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Auckland housing facing ‘violent end’ – RadioNZ

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Auckland

Life is about to get tougher for property investors as the Reserve Bank considers clamping down further on their access to credit to buy houses.

Auckland’s housing market has refused to buckle under Reserve Bank pressure aimed at reining in house price growth, which is starting to accelerate again.

And it’s not the only region where house prices are gathering pace.

Reserve Bank governor Graeme Wheeler openly concedes that puts the health of the financial system at risk.

But he’s not giving up yet.

Speaking at the Finance and Expenditure Select Committee today, he told Labour Party finance spokesperson Grant Robertson that the central bank was exploring further measures to tighten the credit noose for investors.

“In Auckland, investors account for 46 percent of the transactions, for the rest of the country it’s around 40 [percent] or a bit more, so it’s very significant,” Mr Wheeler said.

“It’s providing a lot of impetus in the market. So that’s one area we’re looking at around the LVR [loan to value ratios] around investor activity [though] we’re still doing the analysis.”

Measures to introduce loan limits based on income levels – called debt to income ratios – are also in the pipeline.

Reserve Bank deputy governor Grant Spencer acknowledged they were complex and difficult to implement.

But he insisted first-time home buyers would not be the hardest hit.

“If you look at the lending that is high debt to income, a much bigger proportion of that is investor lending than is owner-occupied lending,” Mr Spencer said.

“So, a debt to income ratio, the appropriate threshold in terms of the hurdle, will tend to impact investors more than owner-occupiers.”

Mr Wheeler said tougher controls for investors could be introduced before the end of the year, though debt to income limits were some time off.

He declined to outline what changes he was considering.

At present, the Reserve Bank’s measures are limited to Auckland property investors, who cannot borrow more than 70 percent of the value of a property.

ASB Bank chief economist Nick Tuffley said the limit could be lowered, and a wider net could be cast to capture investors nationwide.

“One option for the Reserve Bank is increasing the size of the deposit needed in Auckland for investment properties. They could look at expanding that investor deposit restriction elsewhere round the country, given there’s a degree of spillover coming through.”

But Mr Tuffley warned these tools had limits.

“The challenge with all of these tools is that the impact on the housing market at least does wear off after a period. So up to six months is all we can hope for with some of the tools that are coming through,” Mr Tuffley said.

“But there are aspects these tools do have which are longer lasting. For example, banks’ share of loans with low deposits has actually reduced as a result. So you’ve had changes in the banking system.

“The impacts on the housing market, however, have been temporary.”

Building and Housing Minister Nick Smith was coy about the Reserve Bank’s plans to target investors.

But he admitted investors had crowded out first-time buyers.

“I’ve been quite open about the fact that the government wants to screw the scrum in favour of the first-home buyer relative to the investor,” Dr Smith said.

“That’s why we’ve introduced the home start scheme – $430 million – that’s why we’ve increased the tax obligation on those that are investing in properties. That’s why we supported the Reserve Bank governor when he put tougher LVR rules on investors as compared with owner-occupiers of houses.”

But Mr Robertson said the government could solve this crisis easily by building affordable houses itself.

And he said their failure to do that was what was putting the financial stability of the country at risk.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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Nigeria's economic Productivity

OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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