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Reserve Bank lifts Official Cash Rate by 50 points to 1.5%, 'bringing forward' monetary tightening to avoid high inflation becoming embedded

Public Policy / news
Reserve Bank lifts Official Cash Rate by 50 points to 1.5%, 'bringing forward' monetary tightening to avoid high inflation becoming embedded
Adrian Orr

The Reserve Bank's (RBNZ) Monetary Policy Committee has lifted the Official Cash Rate (OCR) relatively aggressively by 50 points to 1.5%. 

The Committee said it wanted to act quickly to avoid high levels of inflation becoming embedded.

It described the move as "bringing forward" monetary tightening, saying it "remained comfortable" with OCR outlook outlined in its February Monetary Policy Statement.

This stylised outlook sees the OCR hitting 2.2% by the end of the year, 3.3% by the end of 2023, and 3.4% in 2024. 

The Committee said, "Members noted that annual consumer price inflation is expected to peak around 7 percent in the first half of 2022. The risk of more persistent high inflation expectations has increased.

"The Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations and minimise any unnecessary volatility in output, interest rates, and the exchange rate in the future."

It also said, "A larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment."

Most New Zealand bank economists were expecting a 25-point hike, however financial markets had priced in a 50-point lift. The OCR hasn't been lifted by this much in 22 years. 

The news saw the New Zealand dollar rise against the US, before dropping right off. 

The Monetary Policy Committee is tasked with ensuring the Consumers Price Index (CPI) rises by between 1% and 3% each year. In the year to the December 2021 quarter, the CPI rose by 5.9%. March quarter figures will be published next Thursday (April 21). 

The Committee is also required to support "maximum sustainable employment".

It said employment is "above its maximum sustainable level". The unemployment rate was 3.2% as at the December 2021 quarter. March quarter figures are due out on May 4. 

The Committee will next review monetary settings on May 25, when it will also publish a quarterly Monetary Policy Statement and provide commentary in a press conference. 

Below is a statement from the RBNZ following today's review. 


The Monetary Policy Committee today increased the Official Cash Rate (OCR) to 1.50 percent. The Committee agreed it is appropriate to continue to tighten monetary conditions at pace to best maintain price stability and support maximum sustainable employment.

The Committee remained comfortable with the outlook for the OCR as outlined in their February Monetary Policy Statement. They agreed that moving the OCR to a more neutral stance sooner will reduce the risks of rising inflation expectations. A larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment.

The level of global economic activity continues to generate rising inflation pressures, exacerbated by ongoing supply disruptions in large part driven by COVID-19. The Russian invasion of Ukraine has significantly added to these supply disruptions, causing prices to spike in internationally traded commodities and energy.

However, the pace of global economic activity continues to slow. There is an elevated level of uncertainty created by the persistent impacts of COVID-19, and clear signals that monetary and broader financial conditions will tighten over the course of 2022. Added to this is the high level of geopolitical tension and related economic sanctions on Russia.

In New Zealand, underlying strength remains in the economy, supported by sound balance sheets, continued fiscal support, and strong export earnings. There has been some economic disruption due to the outbreak of Omicron. However, the high vaccination rates across New Zealand are assisting to reduce this disruption.

Heightened global economic uncertainty and inflation are dampening consumer confidence. The rise in mortgage interest rates – amongst other factors – have acted to reduce mortgage demand and house prices. However, economic capacity pressures remain, with a broad range of indicators highlighting domestic capacity constraints and ongoing inflation pressures. Employment is above its maximum sustainable level and labour shortages are impacting many businesses.

The Reserve Bank’s core inflation measures are at or above 3 percent. Inflationary pressure is being further accentuated by current high imported energy and commodity prices, which are lifting headline CPI inflation. The Committee will remain focused on ensuring that current high consumer price inflation does not become embedded into longer-term inflation expectations.

Summary record of meeting

The Monetary Policy Committee discussed developments affecting the outlook for monetary policy.

It was noted that global consumer price inflation is high, well above most central banks’ targets. This general inflation pressure is due to the recent recovery in global demand running up against severe supply shortages and trade disruption. The economic disruption caused by COVID-19 has been exacerbated by rising energy and food prices resulting from the Russian invasion of Ukraine.

The Committee noted that global economic growth is slowing, given supply constraints, consumer price pressures cutting into real incomes, and heightened geopolitical tensions causing investment uncertainty. Central banks globally are also tightening, or looking to tighten, their monetary policy stances over 2022, in an effort to constrain consumer price inflation expectations consistent with their policy targets.

Members observed that financial conditions have tightened in New Zealand, with higher interest rates, a stronger New Zealand dollar exchange rate, and lower asset prices.

It was noted that mortgage interest rates have risen broadly consistent with the outlook for the Official Cash Rate (OCR) in the Reserve Bank’s February Monetary Policy Statement. The Committee noted that the higher New Zealand dollar against trading-partner currencies has assisted to partly offset higher import prices for local consumers.

In discussing the underlying influences on higher domestic inflation, the Committee agreed that both international and domestic factors were important.

Headline inflation is rising largely as a result of disrupted supply chains and higher world commodity prices. These higher commodity prices are increasing both imported inflation and also the incomes of some New Zealand exporters. Domestic demand pressures, relative to supply capacity, are also pushing New Zealand’s core inflation above the Bank’s 1 to 3 percent target range.

Capacity pressures are apparent across a wide range of domestic indicators. In particular labour shortages remain heightened, impinging on domestic economic output. Nominal wages are rising in response to these shortages, as would be expected. However, the increasing cost of living is putting pressure on household budgets. Consumer confidence has been declining as domestic price pressures are outpacing nominal household income growth.

The Committee discussed the outlook for labour supply with the reopening of New Zealand’s international border underway. Members agreed that while the medium-term outlook is for ongoing net inward migration, as is the historical norm, this level would take some time to rebuild. Near-term indicators highlight that New Zealanders are currently leaving in larger numbers than visitors are arriving, as the border is opened in stages. The Committee noted that net immigration is assumed to increase only slowly, eventually leading to a gradual easing in skill shortages.

