down for a second consecutive month
as the tightening in LVR speed limits for Auckland investor borrowing took effect. House prices in Auckland look
stretched relative to both incomes and rents, but nationwide prices are being supported by lower fixed mortgage
interest rates, tight dwelling supply, and booming net immigration. Other regions look well placed to outperform
our largest city in terms of price growth from here.
We use ten gauges to assess the state of the property market and look for signs that changes are in the wind.
AFFORDABILITY. For new entrants into the housing market, we measure affordability using the ratio of house
prices to income (adjusted for interest rates) and mortgage payments as a proportion of income.
SERVICEABILITY / INDEBTEDNESS. For existing homeowners, serviceability relates interest payments to
income, while indebtedness is measured as the level of debt relative to income.
INTEREST RATES. Interest rates affect both the affordability of new houses and the serviceability of existing
mortgage payments.
MIGRATION. A key source of demand for housing.
SUPPLY-DEMAND BALANCE. We use dwelling consents issuance to proxy growth in supply. Demand is
derived via the natural growth rate in the population, net migration, and the average household size.
CONSENTS AND HOUSE SALES. These are key gauges of activity in the property market.
LIQUIDITY. We look at growth in private sector credit relative to GDP to assess the availability of credit in
supporting the property market.
GLOBALISATION. We look at relative property price movements between New Zealand, the US, the UK, and
Australia, in recognition of the important role that global factors play in New Zealand’s property cycle.
HOUSING SUPPLY. We look at the supply of housing listed on the market, recorded as the number of months
needed to clear the housing stock. A high figure indicates that buyers have the upper hand.
RENTAL GROWTH. We look at growth in the median market rent as an indication of whether it is a better time
to buy vs. rent, and how rental yields are shaping up for the property investor.
Indicator Level Direction
for prices Comment
Affordability Chasing your tail ↔/↓ Houses severely unaffordable in Auckland. A period of price
catch-up in the regions is to be expected.
Serviceability/
indebtedness Hard work ↔/↓ Lower mortgage interest rates are helping, but debt servicing to
income is going up.
Interest rates /
RBNZ Drifting down ↔/↑ Recent cuts in variable and fixed rates will help support
borrowing. LVR changes should slow Auckland investor demand.
Migration Record ↔/↑ New record inflows continue to be reached.
Supply-demand
balance Akld vs Rest of NZ ↔/↑ Auckland shortages are growing, Canterbury shortages are
declining; the situation is more balanced elsewhere.
Consents and
house sales Catching up ↔/↑ Amidst monthly volatility, consents are trending up. More houses
are needed in Auckland; Canterbury issuance is topping out.
Liquidity Firming ↔/↑ Credit is rising faster than incomes. That means households are
re-leveraging from elevated levels – this can’t be sustained.
Globalisation In synch ↔ Major cities booming, other centres not so much.
Housing supply Low ↔/↑ Inventory-to-sales low in most regions, including Auckland.
Median rent Yield drop ↓ Increases in rents being outpaced by house price gains.
On balance Toppy ↔ Continued momentum, but looking for signs of a policy
impact on sentiment.
ANZ Property Focus / December 2015/ 4 of 14
PROPERTY GAUGES
FIGURE 1: HOUSING AFFORDABILITY
0
40
80
120
160
0
10
20
30
40
50
60
70
92 94 96 98 00 02 04 06 08 10 12 14
Index (1
992Q
1=
100)
%
House price-to-income adjusted for interest rates (RHS)
Proportion of average weekly household earnings required to service a 25 year mortgage based on 2-year fixed rate and 20% deposit on a median house (LHS)
FIGURE 2: SERVICEABILITY AND INDEBTEDNESS
0
50
100
150
200
0
4
8
12
16
92 94 96 98 00 02 04 06 08 10 12 14
% o
f dis
posable
incom
e
% o
f dis
posable
incom
e
Household debt to disposable income (RHS)
Interest servicing as % of disposable income (LHS)
FIGURE 3: NEW CUSTOMER AVERAGE RESIDENTIAL
MORTGAGE RATE (<80% LVR)
-25
-20
-15
-10
-5
0
5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Floating 6 mths 1 year 2 years 3 years 4 years 5 years
Basis
poin
ts%
Change in the month (RHS) A month ago (LHS) Latest rates (LHS)
FIGURE 4: NET MIGRATION
-60
-40
-20
0
20
40
60
80
92 94 96 98 00 02 04 06 08 10 12 14 16
Net
annual in
flow
(000)
Net all arrivals (3mth avg) Net permanent and long-term migration
FIGURE 5: HOUSING SUPPLY-DEMAND BALANCE
-4000
0
4000
8000
12000
92 94 96 98 00 02 04 06 08 10 12 14 16
Num
ber
of houses
Excess demand (supply) Supply (advanced 2 qtrs) Demand
FIGURE 6: BUILDING CONSENTS AND HOUSE SALES
3000
4000
5000
6000
7000
8000
9000
10000
11000
800
1200
1600
2000
2400
2800
3200
92 94 96 98 00 02 04 06 08 10 12 14 16
House s
ale
s, 3
mth
avg
Consents
issued,
3 m
th a
vg
Building Consents (LHS) House sales (adv. 3 months, RHS)
FIGURE 7: LIQUIDITY AND HOUSE PRICES
-15
-10
-5
0
5
10
15
20
25
30
0
5
10
15
20
90 92 94 96 98 00 02 04 06 08 10 12 14 16
%
Annual %
change
Annual change in PSC to GDP ratio (RHS) House prices (LHS)
FIGURE 8: HOUSE PRICE INFLATION COMPARISON
-20
-10
0
10
20
30
90 92 94 96 98 00 02 04 06 08 10 12 14
Annual %
change
New Zealand Australia US United Kingdom
FIGURE 9: HOUSING SUPPLY
0
5
10
15
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Num
ber
of m
onth
s t
o s
ell
all lis
tings
Auckland Nationwide
FIGURE 10: MEDIAN RENTAL, ANNUAL GROWTH
-4
-2
0
2
4
6
8
10
12
14
92 94 96 98 00 02 04 06 08 10 12 14 16
%
3 month rolling average
Source: ANZ, Statistics NZ, REINZ, RBNZ, www.interest.co.nz, QVNZ, Nationwide, Bloomberg, Barfoot & Thompson, www.realestate.co.nz,
Department of Building and Housing.
