Surplus ahead

The New Zealand government’s operating surplus is still running ahead of expectations in the first eight months of the financial year as high employment rates bolster income and consumption taxes. The operating balance before gains and losses (obegal) was a surplus of $2.85 billion in the eight months ended February 28, more than the $2.36b surplus predicted in December and twice the $1.41b surplus in the same period a year earlier. Core Crown taxes rose 5.7 per cent to $50.86b, some $692m more than anticipated with goods and services tax and source deduction beating expectations. Core expenses rose 3.9 per cent to $52.3b, largely in line with forecast. The 2017-18 season was influenced by avocado trees producing very poor crops in some orchards, with Te Puke grower Ron Bailey saying his production fell to 50 tonnes — 250 tonnes less than his bumper crop the previous year. “That was typical of a lot of growers.” Bailey said the cyclic seasonal variations in crop volumes was unfortunately what avocado trees did. However, things were looking much better for the harvest due to commence in August, with national production forecasts of up to 3.5 million trays for the season — 1.3 million trays more than this season. “Volumes are looking good.” residential real estate has reached a new high. It now stands at $1.07 trillion of which 23 per cent or $248b is borrowed in home loans, according to new research from CoreLogic NZ. CoreLogic NZ has just issued its monthly property market and economic update for March which highlighted rising values. “The value of residential property continues to grow beyond one trillion dollars, outperforming the value of other asset classes. Residential mortgages are secured against 23 per cent of this value,” the report said. CoreLogic contrasted house values with the values of other asset classes: NZX listed stocks at $130b, commercial and industrial real estate at $201b and NZ Super and KiwiSaver at $79b.