House prices have fallen from their recent high levels. The Committee viewed this as a sign that house prices are moving towards a more sustainable level. Home building intentions remain at record levels, which will assist this adjustment. However, construction activity faces challenges, including access to land, rising building costs, ongoing supply chain bottlenecks, and limited access to labour. The construction sector is operating around peak capacity.

Members noted that inflation is above target and employment is above its maximum sustainable level. As such, the Committee confirmed that further increases in the OCR are needed in order to meet their mandate.

The Committee discussed the pace and extent to which the OCR needs to rise in order to meet their inflation and employment mandate.

Members noted that annual consumer price inflation is expected to peak around 7 percent in the first half of 2022. The risk of more persistent high inflation expectations has increased. The Committee agreed that their policy ‘path of least regret’ is to increase the OCR by more now, rather than later, to head off rising inflation expectations and minimise any unnecessary volatility in output, interest rates, and the exchange rate in the future. The Committee agreed to a 50 basis point rise in the OCR, consistent with this least regrets analysis.

The Committee noted that the OCR is stimulatory at its current level. Members agreed that a larger rise in the OCR now is consistent with the forward path for interest rates outlined in their February Statement. Members also agreed that this ‘stitch in time’ approach is consistent with near-term financial market pricing.

On Wednesday 13 April, the Committee reached a consensus to increase the OCR to 1.50 percent.

Attendees:

Reserve Bank staff: Adrian Orr, Christian Hawkesby, Adam Richardson
External: Bob Buckle, Peter Harris, Caroline Saunders
Observer: Caralee McLiesh
Secretary: Gael Price

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

253 Comments

As expected.  Good.

EDIT:  Look at the price action in the NZD and swap markets since the announcement - that is the market reaffirming RBNZ’s credibility.  They’ve sent a hawk out over the horizon to find a dove (hopefully it doesn’t have to kill and eat said dove on the long flight home). 

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27

7% interest rates coming to a bank near you !

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15

Go on, stop teasing. Drop the "G" word.

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4

I do wonder if the next round of fixed term mortgage rate increases is coming immediately on the back of this. Lots of pressure in the swaps recently.

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Almost a certainty.  Even if swaps flatline from here (which they won't), margins are getting squeezed.

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5

If you are talking about five years than 7% is not far away...one jump and will see 7%

Not be surprised if do not see anything in 4s in near future.

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Really need to be clear what we're talking about. 5 year standard rates are so much higher than the 1 and 2-year specials that actually matter. So if you want to predict rates, please be clear.

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Or just don't? 

It's clear rates are heading up. The magic trick would be predicting to what peak and for how long.

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It's a good thing everyone took the 7% stress test very seriously for the last 5 years...

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37

Go long 2 Minute Noodles

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lol

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I fear this is too little, too late.  Fingers crossed I'm wrong

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Pragmatist called it this morning.

Key outtake for me:

House prices have fallen from their recent high levels. The Committee viewed this as a sign that house prices are moving towards a more sustainable level. ...Members noted that inflation is above target and employment is above its maximum sustainable level. 

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I also called it, but I used a more complicated and technical mapping strategy. Carlos67 said it was going to be 0.25. Most people say Carlos67 makes predictions that are usually wrong. So I therefore said it must be 0.5% increase in the OCR. 

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As I have been saying for months house Prices will need to come down to a level where average wage earners can afford to buy a house this would be around 450k max. Some people and investors with huge loans a million plus for 3 bedroom place on tiny lot crazy prices.We are now in a downward spiral and will hit bottom around 2016 prices. Hopefully the people who purchased over last 4 years made money on way up because anyone purchasing in last 3-4 years will lose deposit and be in negative equity for years.

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you know what would be funny. 

If RBNZ supports the view above and defines this as sustainable.  So when the govt says they need to take house price stability into consideration the RBNZ say 'great, we can increase rates and kill two birds with one stone!'

Just a thought, though for all the calls of govt supported Ponzi, it's conceivable that Orrs idea of what is an acceptable house market correction is to a far lower level than what most of us expect.  Perhaps when the banks come out and ''predict'' (ie ask for what they want to see) they are trying to talk the RBNZ up from a lower target.

Just a thought...

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Have to see if they back it up with another 0.5% in May before I claim my crown.  .  They should, and I hope they do, but if the data is bad they may back it off.  Either way, we aren't getting three 0.5% raises in a row.

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The government and media also said interest rates were going to stay low for a very long time. So that basically means interest rates are going through the roof very quickly.

I wonder if Carlos67 works for the media ? maybe the government ?

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This website really needs a mute function...

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By all accounts, old mate Carlos doesn't work at all.

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Correct, others here need to update their little black book, I quit full time work years ago. By the way a 50bps rise is better for me than a 25bps rise with money in the bank so don't really care if I'm wrong. Said the last two rate reviews should have been 50bps its just the RBNZ is simply to slow to react. Basically I'm right if the next review is another 50 bps rise as that will put the OCR where I predicted it would be so who cares.

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Basically no sorry Carlos you were wrong and now starting to sound like a politician. It's ok we don't care..but keep up the predictions so we can bet the other way.

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Agree 100%. I think it is going to be another 50 bps increase, followed by another 25 bps increase.

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house prices are moving to more sustainable levels    HAHAHAHAHAHAHAHA     Chris Rock style comedy 

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Moronic comment. No one has a right to complain about property peoples comments after this.

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Moving, i.e. have started moving.  Did you expect it to happen all at once?  

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I'm sure this thread will be full of rational, level-headed comments.

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... only the world's finest trained lunatics here @ interest.co.nz  ...

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19

Yeah, me and you included :)

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Which lunatic school did you go to?

Mine was the Hallowed Halls of Lunatics Chapter V11X. Subgroup FRP.

It was an expensive course but well worth the extra investment in my view.

The speciality of this chapter is of course Quality Lunatic web postings 101. Which allow people who pass this subject the ability to convey random thoughts in a convincing way. And if the opportunity arises to convey these in person, an important technique is to nod the head while conveying the key message, and to raise and lower the eyebrows in a seemingly random manner, but it is all just complying with a tried and tested system.

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Oh I must be in the wrong place then.

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That sarcasm on that is so thick its not dripping, its oozing.

The interest comments section is getting as bad as r/newzealand lately.