ANZ Property Focus / December 2015 / 5 of 14
ECONOMIC OVERVIEW
SUMMARY
Momentum across the economy has started to lift. Challenges posed by low dairy prices, peaking earthquake
rebuild activity, capacity bottlenecks in some sectors and a deterioration in structural metrics are being offset
by supportive financial conditions and strength in construction, non-dairy agriculture, tourism, and housing
outside of Auckland. We expect 2.5% growth in 2016; that’s respectable. There are both upside and downside
risks, whereas three months ago the downside dominated. The OCR looks set to stay at 2.5% for a while.
Real GDP growth sits around 2%. That’s soft and insufficient to stop the unemployment rate moving up.
However, there are concrete signs momentum has started to pick up and a turning point has been
reached. Confidence has lifted sharply off lows, firms’ own activity expectations are recovering (and on the
strong side of average) and our Truckometer has risen for three months in a row. Job ads have also started to
rise again. Growth in the second half of 2015 and early 2016 looks to be on reasonable ground.
Key factors behind an improving outlook include:
Monetary policy at work. This has buoyed interest rate-sensitive sectors. But prudential policy changes
(looser LVR restrictions) in the regions are also helping. Capital is flowing into the regions.
A sizeable loosening in financial conditions courtesy of the lower NZD and OCR. Non-dairy-aligned
exporters continue to fare well. The overseas perception may be that New Zealand simply milks cows but
the truth is that the economy is far broader than that.
Some structural factors (i.e. housing shortages in Auckland) that will require years of
investment to address.
Notable buoyancy in some key sectors. Tourism and construction are standouts.
More people is equalling more spending power. An annual net migrant inflow of 62k is huge.
Recovering dairy prices, which, while still low, have helped remove some pessimism and extreme
downside risk. And falls in other commodity prices (i.e. oil/petrol) are boosting disposable incomes too.
We continue to place considerable importance on small dynamics across the economy, that whilst
hard to quantify and often subjective, add to the economic portrait. Witness the continued surge in airlines
flying to NZ (and the size of planes) and what this implies for visitor numbers going forward.
We are still cautious in some areas.
We are starting to see signs of borrow-and spend style growth again. That’s fine as a temporary
phenomenon. But it’s disconcerting to see the household saving rate dipping close to the red and credit
growth outstripping income growth at a time house prices are already extended. The combination makes it
a point of vulnerability.
Dairy prices remain low. Cash-flow is tight. A host of dairy farmers are making material losses and
dairy price signals are subdued. A likely 15% peak-to-trough fall in the goods terms of trade (a measure of
a nation’s purchasing power) is enough to knock 2.5 percentage points off GDP growth over the subsequent
two years. New Zealand is indeed more than cows alone, but we have rather a lot of them.
We remain wary of the downstream implications of the Fed lifting rates. All eyes are on China, our
key export market. It leveraged heavily after the GFC. Weakness in commodity prices around the globe is
giving an ominous signal about China. We are also starting to see some movement across credit spreads
akin to what happened prior to the GFC.
The impact of an El Nino event.
The NZD has firmed. Some is warranted given economic improvement, but further increases risk
undermining the outlook.
We expect real GDP to rise 2.5% over the coming year. That will be sufficient to see the unemployment
rate (which has risen of late) eventually start heading down again. It is also consistent with the OCR likely
staying around 2.50% for an extended period. There are clear candidates to take the OCR lower; low
inflation, and export prices that are vulnerable to global weakness. But there are upside risks too. Households
are threatening to return to their borrow-and-spend ways. The sensible middle ground looks like the OCR
staying at current levels.
ANZ Property Focus / December 2015 / 6 of 14
MORTGAGE BORROWING STRATEGY
SUMMARY
This month saw the 25bps cut in the OCR result in a reduction in variable mortgage interest rates, with limited
moves for both standard and special fixed rates. However, with expectations towards further cuts being pared
back, there is now pressure for 1 and 2 year fixed rates to move up. The cheapest part of the curve is for the
one to two year tenor, where rates are at (or are close to) multi-decade lows. Borrowers could choose to spread
fixed terms across one to two year tenors to stagger roll-overs, but we have a preference for the two-year rate,
which offers greater certainty at a historically low rate. With no OCR rises on the horizon, longer-term rates
offer more certainty, but don’t offer the same value at present.
OUR VIEW
The December 25bps cut in the OCR has
resulted in a corresponding reduction in
variable rates for major lenders. Floating
mortgage interest rates are at their lowest level
since prior to the March 2014 round of OCR
hikes.
Fixed mortgage rates were mostly
unchanged this month, with the introduction
of a new 2 year special rate by one lender
pushing down the average rate offered by the
four major lenders to 4.40%, close to the 4.37%
average 1 year rate. Rates offered are at multi-
decade lows.
This year has seen the RBNZ wind back the four
2014 OCR hikes, with the OCR now back to
2.5%, a record low. Our estimates suggest that
since June, the average rate has fallen by 40-
130bps for specials and 60-100bps for standard
rates. While variable rates are back where they
were at the start of last year, fixed rates are one
to two percentage points lower as the borrowing
curve has flattened.
