Graphs - Hon Bill English MP

By: Bill English  06-Dec-2011

Graphs - Hon Bill English MP

November 2010. Recently I’ve talked about the rebalancing that is underway in our economy as a result of people spending less and saving more.

This chart shows whether, at an aggregate level, households are injecting or withdrawing equity from their homes.

It does this by looking at the amount that households are spending on new housing or renovations, and comparing that with the change in the value of mortgages being secured against the housing stock.

When the increase in mortgages is greater than the new investment in housing, this is effectively an equity withdrawal. An example of this is if you increase your mortgage to pay for a holiday. Conversely, when the new investment in housing is larger than the increase in mortgages, this is an equity injection.  An example of this is if you fund your renovations from saving rather than increasing your mortgage.

The chart shows that households undertook a massive equity withdrawal in the middle of the last decade, peaking at over $7 billion in the year to June 2007.

There was a significant change in behaviour after that. Households moved sharply from funding via borrowing to saving, with the equity injection in the year to March 2009 being almost $5 billion.

This turnaround is equivalent to about a 10% reduction in incomes, in terms of household spending.

This is why we are not experiencing a consumption/retail led upturn.

The information in this article was current at 02 Dec 2011

Other products and services from Bill English


Media Releases - Hon Bill English MP

Earthquake Commission levies will rise early next year to help rebuild the commission's Natural Disaster Fund and to more realistically reflect EQC's operating costs. The levy increase is a responsible step to ensure EQC can meet its long-term costs and continue to provide disaster cover around the rest of New Zealand in a sustainable way.


Video - Hon Bill English MP

Before I go into outlining the some of the details on the ground, I want to say that our full efforts as a Government will be deployed to help the people of Canterbury deal with this disaster. Ambulances from around the South Island are heading to Christchurch and other South Island hospitals are clearing surgery lists and non-urgent patients so they can take casualties.


Articles - Hon Bill English MP

National's Youth Guarantee allows them to study at Polytechnics, Wananga's and other industry training organisations that suit their needs. First we need to take a proactive attitude to preventing young people from becoming youth offenders in the first place. We instead propose to increase the reach of the Youth Court to deal with younger offenders charged with serious crimes.


Newsletter - Hon Bill English MP

Having the Prime Minister there to formally open the hotel, then to declare the Queenstown Winter Festival open was a boost to the community as they awaited the first snowfall. The Non-Bank Deposit Takers Bill puts in place licensing requirements and strengthens the Reserve Bank's powers, including the power to remove directors.


Focus on Finance - Hon Bill English MP

It helps to lift national savings by returning the Government's books to surplus sooner, increasing the level of private savings in KiwiSaver and providing quality investment opportunities for New Zealanders. Budget 2011 marks the next step in this Government’s programme to tilt the economy towards exports, savings and investment and away from borrowing and consumption.