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Nothing is as bad as r/newzealand.

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Bring on the crash.

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14

I'm guessing you've been waiting for it...

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12

What will crash?

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Property prices will definitely crash if ANZ is right, and the OCR goes north of 3%. 

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HouseMouse is a valuer in addition to being a Jack of all Trades and a general good bloke. Knot. Btw he always gets his predictions  of property direction Rong.

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What’s your rebuttal? Why don’t you think prices will crash if the OCR goes above 3%?

look forward to your rational response.

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I really dont like talking to you, you come out with nonsense words. Funny how you want to engage with me yet you get the huff with printer8

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No compelling argument? Fine, your prerogative.

I got the huff with P8 because he kept misrepresenting what I have said, in a big way. You don’t think that’s fair enough?

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Housemouse, Housemouse 

That is not fair, I don't misrepresent you . . .  :)

 

by HouseMouse | 16th Feb 22, 6:19pm

Wouldn't touch the 3 year with a barge pole.

Mortgage rates will be back in the 2-3% range within 2 years.

 

by HouseMouse | 26th Jan 22, 12:09pm

. . . . 

So raising the OCR to 1.5-1.75 max.

by H

ouseMouse | 24th Feb 22, 1:18pm

2022, and I haven't said inflation will be 'done'. I think from late 2022 through to late 2023 it could still be in the 3-4% range. So not 'done' but a lot lower than now. I guess you could say that I think *high* inflation will be 'done'.

And inflation subsiding is only part of the reason I think the OCR won't be lifted above 1.75.

 

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piss off

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by HouseMouse | 13th Apr 22, 7:40pm

No compelling argument?

So "piss off" is a compelling argument?

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I don't have any time for people who intentionally misrepresent my position. I corrected him, and no apology or acknowledgement of that. Pathetic, childish.

People like you and HW2 seem to think misrepresentation is fair, as if I don't have a valid gripe. Good for you if you think misrepresentation is fair...

How would you feel if I misrepresented you on several occasions? Would you feel like engaging with me after that? 

'Yvil said at the end of 2021 that house prices would increase by 15-20% in 2022'

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Housemouse, I'm sorry that you are being trolled.    They are bullies, and are probably all panicking about interest rates.    Picking on you makes them feel good.  It dosen't make you look bad, you can safely ignore the trolling.  Don't feed the trolls with attention.

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Do you stand by your prediction of a 10-20% increase in house prices this year P8?

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HouseMouse

Desperate stuff.:) 

Never said such a thing . . . posted late 2020 that I thought then increases were unsustainable and that market would be flat or show some decline. It took a year to come about. Even your mate IO has been critical of me for having that view. 

Happy for you to show otherwise. 

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Man your are dumb, can't believe you fell for my bait...

Now you know what gross misrepresentation feels like. 

Walk on, old man.

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HouseMouse

You need to keep it honest and stop telling porkies that I was predicting 10 to 20% rises for this year. 

by printer8 | 18th Dec 20, 9:19am

Clearly the current rate of housing inflation is unsustainable (even Bindi has publicly said so) and it poses risk of significant correction which is neither in the RBNZ nor the government’s interest.

and

by printer8 | 3rd Mar 21, 11:35am

Yvil
Yes, I think that most are now seeing current price rises as unsustainable.

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I'm just doing what you are doing to me....totally mispresenting your position.

I corrected your misrepresentation and never received an apology.

 

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HM,

Again, you make some good, smart comments but then you lose your temper too often and go off the rails.  This is a character trait, so not depending on a topic but something that will happen in social settings as well.  It's really not good, I hope that, in time, you will find a way to control your anger and more peace within yourself.

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I don't need a patronizing lecture from you.

See how you feel if someone here misrepresents your views on an ongoing basis. 

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Housemouse, housemouse

How can I misrepresent you when I simply repost what you have posted??

Cheers

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What if I wasn't patronising but honestly giving helpful advice?

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Housemouse

Some good news - I will ease up, but you really need to ask yourself why you leave yourself open as you do. 

Have a great Easter 

Cheers

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Come on, people.  Everyone involved in the above scuffle has a lot to add to the debate.  Nothing is right or wrong in economics and predictions are all but worthless.  What matters and adds value is the reasoned argument behind the prediction and I certainly get a lot of value from HM's line of thought, without worrying too much about what was predicted, when, and who may or may not have misrepresented it.  

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by HouseMouse | 13th Apr 22, 8:35pm 1649838956

Man your [you] are dumb, [ I ] can't believe you fell for my bait...

Now you know what gross misrepresentation feels like. 

Walk on, old man.

 

What a dumb and disturbing way to act, HouseMouse. You lose any credibility you might have had

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Flying High, some people with big mortgages are pissed and angry because it seems only like yesterday the RBNZ were talking about negative rates. Many on here claiming that interest rate rises simply could not happen and were in fact impossible. Looks pretty clear to me that the RBNZ will push this now to the safety limit of between 6 and 7% mortgage rates for 1 to 2 year terms. This is going to have a very bad effect on discretionary spending for some time to come. Its now time to pay up for that free money lolly scramble of the last couple of years.

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It's still slightly free money if the interest rate is less than inflation, isn't it?

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HouseLouse has burnt all his bridges on this side of the river.  Tim Mordaunt will take him.

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Tim's a balrog now?

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Do you stand by your prediction of a 15-20% house price increase in 2022, House Works (2)???

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As they said, 'we'll have to hike even if this will be bad for assets". This will kick matters off the cliff into winter.

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... if followed by a further 50 points rise in May , this'll be just what the housing market desperately needs ... and a boon to savers , the elderly , with term deposits ...

Question is : why did the Reverse Bank choose to crush the OCR so low in the first instance ... time to repair the damage , huh !

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41

While inflation continues to run hot, real returns on savings are still negative. 

This is "less bad" for savers, but its far from good.

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34

Ah yes, cashed up retirees, the real victims in all this. Won't someone think of the boomers? 

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No they can be damned having built pretty much everything you can see.  Having worked your whole life and are now past employment living on your savings we can feel free to curse you for absolutely no reason.

Honestly, take the red pill.

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What was built of any consequence between 1946 - 1964 in NZ?