Our view is that a period of stability in the
OCR is likely, but that the risk profile is
skewed towards a still-lower OCR. With
market expectations implying a 40% chance of a
25bps cut by next September, the question is;
how much of this is currently factored into
current mortgage rates on offer, and what would
it take for fixed rates to move lower still?
So what should borrowers do? This will depend
on individual circumstances, but our
breakeven analysis is useful in comparing
various options. For those able to access
specials, one and two-year terms (top
table) look the cheapest. Borrowers could
choose to spread fixed terms across both tenors
AVERAGE CARDED MORTGAGE RATES^
Current rates
4.00%
4.25%
4.50%
4.75%
5.00%
5.25%
5.50%
5.75%
6.00%
0 1 2 3 4 5
Special (20%+ equity) Standard
Years
Special Mortgage
Rates
Breakevens for 20%+
equity borrowers
Term Current in 6mths in 1yr in 18mths in 2 yrs
Floating 5.78%
6 months 5.04% 3.70% 4.52% 4.62% 5.35%
1 year 4.37% 4.09% 4.51% 5.02% 5.70%
2 years 4.40% 4.55% 5.11% 5.49% 5.94%
3 years 4.86% 5.02% 5.46% 5.66% 5.86%
4 years 5.19% 5.27% 5.52%
5 years 5.29% #Average of “big four” banks
Standard Mortgage Rates Breakevens for standard
mortgage rates*
Term Current in 6mths in 1yr in 18mths in 2 yrs
Floating 5.78%
6 months 5.17% 4.53% 5.15% 5.35% 5.33%
1 year 4.85% 4.84% 5.25% 5.34% 5.38%
2 years 5.05% 5.09% 5.32% 5.40% 5.45%
3 years 5.16% 5.21% 5.38% 5.48% 5.55%
4 years 5.25% 5.32% 5.48%
5 years 5.35% *may be subject to a low equity fee
to stagger rollovers, but because of the additional certainty afforded, we have a preference for locking
in a greater portion for two years. Locking in for terms longer than 2 years would provide more certainty
still, but borrowers would be paying for the privilege. Of the standard rates, the one-year fixed rate looks
preferable, given it would have to rise from around 4.85% to around 5.25% to make it more attractive to fix for
two years. With the OCR not set to go up in 2016, this seems unlikely.
^ Average of carded rates from ANZ, ASB, BNZ and Westpac. Sourced from interest.co.nz
ANZ Property Focus / December 2015 / 7 of 14
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
SUMMARY
In a follow-up article to last month’s analysis of New Zealand population trends we examine what demographic
changes mean for the supply and demand for housing, for both the country as a whole and regional areas.
Key conclusions:
In recent years, stronger rates of household formation, coupled with a period of reasonably modest dwelling
construction, have resulted in a growing dwelling shortfall. This is mostly centred in the upper North Island
(primarily Auckland), but shortfalls are also emerging in other centres (notably Wellington). In the South
Island, growing dwelling oversupply reflects growing supply of dwellings and a reduced shortfall in
Canterbury.
Household formation rates are running at historically high rates at present, with this expected to continue
over the next few years in the absence of a sharp slowing in net immigration. The outlook is for slowing rates
over the next 20 or so years as population growth slows.
The accompanying moderation in the demand for housing is regionally broad based, but expected to be more
acute in some regions – for example, the West Coast and Gisborne – whereas the slowdown in household
formation is expected to be comparatively milder in Auckland.
We emphasise that this analysis is a snapshot; the future is uncertain and population trends and technological
change will no doubt evolve very differently than is outlined here. Nevertheless, the analysis is useful for
highlighting some of the ‘big picture’ issues.
LOOKING AHEAD
Current population growth may be the highest in a decade courtesy of record net migration, but
population ageing and lower fertility rates are expected to drive a slowdown. Population projections
for New Zealand and broad regional areas suggest a regionally widespread moderation in resident population
growth, with population levels actually falling in some regions over the next 30 years or so.
What does this mean for the demand for dwellings? Historically there has been a positive relationship between
changes in population and rates of dwelling construction, although the latter is not as variable.1
FIGURE 1. DWELLING NUMBERS & ANNUAL POPULATION GROWTH
-10
0
10
20
30
40
50
60
70
80
90
0
5
10
15
20
25
30
35
65 70 75 80 85 90 95 00 05 10 15
(000)
(000)
New dwellings (LHS) Population change (RHS)
Source: ANZ, Statistics NZ
Obviously a lower rate of population growth translates broadly into fewer dwellings being
constructed, but the swing variable is the number of persons per household, which can partly
absorb cyclical movements. It also trends: since the 1960s, the number of people per dwelling has been on
1The coefficient of variation of swings in annual population growth is about twice that for annual dwelling construction since 1965.
ANZ Property Focus / December 2015 / 8 of 14
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
a downward trend given the decline in fertility rates and the ageing of the population structure. Social facets
(i.e. more divorces) also come into play. Based on baseline demographic projections, this ratio is likely to
decline further, both nationwide and across most regions. It is apparent, however, that this ratio has not always
declined in a straight-line fashion over time. The early 1990s, and the last decade or so, has seen this ratio
level off.
FIGURE 2. PERSONS PER DWELLING
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
65 70 75 80 85 90 95 00 05 10 15 20 25 30 35
Actual Baseline
Forecast
Source: ANZ, Statistics NZ
There are regional facets to this, with the numbers of households being formed in each region
sometimes outstripping that of the number of dwellings being constructed. Our demand and supply
balances are approximate, but provide a reasonable framework for analysis. Stronger rates of household
formation in the top of the North Island relative to the pace of residential construction have resulted in a
growing dwelling shortfall. This is mostly centred in the Auckland region, but is also noticeable in some other
upper North Island regions, including the Bay of Plenty. In the lower North Island, a rising dwelling shortfall in
Wellington is being offset by growing surpluses in other centres. In the South Island, growing dwelling
oversupply reflects growing supply of dwellings and in particular, a reduced shortfall in Canterbury.
