Highlights and lessons from the NZ Christmas Drinks in Shanghai

Kea, along with Barfoot & Thompson and KPMG hosted the Kea Shanghai Christmas Drinks in early December. The Kiwi expats, WCNZers and Friends of New Zealand who attended heard from Peter Thompson from Barfoot & Thompson, Simon Hunter from KPMG and ASB. Here are some key learnings about the Auckland housing market, the importance of networking, doing business in China and New Zealand’s economic outlook. 

Peter Thompson on the Auckland housing market

A key learning from Peter Thompson’s presentation was that Auckland house prices will remain stable for the first quarter of 2018. He also advised that it’s unlikely there will be a big drop in house prices in the near future, given the current market, supply of houses and the increasing demand.

Another interesting point from Peter was that the statistics on Chinese buyers in the Auckland housing market are often misrepresented. He put this down to the common practice of including any buyer with a Chinese last name in the statistics, regardless of where they reside. Peter estimated the real number of overseas Chinese buyers as 15-17%, not the 40% that is often quoted. Surprisingly, the largest market of foreign buyers is actually Russia.

Peter also mentioned keeping an eye on any new immigration laws, as they could likely impact the housing market. He added that there is a lot of uncertainty around this at the moment so it is hard to get a clear picture of what these law changes may be.

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Simon Hunter on doing business in China

Simon Hunter from KPMG spoke about the importance of networking and connections, particularly when doing business in China, where relationships are key and trust in business is built up over time.

Simon also discussed the work he and KPMG are doing in the New Zealand agrifood sector and the opportunities created by disrupting supply chains, particularly around the disruption online platforms are having on food supply chains in China.

“Our instinct is to think Alibaba or Tmall, but for food there are many niche platforms that are growing exponentially.”


Another key point Simon raised was the differences between Chinese e-commerce and New Zealand e-commerce, in particular the level of investment, marketing and social media activity required to drive demand in China. How New Zealand firms position themselves in Chinese platforms will be important for many current and future exporters.

ASB on NZ’s economic outlook

ASB shared their latest economic update, with Chief Economist Nick Tuffley outlining NZ’s economic outlook for 2018 and beyond.

In the short term, with the change in season and government, NZ can expect some uncertainty as a number of businesses wait for guidance before making any big decisions. This however, Nick says, is completely normal with any change in government and is usually very short-lived.

Key changes we can expect from the new government:

  • A focus on immigration and housing, with regards to tax and legislation taxes.

  • Policy to reduce inbound migration to reduce the stress on infrastructure.

  • Tax changes to discourage property investment.

  • A focus on regional development, particularly on forestry, infrastructure and rail.

 

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Nick says the new government will focus on reducing inbound migration, as the strong migration NZ has experienced for the past few years is starting to put stress on NZ’s infrastructure, particularly housing.

A number of potential or likely changes to housing tax and law were outlined:

  • Changing the brightline tax from two years to five years.

  • Ending negative gearing, where losses from property can be offset against other income.

  • Relaxing regulations to speed up the building of homes in main centres.

  • The tax working group may well recommend a capital gains tax in the future.


There’s also likely to be more coordinated thinking when it comes to infrastructure planning i.e. more matching up of housing and transport planning to create more cohesive developments.
 

 

ASB also outlined some challenges and opportunities for New Zealand businesses going forward.

The drive to build affordable homes

The building of new homes provides a lot of opportunities for businesses who can come up with innovative ways of building and developing new infrastructure.

Change = opportunity

Change always means new opportunities in any sector, so NZ businesses have a real opportunity to capitalise on any new changes.

Immigration and skilled workers

Nick says some NZ businesses have a slight worry that changes to immigration will mean they can’t find the skilled people they need. However, there is a lot of opportunity for the people with the right skills to step in.

 

Overall, Nick’s main message for New Zealand and NZ businesses is that governments come and go and the main drivers of NZ’s economy are the fundamentals such as exports, trade and inflation, which are all looking pretty good.