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You are joking. I hope.

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Definitely a fair bit of building of affordable housing supply which helped NZ to attain its once high home ownership rate by the 1980s and 90s. All undone with policy changes in recent decades, to the benefit of those who had that affordable housing left to their generations by predecessors.

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If we are interested in what the facts say, we could say that the Boomers led a building "boom" (couldn't resist) and built more house in 73-74 than ever before or since.  Yeah Boomers did that.  They also built the sealed roads, all the motorways, almost all our electricity generation, our airports our harbours etc.  Yeah Boomers did that.

But they can go to hell amirite???

https://www.stats.govt.nz/news/45-year-high-for-new-home-consents

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And then as 7-to-27-year olds benefiting from those policies and years leading up to 1973-74, who then changed things?

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Are you saying that Boomer's "led" the construction boom in the 1970's?  20 - 30 year olds were in charge of managing the delivery of all these projects?

Or were they merely employed to do a job by the golden generation before them?  You make out like they did all this for charity.  

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They built harbours?

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I guess considering how likely it is I will have any savings at all if I'm lucky enough to retire before I drop dead, I have some suggestions about possible methods you could use when you're taking these red pills yourself. Not all of them are orally administered :)

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I mean, it's easy to be sarcastic about it but theres a significant portion of retirees who went into retirement banking on a small but predictable return on term deposits. People who because of their age probably shouldn't be investing too heavily in risk assets.

I would call them one of the many victims in all this.

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This is true. And their savings wealth has been transferred to asset speculators as much as younger Kiwis' wage and savings wealth has been, in recent decades' entitlement-driven tax and housing policy.

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100 percent agreed, and to think otherwise is ingenuine. 

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J_U,

"ingenuine" Splendid word, pity it doesn't exist. Try ingenuous.. 

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"ungenuine" would be a better fit.

https://www.merriam-webster.com/dictionary/ungenuine

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disingenuous? 

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That the NZ annuities market sucks is part of the issue. IMHO the Superfund should offer KiwiSpend annuity products with a guaranteed return for whole of lifetime. No money back on death (so guaranteed rate can be decent) but that's OK because it's patriotically supporting the NZ sovereign wealth fund. No obligation to buy but at least an option for a predicable source of income for retirees. 

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This has set a precedent. 0.5% for May as well. The OCR is going to double over a very short timeframe. 

7% interest rates this year Guaranteed !

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0.5 today, 0.5 in may, then back to 0.25, unless the data is bad, then it might be a nothing.

But still not going to hit 7%, except maybe for 5 yr mortgages on the non-special rates.

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five year mortage is already near 6% so 7% is possible in near future.

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.

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Nah, only the standard rates, almost nobody publishes the special rates at 4 & 5 yr terms.  Real 4 and 5yr rates are still around 5.5%

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Almost nobody publishes 4 & 5yr specials? Err, everyone except ANZ does. 

5yr specials are all knocking on 6%. 

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2022 - I have requested you get a ban

a) you repeat the same comments each day;

b) your too silly to ever state a term for your 7% despite being asked.

 

Do us all a favour and stop commenting 

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If you insist on cancelling a year, may I suggest cancelling 2020.

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COVID - "hold my beer..."

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If you don't like it just scroll on.....like we do with TTP and other spruikers saying the same s**t over and over again.

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How did your Ban Application get on atknz ?

by Brock Landers | 11th Apr 22, 3:29pm

To be fair, he is correct, 7% is a certainty. It would be financially astute to listen to him.

Listening to the "be quick" clown would have been catastrophic.

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Agreed. It’s not constructive.

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By that logic you should have been requesting TTP to be banned for the last few years, with his incessant battle cry of "property only goes up!" and "soft landing!" (paraphrasing here) while offering no data or analyses.

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"7% interest rates this year Guaranteed !"

 

That's a very vague prediction, for which term? 1 year? 5 years? floating?  Or are you just throwing a number out there, hoping that any term, at any time during this year will hit your number so you can claim you're Nostradamus?

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Gummy bear you are on to it today, correct they have fooled a lot of people pushing up house prices to crazy levels as rates return from emergency levels people, speculators with million plus mortgages will be wiped out this is what FOMO and greed with bad advise will do.

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I guess not many TD and savers on here because in case nobody noticed the banks are still not moving the savings rates up. The big four are now screwing everyone with a mortgage and are not lifting the savings rates in unison. 

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In the past when interest rates rise the higher priced houses fall more in value than the cheaper ones. Less buyers. If you are thinking of upgrading and the bank will assist you then you should do well. 

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Due to Council policy they are all high now.

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You can still pick up a 3brm home in Mangere East for $1.3m.......

Do you think any of bank CEOs went and looked at what they were lending money for....drove to South Auckland and checked the valuations...?

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Whoever posted this gem the other day takes the cake.

https://www.trademe.co.nz/a/property/residential/sale/listing/3543966606

Price reduced.  Be quick!

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"Who farted!!?"

"Our Neighbour.. <looks over shoulder through lounge window> hi Jim"

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My favourite part is - "Urgent sale needed for next project!"   

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Not too much room for that inflation busting vege garden in that lot. Oh well, I’m sure the Greens will be happy.

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house Prices will eventually go back to around 2016 level or does anyone think further. The old BS of doubles every 10 year will take a hit

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Come on boys and girls - you're usually all over Orr give him some credit he did what he should do for the first time since being in office! :)

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Cue backhanded compliments

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Its a Committtee decision. Agree they needed to do this but they are behind the game.

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Thank you arsonist fireman.

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Agree, even if he done with gun on his head (inflation) and for a change did not ....or may be situatation is so bad or he can see and .....

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Praising is not a strength of most commenters on this site, blaming, whingeing and complaining on the other hand………………...

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Are you complaining about most of the commentators?

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18

<mic drop>

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Why do you think Adrian Orr deserves compliments at this point?  Inflation is almost 3% outside the target band.  We have had 12 months of data (pricing intentions, employment figures) all pointing to this, but he chose to stick his head in the sand and keep massively stimulatory policies in place - not "neutral" monetary settings, emergency stimulatory settings.