FIGURE 3. REGIONAL HOUSING BALANCES
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
90 92 94 96 98 00 02 04 06 08 10 12 14 16
(000)
South Island Top North Island Lower North Island
SurplusSurplus
Shortage
Source: ANZ, Statistics NZ
ANZ Property Focus / December 2015 / 9 of 14
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
A shortfall does not necessarily mean people will not have a roof over their heads. It simply means
that more people live in each house, on average. Dwellings constructed today are on average around
185sqm according to consent data, versus 130sqm constructed 50 or so years ago. But given unequal access to
housing, it is probably fair to say that when economic times are tough, some houses can become very crowded.
LOOKING AHEAD
Table 1 shows projections for the number of households based on demographic projections from Statistics New
Zealand. The growth in the number of households (and hence the demand for dwellings) is currently running
slightly above that of resident population growth, both nationwide and in most regional areas.2 Rates of
household formation are likely to slow from current rates but not as quickly as the slowing in
population growth, with the number of persons per dwelling set to fall in all regions.
TABLE 1. HOUSEHOLD PROJECTIONS
Persons per HH Average annual growth rates by year
2013 2038 2013-18 2018-23 2023-28 2028-33 2033-38 2013-18
Northland 2.50 2.20 1.2 0.8 0.7 0.5 0.3 0.7
Auckland 2.90 2.80 2.4 1.8 1.6 1.5 1.3 1.7
Waikato 2.50 2.40 1.5 1.5 1.5 1.5 1.5 1.0
BOP 2.50 2.40 1.2 1.0 0.8 0.7 0.5 0.8
Gisborne 2.60 2.40 0.7 0.6 0.4 0.4 0.0 0.4
Hawkes Bay 2.50 2.40 0.9 0.6 0.4 0.3 0.1 0.4
Taranaki 2.40 2.30 1.2 0.7 0.6 0.6 0.4 0.7
Manawatu/Whanganui 2.40 2.30 0.6 0.4 0.3 0.2 0.0 0.3
Wellington 2.60 2.40 1.1 0.8 0.7 0.5 0.4 0.7
Nelson/Marlborough 2.43 2.30 1.2 0.8 0.7 0.5 0.2 0.7
West Coast 2.30 2.10 0.9 0.4 0.3 0.3 0.0 0.3
Canterbury 2.50 2.40 1.9 1.1 1.0 0.9 0.7 1.1
Otago 2.40 2.30 1.1 0.8 0.7 0.6 0.4 0.7
Southland 2.40 2.20 0.8 0.3 0.3 0.2 0.0 0.3
New Zealand 2.60 2.50 1.6 1.2 1.0 0.9 0.7 1.1
Source: ANZ, Statistics NZ
Table 2 (overleaf) shows the number of residential consents issued for new dwellings for the September year,
alongside baseline projections for the number of households formed over the current five-year period (2013-
18). Strong rates of household formation – around 26,800 new households per annum – are expected through
to 2018, slightly above that of the current rates of consent issuance. Dwelling construction in about half of
the regions – most notably Auckland and Wellington – is still insufficient to meet population needs
over the next few years. For Auckland and Wellington, this implies rising housing shortages, adding
to the current shortfall of around 4,000 dwellings in Wellington and 26,000 dwellings in Auckland. In
Canterbury, rebuild-related consent issuance is still well above that of the number of households
being formed, particularly with our estimates showing a sharp closing in housing shortfalls for the region in
recent years.
2 Table 1 of last month’s Property Focus feature article has respective rates of population growth for NZ and regional areas. It shows
growth in resident population is expected to average 1.3% per annum over the 2013/18 period, averaging 0.9% per annum through
till 2038.
ANZ Property Focus / December 2015 / 10 of 14
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
TABLE 2. ANNUAL HOUSEHOLD FORMATION AND ANNUAL CONSENT ISSUANCE
Consents Growth in Households New households per annum (2013-38)
2013-18 2033-38 Central Low High
Northland 805 800 220 488 168 836
Auckland 8,721 12,140 8,880 10,164 6,660 13,648
Waikato 2,691 2,460 1,240 1,764 892 2,696
BOP 1,649 1,260 660 984 336 1,668
Gisborne 64 120 0 76 -8 168
Hawkes Bay 342 560 40 288 -28 628
Taranaki 491 540 220 344 100 608
Manawatu/Whanganui 474 600 20 316 -128 788
Wellington 1,544 2,080 800 1,384 448 2,380
Nelson/Marlborough 703 700 140 420 116 756
West Coast 119 120 0 52 -20 128
Canterbury 7,007 4,240 2,000 2,792 1,156 4,496
Otago 1,323 900 380 620 160 1,100
Southland 250 320 0 132 -52 336
New Zealand 26,185 26,840 14,600 19,824 9,800 30,236
Source: ANZ, Statistics NZ
Population projections depend on a whole range of factors, including trends in net immigration, fertility and
mortality. Different assumptions cumulate to sizeable impacts over time. It gets trickier still when looking at
rates of household formation, given the number of economic, social and demographic factors behind this. As an
illustration, Table 2 also includes different estimates of the number of households formed in each region each
year over the next 20 or so years:
The central scenario, which uses the baseline population projections.
The “high” scenario, which uses the upper population estimates (high migration, higher than usual fertility,
low mortality).
The “low household” scenario, which uses the lower population projections.
The central projection indicates that around 20,000 households nationwide, on average, will be formed each
year over the next 20 or so years. This is roughly on par with historical averages, but is about one quarter
lower than current rates of household formation and the current rate of consent issuance in the regions. As
Table 1 implies, rates of household formation are expected to progressively slow over the next 20 or
so years, which in turn will have implications for the provision of dwellings. As Table 2 shows, in the
central scenario around 15,000 extra households will be formed per annum over the 2033/28 period, slightly
more than half of the number of new households formed at present. Slower rates of household formation are
uniform across the regions.
