House Prices

Beware of good news avalanches

A huge amount of positive economic news came out last week – strong retail sales for the June quarter, very low unemployment and a bumper profit from Fletcher Building suggesting that the housing sector is going gang busters.

Saturday, August 21st 2004

Unfortunately, for share investors this avalanche of good news is unequivocally bad news.

There is no contradiction here, for there are clear negative consequences awaiting the economy as a result of what is happening at present.

At the beginning of any upswing, when there is lots of spare capacity in the system, good economic news is welcomed by the sharemarket. Rising retail spending and an improvement in consumer confidence or the property market at such a stage of an economic cycle is normally universally positive for shares.

But with the New Zealand economy as capacity-constrained as it ever has been, every piece of further good news increases the chances of a hard landing in the future. The raft of good economic news received should also remind investors that the current profits being earned by their companies are coming at a time of cyclical highs.

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Heartland Bank - Online 6.69
SBS FirstHome Combo 6.74
Wairarapa Building Society 6.95
Unity 6.99
Co-operative Bank - First Home Special 7.04
ICBC 7.05
China Construction Bank 7.09
BNZ - Classic 7.24
ASB Bank 7.24
ANZ Special 7.24
TSB Special 7.24
Unity First Home Buyer special 6.45
Heartland Bank - Online 6.45
China Construction Bank 6.75
TSB Special 6.75
ICBC 6.75
ANZ Special 6.79
ASB Bank 6.79
AIA - Go Home Loans 6.79
Kiwibank Special 6.79
BNZ - Classic 6.79
Unity 6.79
Westpac Special 6.39
China Construction Bank 6.40
ICBC 6.49
SBS Bank Special 6.55
Kiwibank Special 6.55
BNZ - Classic 6.55
Co-operative Bank - Owner Occ 6.55
ASB Bank 6.55
AIA - Go Home Loans 6.55
TSB Special 6.59
Kainga Ora 6.99
SBS FirstHome Combo 6.19
AIA - Back My Build 6.19
ANZ Blueprint to Build 7.39
Credit Union Auckland 7.70
ICBC 7.85
Heartland Bank - Online 7.99
Pepper Money Essential 8.29
Co-operative Bank - Owner Occ 8.40
Co-operative Bank - Standard 8.40
First Credit Union Standard 8.50
Kiwibank 8.50

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