So when he starts to remove the emergency stimulus, months after it was clear it was necessary, after letting inflation get out of control, we are supposed to congratulate him?

Really?

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A truly excellent comment .

.. so what do say now ?

 

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Thanks paashaas

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So says the guy who praises those who only ever say things that he agrees with…

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Hang on, he has simply gone from incompetence to the level of actually doing his job (just), I will hold my applause for now.

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there was an interesting case to actually do 1% today and nothing in May -- the End figures are the same --  but market and public reaction may have been very different -- possibly got more bang for his buck than two .5% rises --      

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I thought Michael Reddell’s comment put the rise in perspective. https://twitter.com/mhreddell/status/1514086922200961024?s=21&t=DSp3GF-…

‘Better than 25bps I guess, but this is the move the MPC should have been taking 6 months ago. The real OCR is still well below where it was in early 2020 pre Covid, and the challenge now is to get core inflation back down again.’

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So says the guy who argued that the OCR should be deeply negative in 2020....

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Sounds like mum talking about first step of baby Orr many more step to come.

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Good job. Certainly the path of least regret, even if we have been caught asleep at the wheel previously.

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... just in the nick of time the Captain at the wheel woke up and shifted course , so that the Titanic wouldnt hit the iceberg full face on ... it'd just sideswipe it a bit  ...

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The price of housing will never sink...

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Some people have compulsive denial, people think they're just sleepwalking

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To give the band the chance to start a second set.

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Much, much more will be required if they are serious about getting inflation back to 2%.

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Hopefully this will be the wake up call for those people who firmly believe RBNZ would protect housing market at all cost rather than curbing the inflation.

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"Employment is above its maximum sustainable level and labour shortages are impacting many businesses."

...this often is a sign of a recession on its way. 

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My young 20s kiddoes are doing very alright for themselves. Govt jobs and climbing 

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When will you ask them to leave the family home?

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Multi-generational household and grannies looking after the grandkids, here we come!

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No Never.. they own their own homes bought in previous 2 years at a good price. Yes before you ask, we assisted

 

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6-12 months away by my modelling. 

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In what way?  Genuine question, how does full employment signal a recession?  I get how it will affect our maximum potential growth negatively but how will it move to a recession?

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Hmmm - will be interesting to see how much impact this creates on the house market. The OCR is now back at the same level it was at on the 8th May 2019 - 3 years ago and before the majority of regions house prices took off. One more rise will take the OCR back to the Sept 2016 OCR.

Now on that note here's this weeks Hutt Valley Housing Market update. Are we facing the perfect storm

1. High levels of housing stock and rental stock- exacerbated with high numbers of new builds

2. Rising Interest Rates

3. Low immigration.

4. Lower demand due to investors leaving the market - low yields and lots of competition coming.

 

I've added a new measure in this week  number of houses on the market > 90 days - effectively those that listed in 2021.

 

Current Market Listings

665 houses on the market- increase of 13 on this time last week and an increase of 70 houses since the 9th March. I’m predicting over 700 houses could be on the market by the end  of April.

Based on the REINZ data which showed that 96 sold in Feb – 672 houses means there is  7 months stock on the market

Using the 20/21 data where 40 houses a week sold then there is 17 weeks of stock on the market

 

House Price Reductions

294 houses have a listed price and again this week prices have continued to fall, although only 50% of the houses listed have reduced prices The average markdown is steady at 70K.  Previous reports have shown markdowns as high as 60% of the market. In the last few weeks more houses have listed with prices but fewer are reducing their prices. Looks like a number of listers are taking a longer wait and see approach , this could also indicate recent listings don’t have the same urgency to sell as previous listers may have had.

The data continues to show the majority of houses listed are under 900K. The Median house price for all 665 listings is now 839K. (10K drop on last week)

Most sales on the market continue to be at the 800K-$1 Million mark. The bottom quartile still seems to be very sluggish with very few sales.

Length of time on the Market

Given how slow the market now is – I’m adding a new Length of time – which is houses that have been on the market for over 90 days- effectively these houses listed in 2021 and remain unsold.

  • 428 of the houses have been on the market for over 30 days  - 64% (last week it was 403)
  • 256 of the houses have been on the market for over 60 days - 39% (last week it was 243)
  • 130 of the houses have been on the market for over 90 days – 20% (last week was 134)

The percentage and number of houses on the market longer than 2 months is growing each week – indicating a stagnation of house sales.

 

Rental Market

Meanwhile the rental market has 175 properties for rent (up 5 on last week), up 53 on this time last year.

A number of properties are taking some time to rent and having to drop their rental price up to $100 a week in order to rent the property. Average rental price reduction YTD is $47 a week and 40% have dropped their prices since listing.

Three brand new properties are advertising this week – with first week rent free and have had to 2 of the 3  have dropped their rental price from the original listed price.

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Always great to get some really detailed, granular data.  Keep it coming, its much appreciated.

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Thanks for this. I find it very interesting. Do you have any idea of listings that were withdrawn versus sold?

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I do have that data ( please note in my data i record only those houses that have a listed price If a house has never listed with a price then I wont know if its been withdrawn from the market) . For those that have had a listed price 78 houses since the 1st Jan 2022 have been removed from the market unsold and 13 of those have been rented instead.

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Keep this up,  you'll get a QSM

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What is needed now is for the Minister and the Bank to set an interim target for returning inflation to the band.  it is too easy for the Bank to let things slide. 

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And some clarity around planned future migration levels. Are we going back to the population ponzi we had before? I'm guessing the answer is 'probably'. 

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... no , I recall Jacinda saying recently that 25 000 annual immigrants would be the top end .... 

Given the pent up desire for Kiwis to OE , I'd say we could have a net population decrease over the next year or so ..

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It's only the ones that won't vote Labour that are leaving, and the ones being allowed in will vote Labour. Who cares if the pie gets smaller if you can retain or grow the size of your piece.

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Sounds like a communist pie.

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net immigration is running at around negative 7,600 (year to feb 2022)

4k more people left NZ than arrived in the last 3 weeks. This is just on arrival vs departures

all data on statsnz page

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Don't worry though, in the last year we built 30k houses for all those immigr... hang on a second...

