Will supermarket prices ever fall?

Dear *|FNAME|*,

As we head into a new month, we also head into a period where COVID-19 restrictions are beginning to lift.

Business are no longer required to display QR codes, require check-ins or keep records of attendees. There are no longer the same limits on outdoor gatherings and events, which means sporting events can return to playing in front of fuller crowds.

In summary:

• My Vaccine Pass requirements will continue until 11:59pm Monday 4 April 2022.

• No number limits for outdoor gatherings and events.

• Face masks not required at outdoor events.

• 200-person limits for indoor gatherings and events.

• Businesses do not have to display QR codes.

Visiting our offices will remain essentially the same, and you’re still welcome to opt for calls where appropriate. If you have any questions about that, please feel free to contact us.

Commerce Commission supermarket study’s recommendations feckless?

You may recall our discussion of inflation's impacts on grocery prices in January, and our August 2021 news that the Commerce Commission was investigating grocery prices and the duopoly that controls the market. Their final report has now emerged.

Unfortunately, many people believe the report did not go far enough. Retail consultant Nick Hogendijk believes consumers were waiting for strong action against the two major supermarket groups.

This is particularly because the report concluded they made about $430 million in “excess profits” each year between 2015 and 2019, and Deloitte estimates the supermarkets’ net profits are 2-2.5 percent higher than the international norm. And as prices increase due to inflation and supply chain issues, the issue is becoming even more prominent.

So what does the report recommend? Measures include:

• Making more land available for new supermarkets.

• An appeal for Countdown and Foodstuffs to provide better access to wholesale groceries to businesses such as dairies and specialty shops.

• A mandatory code to ensure supermarkets treat their suppliers fairly and use their market power responsibly.

But would that lead to the kind of price results consumers might expect? And will it make things any easier for other supermarkets to enter the market? Commerce Commission commissioner John Small says it hasn’t investigated that with any potential supermarket entrants.

Of course, grocery prices aren’t the only thing on consumers’ minds at the moment. Fuel has been a big issue, too. And this is another area where the Commerce Commission might not have delivered on consumer and competitor expectations as well. Petrol stations now display additional prices for fuels other than 91 as a result of the report, but it’s unclear if the report and its recommendations have had any impact on fuel price margins. And those margins are something many of us have wondered about.

On the supermarkets front, it’s now up to the Government as to what measures they might actually enact.

Minister of Commerce and Consumer Affairs David Clark has suggested they could go further than the report’s recommendations. For example, he has not ruled out a measure the Commission considered but left out of its final report: requiring Countdown and Foodstuffs to sell existing stores to make way for a new competitor.

Property managers likely to face regulation

Following on from a 2020 election promise by Labour, property managers are likely face regulation in the near future. New Zealand is currently one of the only OECD countries that does not have any such regulation in place.

The latest development is a discussion document released by Associate Housing Minister Poto Williams, which explores how things might be made “fairer for renters and landlords,” and maintain the reputation of the property management industry.

The proposed regulatory model includes:

• A public register and licensing for individual property managers

• Professional requirements, including a minimum age of 18, a "fit and proper person" test, and basic training of about 15 hours.

• Continuing professional development at about 20 hours a year.

• A code of conduct.

• Insurance and trust account requirements.

• A tiered complaints framework.

• Offences and penalties with maximum fines of $40,000 for individuals and $100,000 for a company.

• An approach for cost recovery.

• Regulatory management by the Real Estate Authority or MBIE, and regulatory stewardship.

This will apply only to professional property managers, and not private landlords.

Submissions on the discussion paper are open until April 19 2022. If you would like any advice on how the proposal might affect you as a property manager, property owner or tenant, please feel free to contact our property team.

Monthly Housing Update

Has the property market passed its peak? CoreLogic research suggests so. Higher mortgage rates and less access to credit seems to be slowing market growth—or even turning it negative in places.

Speaking to Newshub, CoreLogic chief property economist Kelvin Davidson said that while conditions remain comparatively stronger in Christchurch, parts of Auckland, Hamilton, Napier/Hastings, Wellington, Kapiti Coast, Dunedin and Queenstown are seeing some weakness.

All Christchurch suburbs saw price increases in February, but experts anticipate a drop here as well, with Davidson predicting five percent. The market here is also seeing a “stand-off,” with sellers holding out for higher prices, and buyers trying to avoid buying at the peak.

“The mood has changed,” Davidson says. “The market in 2022 will be very different to last year.”

But there are, of course, still good opportunities out there for both buyers and sellers. If you feel it’s the right time for you to enter the market on either side, we’re here for advice and assistance.

Thanks *|FNAME|*.

That’s it for another edition of Legalchat. We know it's been an eventful time for many, and as always, we're just an email or phone call away for any questions or advice to help guide you through it all. Otherwise, we look forward to chatting with you next time.

Regards,

Clive, Grant and the Team at Canterbury Legal