There is considerable variation around these estimates, with anything from 10,000 to 30,000 new
households formed each year, on average, over the next 20 years. These are not at the extreme ends of
ranges – household formation could be stronger or weaker than outlined in the scenarios – but the numbers in
the table highlight a plausible range of outcomes, which will cumulate to substantial differences over time. In
the high-population scenario, for example, the number of households being formed in 20 years’ time will be on
par with current rates, whereas under the low-population scenario only about 3,000 new households will be
formed each year, with household numbers increasing in Auckland and the Waikato but falling in other regions.
The extent of slowdown will also vary by region. In 20 years’ time the sharpest falls are likely to be in
Southland, the West Coast, Hawke’s Bay and Manawatu/Whanganui, where the number of households formed
each year is forecast to be about half that of current rates. By contrast, Auckland and the BOP are the only two
regions in which the moderation in rates of household formation is less than 25%, below the nationwide
average. The upshot is that while slower rates of household formation will occur, proportionately more
residential construction sector resource will be needed where the slowing in household formation is milder – in
this case, the Auckland region.
ANZ Property Focus / December 2015 / 11 of 14
FEATURE ARTICLE: ASSESSING THE DEMAND FOR HOUSING
Looking at a 20-odd year time horizon, the table suggests that anywhere between 6,700 and 13,600 dwellings
per annum will need to be built to meet population needs in Auckland. This cumulates to huge differences over
time. Auckland – which has just over 30% of the nationwide dwelling stock and one third of residential issuance
at present – is likely to account for anything from 45% to 67% of new nationwide households formed. The
strengthening seen in Waikato and BOP issuance has been consistent with longer-term demands, whilst
Wellington is underbuilding in terms of meeting future needs. Canterbury, which currently accounts for about
one quarter of residential issuance, is likely to account for anything from 11-15% to household formation. In
Southland, the West Coast and Gisborne, current building rates are either above or towards the top of likely
future ranges.
These figures are illustrative and future events can turn out quite differently. Balance sheet
considerations need to be taken into account as the bungy cord of regional Auckland house price
outperformance has become taut. A period of relative underperformance is warranted for Auckland. Internal
migration from Auckland to the rest of the country could intensify, and hence shift the demand for dwelling
construction to other centres. We are also mindful that the drift lower in average household size suggests that
the construction sector response will need to include smaller dwelling sizes and more intensification.
ANZ Property Focus / December 2015 / 12 of 14
KEY FORECASTS
Weekly mortgage repayments table (based on 25-year term)
Mortgage Rate (%)
Mo
rtg
ag
e S
ize (
$’0
00
)
4.00 4.25 4.50 4.75 5.00 5.25 5.50 5.75 6.00 6.25 6.50 6.75 7.00 7.25
200 243 250 256 263 270 276 283 290 297 304 311 319 326 333
250 304 312 320 329 337 345 354 363 371 380 389 398 407 417
300 365 375 385 394 404 415 425 435 446 456 467 478 489 500
350 426 437 449 460 472 484 496 508 520 532 545 558 570 583
400 487 500 513 526 539 553 566 580 594 608 623 637 652 667
450 548 562 577 592 607 622 637 653 669 684 701 717 733 750
500 609 625 641 657 674 691 708 725 743 761 778 797 815 833
550 669 687 705 723 741 760 779 798 817 837 856 876 896 917
600 730 750 769 789 809 829 850 870 891 913 934 956 978 1,000
650 791 812 833 854 876 898 920 943 966 989 1,012 1,036 1,059 1,083
700 852 874 897 920 944 967 991 1,015 1,040 1,065 1,090 1,115 1,141 1,167
750 913 937 961 986 1,011 1,036 1,062 1,088 1,114 1,141 1,168 1,195 1,222 1,250
800 974 999 1,025 1,052 1,078 1,105 1,133 1,160 1,188 1,217 1,246 1,274 1,304 1,333
850 1,035 1,062 1,089 1,117 1,146 1,174 1,204 1,233 1,263 1,293 1,323 1,354 1,385 1,417
900 1,095 1,124 1,154 1,183 1,213 1,244 1,274 1,306 1,337 1,369 1,401 1,434 1,467 1,500
950 1,156 1,187 1,218 1,249 1,281 1,313 1,345 1,378 1,411 1,445 1,479 1,513 1,548 1,583
1000 1,217 1,249 1,282 1,315 1,348 1,382 1,416 1,451 1,486 1,521 1,557 1,593 1,630 1,667
Housing market indicators for November 2015 (based on REINZ data)
House
prices (ann %
change)
3mth % chg
No of sales
(sa)
Mthly % chg
Avg days to sell
(sa)
Comment
Northland 6.3 6.4 268 +8% 55 Sales +69% y/y, prices flattening off.
Auckland 14.2 0.5 2,227 -13% 34 Volumes -11.8% 3m/3m, days to sell at 15-month high
Waikato/BOP/Gisborne 8.9 7.5 1,439 -6% 37 Strengthening prices, low days to sell, volumes +38% y/y.
Hawke’s Bay 1.5 0.8 256 -9% 35 Volumes +36% y/y, days to sell at 10-year low.
Manawatu-Whanganui -6.6 3.9 293 -5% 39 Days sell below average (44), volumes 14% y/y, prices flat.
Taranaki -3.5 4.5 182 +6% 45 Volumes +22% y/y, days to sell up from decade low.
Wellington 2.0 2.9 776 +1% 34 Prices trending up, volumes +17% y/y.
Nelson-Marlborough 4.1 2.6 277 +2% 34 Days to sell down, prices flattening off, volumes +1.7% 3m/3m.