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We only just allowed the first bunch of non citizens/residents back in last night, those numbers are just reflecting the old restrictions. 

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Totally aware of that

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100% - To be fair we need more skilled workers, if the open the boarders, hopefully they have better rules this time. 

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Yes, it takes many years of study and training to be able to pick fruit.

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"The Committee noted that the OCR is stimulatory at its current level. Members agreed that a larger rise in the OCR now is consistent with the forward path for interest rates outlined in their February Statement."

Since 1.5 percent is a historical low for the OCR pre 2019 wouldn't it be a safe bet that this current rate is still stimulatory?

Glad to see them start making movements. be interesting to see what the next desiscion is. 

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Yes 1.5% OCR is still definitely stimulatory.  Rates will need to go a lot higher.

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The OCR peak will have to go to between 4% and 5%, regardless of the RBNZ's wishful thinking. They probably already know that it is a likely scenario, but they are hoping that it will not eventuate. The Covid excuse is disappearing fast, and they are now running out of excuses for not finally  normalizing interest rates.   

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Good decision, if we think rationally

But still, 1.5% seems to be the emergency rate, a lot more needs to be done. 

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I think a ‘stitch in time’ was actually some time ago.

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A stitch in time saves...$900,000?

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Good. Need to control Inflation.

Better Late.........Can delay but cannot avoid blood on the street, for once it has to,  before Good time.

Like Life let economy cycle run.

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He should have bet the house and increased by a full one percent. Opportunity lost.

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Lol, he did... just not his one!

Where was this 4 years ago when houses were ballooning in price?

Still we're heading into winter with interest rate rises underway - going to be a good buyers market

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Had a browse through TardMe last night to see the dross currently on offer.

Auckland prices could easily drop 40% and still be considered overpriced.

It might be a "buyer's market", but until we see mean reversion, not a good one.

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Yes indeed, the stock is poor.  Unfortunately we have some supply side constraints in the access to building talent and of course the actual building suppliers making bank as well.

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Yep, that's why I have been saying up to 60% drop would see us down to affordable levels.

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Overpriced is relative... thinking that a market will move 40% down is speculation, it's possible but unlikely

The key drivers (population growth, interest rates, tax policy) are pointing to a decline. Employment is still strong (for now) which supports higher servicing ability...

My guess is that a 10-20% decline and then sideways market for a couple of years would stabilise prices and tackle inflation, rather than the doom and gloom prediction which would ultimately cause more pain than it solves

Being a FHB is tough now as I know I had to move cities to do it myself, a correction in the market is a positive thing for everyone

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Wow! This is almost makes me want to say something positive about Mr Orr. I just can't though i'm sorry.

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50bps indeed, good on you RB

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Well there you go, that is a MASSIVE statement from RBNZ! It's on like Donkey Kong.

 

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This is excellent news in many ways.

But perhaps the government will need to think about ways to support people who they lured in (with loose lending policy) to taking out huge mortgages to buy houses during the biggest property bubble in NZ history. Many of these folk (if they haven't fixed for a few years) may find themselves in serious financial straits over the next year or two.

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Many parents shouldn't have given their kids the deposit.

How many do you think are going to be bailing out the kids....if they can? .....major market distortion 

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I feel very fortunate I didn't buy a house last October now! not by luck. But from experience. After seeing my parents get burnt in in 2008 after buying in 2007 at the height of the UK bubble. the pain they went through. the stress it causes. They managed to hold on to it fortunately. only just sold the house last week due to illness. they got what it was valued at. but it was still 5KGBP less than what they paid for it 15 years ago!

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Same happened in UK early 1990s took 10 year for that one to recover 

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Well done, you will certainly benefit from that decision.

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Gosh.  Can you imagine what 🤡WBW's "boys" and those who were "lining up" for his financial advice are doing to him at the moment?  He will never be heard from again.

Time is certainly showing how idiotic it was to be buying towards the end of last year.  Those unfortunate FHB that were not saved by their own common sense are going to be cannon fodder.

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suckered in by the likes of these folk

https://www.youtube.com/watch?v=soEmGbXRq6I 
 

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Oh to be a fly on the wall in that basement.

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What he didn't mention was that his 'basement' was located somewhere south of Belarus

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This is good news . Also good for first home buyers, as they will be getting more interest on their deposits, and hiuse prices will hopefully drop quickly to accommodate the shift. Sellers will need to accept that prices are dropping. Agents are dropping  prices on houses for sale  all over the place by 5-10% already based on houses on my watchlist. 

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Today is definitely a good day, with NZ going finally to orange, and with a decent 50 pbs increase to the OCR. Even Orr is starting to understand, very belatedly, what actions have to be carried out, and urgently so, in order to control inflation. 50 bps increase is very insufficient, as the OCR should already have been raised to 3% by now, but 50 pbs is better than nothing. We are very likely going to see another 50 pbs increase next month. Still way too slow, but still pretty good stuff, if compared with the RBNZ's attitude in the recent past. 

Moreover, international rates are going to go up significantly in the near future, which will help as well with normalizing swap rates (and consequently mortgage and deposit rates) in NZ too.   

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Those with big mortgages relative to income can take comfort that the Banks stress-tested you to 7% - remember. 

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You are assuming that rates will stop at 7%. This is not a given, and far from being guaranteed.

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Most tested at low 6% last year...

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Hmmm..... I thought my sarcasm was more obvious than that.

 

The point really is, that any stress test is not for the purchasers' benefit, but for the banks. Otherwise, if there is no or little stress at 7% for purchasers, -what is everyone worried about?

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Spike in listings to come, boomers trying to flog off excess stock.. 

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Be careful, the rubbish will come first, anecdotally, i've seen this happen with bare land, lifestyle blocks and apartments so far. we will have to wait a while for the good stuff to be discounted.

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Members observed that financial conditions have tightened in New Zealand, with higher interest rates, a stronger New Zealand dollar exchange rate, and lower asset prices.

The MPC is wrong about stronger NZD,  if 68c is a strong dollar, what does MPC think of a weak or stimulatory NZD... 55c?

Anyone importing stuff would know currently NZD is not strong, it's neutral at best. Makes me wonder about the abilities of these high priests in positions of power

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Considering we keep getting told it's 'over-valued' despite trading in this range for the better part of a decade now, you have to wonder what possible basis there could be for it's abnormally 'strong'. 

