Duncan Garner: Top brains spooked about economy taking a dive

News 28/03/2019

OPINION: How confident are we that our economy can stand up to ongoing pressures? There's so much talk that we could crash. Our trading partners are struggling so will our economy turn to mush? 

The outlook is soft.

There’s no doubt about that. That's why the Reserve Bank has forecast interest rate cuts to keep the economy ticking over. 

It's good for those wanting a mortgage but it's a sure sign our top brains are slightly spooked about the economy taking a dive.

Let me just say it's in none of our interests that we take a dive - only a few speculators who know what they're doing usually win - the rest of us economic plonkers just hang on for dear life and hope we keep our jobs, houses - if we have those - and hope we can still pay the bills. 

So often sentiment or confidence will tell you the economic story and if my next example is anything to go by we have parked our confidence at the big bonfire and we're about to watch the economy burn.  

Yesterday Bayleys real estate had 10 properties for sale at an auction in Auckland, eight houses and two apartments. These were older villas and the like in Mt Albert, Mt Eden, Pt Chev, Titarangi, and apartments in Grey Lynn and the city.

Guess how many sold? The room was full, not a chair available, but here's the answer – not one of the eight sold. Worse still, in the full auction room, there was not one bid.

Buyers have lost confidence. Eight houses in a tight market and clearly no one wanted to part with their cash.

People are unsure, nervy and probably over cautious.

The two apartments sold - one for $912,000 and one for $1.35 million.

The $912,000 apartment was bought for $910,000 three years ago. Add in the $30,000 commission and that seller just lost $28,000 in the housing market.

Yesterday's auction sums up our economy. We’re watching, waiting, hunkering down, and we’re not putting our money anywhere. But money must move for an economy to grow. Let's hope we don't burn as a result, something tells me we are not at the bottom yet so hold onto your hats and your jobs.

Duncan Garner is host of The AM Show.