Canterbury/Westland 1.0 0.1 938 -1% 31 Sales volumes -0.6% 3m/3m, prices +0.1% 3m/3m.
Central Otago Lakes -10.7 -5.8 163 -4% 39 Prices down, sales +42% y/y, days to sell up from record low.
Otago 9.8 3.4 268 -2% 30 Days to sell at 8-year low, volumes +12% 3m/3m.
Southland -1.2 -2.4 187 +9% 39 Days to sell at 3-year low, volumes +39% y/y.
NEW ZEALAND 0.8 0.3 7,329 -4% 35 Days to sell at 8-month high, median price at 5-month low.
Key forecasts
Actual Forecasts
Economic indicators Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
GDP (Ann Avg % Chg) 3.6 3.3 2.9 2.4 2.2 2.2 2.3 2.5 2.6 2.7
CPI Inflation (Annual % Chg) 0.3 0.4 0.4 0.3 0.9 0.9 1.1 1.6 1.7 1.7
Unemployment Rate (%) 5.7 5.8 5.9 6.0 6.2 6.3 6.2 6.1 5.9 5.9
Interest rates (carded) Oct-15 Nov-15 Latest Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17
Official Cash Rate 2.75 2.75 2.50 2.50 2.50 2.50 2.50 2.50 2.75 3.25
90-Day Bank Bill Rate 3.0 2.8 2.8 2.8 2.7 2.7 2.7 2.7 3.1 3.5
Floating Mortgage Rate 6.0 6.0 5.7 5.7 5.7 5.7 5.7 5.7 6.0 6.5
1-Yr Fixed Mortgage Rate 5.0 4.8 4.6 4.6 4.7 4.9 5.0 5.1 5.5 5.7
2-Yr Fixed Mortgage Rate 5.3 5.0 4.7 4.7 4.7 5.0 5.1 5.3 5.7 5.8
5-Yr Fixed Mortgage Rate 5.7 5.7 5.6 5.6 5.6 5.8 6.0 6.0 6.1 6.1
ANZ Property Focus / December 2015 / 13 of 14
IMPORTANT NOTICE
The distribution of this document or streaming of this video broadcast (as applicable, “publication”) may be restricted by law in certain jurisdictions. Persons who receive this publication must inform themselves about and observe all relevant restrictions.
1. Disclaimer for all jurisdictions, where content is authored by ANZ Research: Except if otherwise specified in section 2 below, this publication is issued and distributed in your country/region by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (“ANZ”), on the basis that it is only for the information of the specified recipient or permitted user of the relevant website (collectively, “recipient”). This publication may not be reproduced, distributed or published by any recipient for any purpose. It is general information and has been prepared without taking into account the objectives, financial situation or needs of any person. Nothing in this publication is intended to be an offer to sell, or a solicitation of an offer to buy, any product, instrument or investment, to effect any transaction or to conclude any legal act of any kind. If, despite the foregoing, any services or products referred to in this publication are deemed to be offered in the jurisdiction in which this publication is received or accessed, no such service or product is intended for nor available to persons resident in that jurisdiction if it would be contradictory to local law or regulation. Such local laws, regulations and other limitations always apply with non-exclusive jurisdiction of local courts. Certain financial products may be subject to mandatory clearing, regulatory reporting and/or other related obligations. These obligations may vary by jurisdiction and be subject to frequent amendment. Before making an investment decision, recipients should seek independent financial, legal, tax and other relevant advice having regard to their particular circumstances. The views and recommendations expressed in this publication are the author’s. They are based on information known by the author and on sources which the author believes to be reliable, but may involve material elements of subjective judgement and analysis. Unless specifically stated otherwise: they are current on the date of this publication and are subject to change without notice; and, all price information is indicative only. Any of the views and recommendations which comprise estimates, forecasts or other projections, are subject to significant uncertainties and contingencies that cannot reasonably be anticipated. On this basis, such views and recommendations may not always be achieved or prove to be correct. Indications of past performance in this publication will not necessarily be repeated in the future. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. Additionally, this publication may contain ‘forward looking statements’. Actual events or results or actual performance may differ materially from those reflected or contemplated in such forward looking statements. All investments entail a risk and may result in both profits and losses. Foreign currency rates of exchange may adversely affect the value, price or income of any products or services described in this publication. The products and services described in this publication are not suitable for all investors, and transacting in these products or services may be considered risky. ANZ and its related bodies corporate and affiliates, and the officers, employees, contractors and agents of each of them (including the author) (“Affiliates”), do not make any representation as to the accuracy, completeness or currency of the views or recommendations expressed in this publication. Neither ANZ nor its Affiliates accept any responsibility to inform you of any matter that subsequently comes to their notice, which may affect the accuracy, completeness or currency of the information in this publication. Except as required by law, and only to the extent so required: neither ANZ nor its Affiliates warrant or guarantee the performance of any of the products or services described in this publication or any return on any associated investment; and, ANZ and its Affiliates expressly disclaim any responsibility and shall not be liable for any loss, damage, claim, liability, proceedings, cost or expense (“Liability”) arising directly or indirectly and whether in tort (including negligence), contract, equity or otherwise out of or in connection with this publication. If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. ANZ and its Affiliates do not accept any Liability as a result of electronic transmission of this publication. ANZ and its Affiliates may have an interest in the subject matter of this publication as follows: They may receive fees from customers for dealing in the products or services described in this publication, and their staff and introducers
of business may share in such fees or receive a bonus that may be influenced by total sales. They or their customers may have or have had interests or long or short positions in the products or services described in this
publication, and may at any time make purchases and/or sales in them as principal or agent. They may act or have acted as market-maker in products described in this publication. ANZ and its Affiliates may rely on information barriers and other arrangements to control the flow of information contained in one or more business areas within ANZ or within its Affiliates into other business areas of ANZ or of its Affiliates. Please contact your ANZ point of contact with any questions about this publication including for further information on these disclosures of interest.