God help our imported inflation if the dollar was where these clowns think it should be 

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Basis is probably an untapped lack of financial acuity and good judgement exists within the US Congress.  

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Awesome Frank, only comment to bring up exchange rates. And exchange mechanisms.Not taking away from the article itself. Fact is, raising rates should lift a currency. 

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Some nice juicy short term deposits (eg 6-months) in store for depositors.  And if you have a reasonable sum to invest you can always squeeze the banks for a rate slightly higher than their carded rate.   I'm predicting a 4% rate for a 6-month term later in the year.

I can see house prices dropping by at least 20% particularly in outer low socio-economic suburbs, by the end of the year.

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"The path of least regret".

What a horrible negative phrase to use.

Corporate speak, with a hint of covering their butt for when things go wrong.

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It's interesting how they announce the country will go into orange at the same time Orr drops this 50bps blow...

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It was suppose to the 14th for the traffic light announcement

Not sure why they decided for today..

 

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you think ministers will all be in the house thursday before Easter weekend ? 

 

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Wow those who bought last year will be kicking themselves as it is going to get ugly out there. So many buyers had that "fear of missing out. "  It just staggers me to think that there were people out there who just thought it was going to keep going up. Some agents and their vendors have a lot to answer for. The agent got the commission, the vendors got their cash and some of the buyers have a problem. Interest rates as well all other living costs will continue to rise for some time. Talk about passing the parcel.

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So everyone is saying this is good news - really? Face it this is bad news for families, property investors, businesses and more. There will be negative flow on affects

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I could not give a shit about property investors. I do care about thousands of owner occupiers who face going underwater after years of the government falling over itself to protect a property investor class that got to spike prices and cash out their tax free gains - who will now benefit from rising interest rates on the other side of the equation.

But John Q Homeowner, who owns one house they bought in the last three years? They're in trouble, through no fault of their own, simply for the crime of trying to keep a stable roof over their family's heads. 

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They will still have the home that they purchased and the price that they paid for it hasn't changed.

Those that expected interest rates to stay at two hundred-year lows in perpetuity will gain a valuable life lesson.

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Yeah, if this can teach them a lesson about debts, I think it's a good thing. Good lessons normally come with a price.

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What lesson, exactly, are you learning if you've watched a politically protected class price accommodation out of reach? People seem to think it is reasonable that people sit on the sidelines forever, while literally every indicator up to this point was that house prices would not be allowed to fall. 

So what is the actual lesson you're expecting people to learn here? Because it just sounds like more paternal finger-wagging, in which young people in this country are somehow always at fault, even when trying to navigate a world in which almost everything is stacked against them?

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You are correct. 

Everything is stacked against young people in this country.

The obvious answer, however, was simply to leave this abusive country and watch the consequences play out from afar ✈️✅.

Sticking around to be a bagholder is financial suicide.

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Great for those who can, just tough shit for those who can't? Well, it fits the theme, I guess. 

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Nobody held a gun to anybody's head and forced them to buy a lousy house.

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No one forced us to import tens of thousands of people a year. Or treat property investors like immortal Gods, at huge social and financial costs to the rest of us either. Wild, huh?  

But sure dude, keep defending this weird idea that people have some sort of ‘choice’ when renting in this country means moving every 12 months or less as your landlord decides to cash-up and realise some of those sweet untaxed gains – while you’re trying to keep kids in schools, deal with mega-commutes and spiking rents. But nah man, no one has a gun to their head at all in this country. Everyone is definitely choosing to live this way.

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I will not make light of this, sounds like a very tough situation.  

However in all seriousness please do look into Australia, the young people I know who have gone have done well for themselves.  Not sure what you do for a living but the trades are really seen as roles to aspire to over there and very well paid.

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Again, as I said, nobody held a gun up and forced anybody to buy a lousy Auckland house.  It's a voluntary action.

Many of us have been quite vocal about the extreme risks of doing so because this situation was bound to happen like clockwork.  "Doom goblins" they called us. 

The signs were all there... Auckland more expensive than Sydney or London.  It's laughable.  

The unfortunate renting circumstances that you mentioned may end up seeming like minor inconveniences compared to the lifetime of debt servitude, negative equity and bankruptcy facing those that abandoned common-sense.

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Yes, many of us can also see the risk of what was happening. But up until extremely recently, even the current PM/Finance Minister were saying house prices would should be stable or rise slowly, ideally. So at that point, what do you do? Like I say, a traditional economic cycle is seven years, and we're in year fifteen. How much longer do you sit on the sidelines waiting for a more reasonable price? Fifteen years is a long long time to spend waiting while watching everyone bend over backwards to keep house prices rising and avoid doing something about it. At that point, being able to see risk is literally worthless as a decision making tool. 

And with all due respect, switching houses constantly, finding new rentals and dealing with a new landlord every 11 months is pretty awful, having watched friends go through it. It's the kind of thing people deal with in the hope that maybe, against all political and institutional odds, houses might actually get cheaper. Ironically, in the end, the people I know either left the country or suffered relationship failures and I just have never heard from them again. I can't up up sticks and head overseas due to family and medical reasons, so I'm stuck here dealing with it. 

New Zealand is, when it comes to providing for people under the age of 50, effectively a failed state. 

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New Zealand is, when it comes to providing for people under the age of 50, effectively a failed state. 

I do sympathise and I entirely agree with you.

At the end of the day, we can only play the cards that we are dealt the best that we can.

That said, the PM is a serial liar and the finance minister can't even count calories.  Pay no heed to their utterances.

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Question Brock..if you live in Australia why do you spend some much of your time on this site, surely you should be out having a 4 x and running after wombats? Are you that bored?

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That really depends on if you believe Brock is actually living in Australia or not.

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GV 27, I empathize with your plight, and am not making light of it.

That said, you could sell now if you wanted to.   You seem a bit angry/resigned/hard-done-by about a crash that Hasn't Happened Yet.

None of us are ever locked into one path.   Yes, renting sucks.  But you DO have that option.   Houses are still selling.

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This is not fair.  Unless you have bought a house this year you will not have been able to forecast the interest rate rises.