2. Country/region specific information: Australia. This publication is distributed in Australia by ANZ. ANZ holds an Australian Financial Services licence no. 234527. A copy of ANZ's Financial Services Guide is available at http://www.anz.com/documents/AU/aboutANZ/FinancialServicesGuide.pdf and is available upon request from your ANZ point of contact. If trading strategies or recommendations are included in this publication, they are solely for the information of ‘wholesale clients’ (as defined in section 761G of the Corporations Act 2001 Cth). Persons who receive this publication must inform themselves about and observe all relevant restrictions. Brazil. This publication is distributed in Brazil by ANZ on a cross border basis and only following request by the recipient. No securities are being offered or sold in Brazil under this publication, and no securities have been and will not be registered with the Securities Commission – CVM. Brunei. Japan. Kuwait. Malaysia. Switzerland. Taiwan. This publication is distributed in each of Brunei, Japan, Kuwait, Malaysia, Switzerland and Taiwan by ANZ on a cross-border basis. Cambodia. APS222 Disclosure. The recipient acknowledges that although ANZ Royal Bank (Cambodia) Ltd. is a subsidiary of ANZ, it is a separate entity to ANZ and the obligations of ANZ Royal Bank (Cambodia) Ltd. do not constitute deposits or other liabilities of ANZ and ANZ is not required to meet the obligations of ANZ Royal Bank (Cambodia) Ltd. European Economic Area (“EEA”): United Kingdom. ANZ in the United Kingdom is authorised by the Prudential Regulation Authority (“PRA”). Subject to regulation by the Financial Conduct Authority (“FCA”) and limited regulation by the PRA. Details about the extent of our regulation by the PRA are available from us on request. This publication is distributed in the United Kingdom by ANZ solely for the information of persons who would come within the FCA definition of “eligible counterparty” or “professional client”. It is not intended for and must not be distributed to any person who would come within the FCA definition of “retail client”. Nothing here excludes or restricts any duty or liability to a customer which ANZ may have under the UK Financial Services and Markets Act 2000 or under the regulatory system as defined in the Rules of the PRA and the FCA. Germany. This publication is distributed in Germany by the Frankfurt Branch of ANZ solely for the information of its clients. Other EEA countries. This publication is distributed in the EEA by ANZ Bank (Europe) Limited (“ANZBEL”) which is authorised by the PRA and regulated by the FCA and the PRA in the United Kingdom, to persons who would come within the FCA definition of “eligible counterparty” or “professional client” in other countries in the EEA. This publication is distributed in those countries solely for the information of such persons upon their request. It is not intended for, and must not be distributed to, any person in those countries who would come within the FCA definition of “retail client”. Fiji. For Fiji regulatory purposes, this publication and any views and recommendations are not to be deemed as investment advice. Fiji investors must seek licensed professional advice should they wish to make any investment in relation to this publication. Hong Kong. This publication is distributed in Hong Kong by the Hong Kong branch of ANZ, which is registered at the Hong Kong Monetary Authority to conduct Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) regulated activities. The contents of this publication have not been reviewed by any regulatory authority in Hong Kong. If in doubt about the contents of this publication, you should obtain independent professional advice.
ANZ Property Focus / December 2015 / 14 of 14
IMPORTANT NOTICE
India. This publication is distributed in India by ANZ on a cross-border basis. If this publication is received in India, only you (the specified recipient) may print it provided that before doing so, you specify on it your name and place of printing. Further copying or duplication of this publication is strictly prohibited. Myanmar. This publication is intended to be of a general nature as part of customer service and marketing activities provided by ANZ in the course of implementing its functions as a licensed bank. This publication does not take into account your financial situation or goals and is not Securities Investment Advice (as that term is defined in the Myanmar Securities Transaction Law 2013). The contents of this publication have not been reviewed by any regulatory authority in Myanmar. If in doubt about the contents of this publication, you should obtain independent professional advice. New Zealand. This publication is intended to be of a general nature, does not take into account your financial situation or goals, and is not a personalised adviser service under the Financial Advisers Act 2008. Oman. This publication has been prepared by ANZ. ANZ neither has a registered business presence nor a representative office in Oman and does not undertake banking business or provide financial services in Oman. Consequently ANZ is not regulated by either the Central Bank of Oman or Oman’s Capital Market Authority. The information contained in this publication is for discussion purposes only and neither constitutes an offer of securities in Oman as contemplated by the Commercial Companies Law of Oman (Royal Decree 4/74) or the Capital Market Law of Oman (Royal Decree 80/98), nor does it constitute an offer to sell, or the solicitation of any offer to buy non-Omani securities in Oman as contemplated by Article 139 of the Executive Regulations to the Capital Market Law (issued vide CMA Decision 1/2009). ANZ does not solicit business in Oman and the only circumstances in which ANZ sends information or material describing financial products or financial services to recipients in Oman, is where such information or material has been requested from ANZ and by receiving this publication, the person or entity to whom it has been dispatched by ANZ understands, acknowledges and agrees that this publication has not been approved by the CBO, the CMA or any other regulatory body or authority in Oman. ANZ does not market, offer, sell or distribute any financial or investment products or services in Oman and no subscription to any securities, products or financial services may or will be consummated within Oman. Nothing contained in this publication is intended to constitute Omani investment, legal, tax, accounting or other professional advice. People’s Republic of China (“PRC”). Recipients must comply with all applicable laws and regulations of PRC, including any prohibitions on speculative transactions and CNY/CNH arbitrage trading. If and when the material accompanying this document is distributed by Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (“ANZ”) or an affiliate (other than Australia and New Zealand Bank (China) Company Limited ("ANZ C")), the following statement and the text below is applicable: No action has been taken by ANZ or any affiliate which would permit a public offering of any products or services of such an entity or distribution or re-distribution of this document in the PRC. Accordingly, the products and services of such entities are not being offered or sold within the PRC by means of this document or any other document. This document may not be distributed, re-distributed or published in the PRC, except under circumstances that will result in compliance with any applicable laws and regulations. If and when the material accompanying this document relates to the products and/or services of ANZ C, the following statement and the text below is applicable: This document is distributed by ANZ C in the Mainland of the PRC. Qatar. This publication has not been, and will not be lodged or registered with, or reviewed or approved by, the Qatar Central Bank ("QCB"), the Qatar Financial Centre ("QFC") Authority, QFC Regulatory Authority or any other authority in the State of Qatar ("Qatar"); or authorised or licensed for distribution in Qatar; and the information contained in this publication does not, and is not intended to, constitute a public offer or other invitation in respect of securities in Qatar or the QFC. The financial products or services described in this publication have not been, and will not be registered with the QCB, QFC Authority, QFC Regulatory Authority or any other governmental authority in Qatar; or authorised or licensed for offering, marketing, issue or sale, directly or indirectly, in Qatar. Accordingly, the financial products or services described in this publication are not being, and will not be, offered, issued or sold in Qatar, and this publication is not being, and will not be, distributed in Qatar. The offering, marketing, issue and sale of the financial products or services described in this publication and distribution of this publication is being made in, and is subject to the laws, regulations and rules of, jurisdictions outside of Qatar and the QFC. Recipients of this publication must abide by this restriction and not distribute this publication in breach of this restriction. This publication is being sent/issued to a limited number of institutional and/or sophisticated investors (i) upon their request and confirmation that they understand the statements above; and (ii) on the condition that it will not be provided to any person other than the original recipient, and is not for general circulation and may not be reproduced or used for any other purpose. Singapore. This publication is distributed in Singapore by the Singapore branch of ANZ solely for the information of “accredited investors”, “expert investors” or (as the case may be) “institutional investors” (each term as defined in the Securities and Futures Act Cap. 289 of Singapore). ANZ is licensed in Singapore under the Banking Act Cap. 19 of Singapore and is exempted from holding a financial adviser’s licence under Section 23(1)(a) of the Financial Advisers Act Cap. 100 of Singapore. In respect of any matters arising from, or in connection with the distribution of this publication in Singapore, contact your ANZ point of contact. United Arab Emirates. This publication is distributed in the United Arab Emirates (“UAE”) or the Dubai International Financial Centre (as applicable) by ANZ. This publication: does not, and is not intended to constitute an offer of securities anywhere in the UAE; does not constitute, and is not intended to constitute the carrying on or engagement in banking, financial and/or investment consultation business in the UAE under the rules and regulations made by the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or the United Arab Emirates Ministry of Economy; does not, and is not intended to constitute an offer of securities within the meaning of the Dubai International Financial Centre Markets Law No. 12 of 2004; and, does not constitute, and is not intended to constitute, a financial promotion, as defined under the Dubai International Financial Centre Regulatory Law No. 1 of 200. ANZ DIFC Branch is regulated by the Dubai Financial Services Authority (“DFSA”). The financial products or services described in this publication are only available to persons who qualify as “Professional Clients” or “Market Counterparty” in accordance with the provisions of the DFSA rules. In addition, ANZ has a representative office (“ANZ Representative Office”) in Abu Dhabi regulated by the Central Bank of the United Arab Emirates. ANZ Representative Office is not permitted by the Central Bank of the United Arab Emirates to provide any banking services to clients in the UAE. United States. If and when this publication is received by any person in the United States or a "U.S. person" (as defined in Regulation S under the US Securities Act of 1933, as amended) (“US Person”) or any person acting for the account or benefit of a US Person, it is noted that ANZ Securities, Inc. (“ANZ S”) is a member of FINRA (www.finra.org) and registered with the SEC. ANZ S’ address is 277 Park Avenue, 31st Floor, New York, NY 10172, USA (Tel: +1 212 801 9160 Fax: +1 212 801 9163). Except where this is a FX- related or commodity-related publication, this publication is distributed in the United States by ANZ S (a wholly owned subsidiary of ANZ), which accepts responsibility for its content. Information on any securities referred to in this publication may be obtained from ANZ S upon request. Any US Person receiving this publication and wishing to effect transactions in any securities referred to in this publication must contact ANZ S, not its affiliates. Where this is an FX- related or commodity-related publication, it is distributed in the United States by ANZ's New York Branch, which is also located at 277 Park Avenue, 31st Floor, New York, NY 10172, USA (Tel: +1 212 801 9160 Fax: +1 212 801 9163). Commodity-related products are not insured by any U.S. governmental agency, and are not guaranteed by ANZ or any of its affiliates. Transacting in these products may involve substantial risks and could result in a significant loss. You should carefully consider whether transacting in commodity-related products is suitable for you in light of your financial condition and investment objectives. ANZ S is authorised as a broker-dealer only for US Persons who are institutions, not for US Persons who are individuals. If you have registered to use this website or have otherwise received this publication and are a US Person who is an individual: to avoid loss, you should cease to use this website by unsubscribing or should notify the sender and you should not act on the contents of this publication in any way. Vietnam. This publication is distributed in Vietnam by ANZ or ANZ Bank (Vietnam) Limited, a subsidiary of ANZ. Please note that the contents of this publication have not been reviewed by any regulatory authority in Vietnam. If you are in any doubt about any of the contents of this publication, you should obtain independent professional advice.
This document has been prepared by ANZ Bank New Zealand Limited, Level 10, 171 Featherston Street, Wellington 6011, New Zealand, Ph 64-4-802 2212, e-mail [email protected], http://www.anz.co.nz