There are plenty on this site that held off buying in 2020 because the market was stupidly over-valued then, only to see 50% uplift in costs.

If you bought in June 2021 you will be genuinely unlucky.

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Like giving into their fear because of what media has been influencing them on FOMO and carrying huge amount of debt without thinking what they get themselves into in next ten years? I'm not only talking about first home buyers here but also investors. Young people need to learn how to do critical thinking and not just believing so call "experts" saying "buy now or never" "interest rates never go up" "housing price will just go up" these lies.

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Ah yes, it's the young people, not the morally corrupt political class who used their plight to get into power and then run the government as a protection racket for property investors who pushed them out of the market. Yup. The young people who need to 'learn how to do critical thinking' were the problem.

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The older, wealthier folk in power manipulate the market for their own gain, then point at the young people and say "Well, it's your fault!"

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Buying a house is a long term investment, if it's investment, there is risk involved. No one is forcing any one to buy houses. There is no such a thing called risk free investment. Obviously the system is flawed, that's why smart people need to see through that, if not, at least make efforts to learn and analyse the information they have. Again, I am not particularly pointing finger at one generation.

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The problem is if you think of the price they paid for the house as the total paid over time (including all the interest), that price is heading up. It's not like most people pay cash for a house.

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"They will still have the home that they purchased and the price that they paid for it hasn't changed."

They'll also have the debt they took on to pay for it, which is my actual point. The price they paid doesn't cost them money on an ongoing basis, but now they have to wear the increasing cost of the debt on something they paid over the odds for because governments were too cowardly to meaningfully reform property until an external shock came along. 

But of course, it's the fault of young people not putting their lives on hold forever waiting for a seven year economic cycle in its fifteenth year to actually correct, and not the idiots who priced something as basic as owning a house out of reach. They're definitely the ones who need to be taught a lesson. 

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For the record, I appreciate this will make housing more affordable if prices drop, which solves half the problem. But it also loads a further economic burden on the cohort of Kiwis who have copped it at literally every step so far. This really needed to be done well before now, as part of a structured walkback of house prices, and not just 'oh well had to happen at some point' where the same group of Kiwis loses out over and over and over again. 

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To bail out those that weren't strong enough to see the world's biggest housing bubble is moral hazard.

By bailing out the greatest fools you simply sow the seeds of the next one.

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Ah yes, fools, couldn't see the bubble, etc. Got any more bangers? Keep them to yourself.

We all saw the bubble. We voted to do something about it. The people we voted for over multiple decades instead protected the people who caused the problem.

Keep ignoring that though, I'm really digging this "I'm so much smarter than everyone else" thing you're going for. I'm sure there's a bunch of women out there struggling with declining fertility who put off having kids who would just love to hear more of your reckons. 

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You want some more reckons?  Ok...

Contrary to common belief, you do not need to own a house in order to have children.

If you find yourself in a situation where your fertility is declining and you really want to have kids... stop making excuses to put it off and just do it.

It's what us "smart" people did and we are much better off for it.

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I know 2 couples that were so fed up with getting moved on from their rentals  and having to find somewhere still within reasonable distance of the schools their children were already in that they ended up buying late last year or early this  year that yes, for them they did need to own the house for the sake of their sanity.. 
one couple were just 3 weeks home from the hospital of child two when they were told you need to find somewhere else to live... ironically that house still sits with a B&T sign outside 

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Here's a free one: The boot you lick today may be the one your throat tomorrow. 

It's all well and good treating the people coping with the fallout of a broken system as if they're the one with the problem, but see how far that gets you when you've got someone standing at the end of your bedroom with a baseball bat in the middle of the night trying to turn your place over. 

Frankly people with your attitude are the cause of most of the problems in this country. No matter what young people do to try and get ahead, or what they do to try and make life easier for themselves, there's always someone with a low-rent 'bootstraps' talkback opinion that usually involves blaming them for everything they're trying to deal with. 

But if this is the best self-appointed 'smart' people can come up with - snark, finger-wagging and back-patting masquerading as informed opinion - then I'm starting to understand how we ended up where we have. 

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Well said.

Anyways, I think a bail out is out of question anyways.

well... hopefully.

It would not be fair to pay for it with the money of people that have real jobs... what about doing it entirely with taxes on properties (lol) ?

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Only if you bail out the speculators / investors, the hoarders. The governments and Reserve Bank created the FOMO and drove young people into the market by actively pumping and manipulating it. They should bear some responsibility in cleaning up. 

But it should not be a bail-out per house. Something more like the Australian New Liberals debt jubilee plan that also helps renters would be preferable. I.e. a per adult amount, not per house, and being used to significantly downsize overall debt at the same time. Because it's per adult, not per house, it would not bail out speculators.

Otherwise, young renters and FHB could be excused for getting out their pitchforks and going after bankers central and retail, governments and NIMBY councilors who prevented supply.

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Agreed we had nearly 50% house price inflation in a couple of years, this is an economic disaster for those who bought right at the peak.  I think we should recognise this, at least they were really trying to get in the mix, some tax relief would be fair.

We give plenty to people who do not try at all. 

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Bankruptcy exists, 

It actually is a good solution sometimes.

Anyways, no, I don't agree in paying with my taxes for somebody that bought an house in the last 2 years. There are better uses.

Fight homelesness? <= good

Polluting again the idea of risk? <= bad

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Well if we're setting that kind of bar, let's talk about the amount we spent de-risking property investment and causing this problem in the first place.

Or is that not how this works? 

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No no, you are perfectly right, we should not have spent that money too.

 

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So you think fighting homelessness is good but making people homeless through bankruptcy is also good.

OK.

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I state that bankruptcy is a good idea sometimes...

Like "I owe 1.5M to a bank" and I can't afford to pay the current mortgage, My house now is valued 900k, so even by selling I still owe 600k to the bank.

At that point you need a good conversation with the bank, but if they are not considerate you better clear your debts as fast as possible.

In this case bankruptcy means 3-4 years of troubles, instead of a life.

 

(btw... the bank knows that, bankruptcy is a formidable weapon for a debtor, they will be nice-er if they smell you can use it)

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You can't threaten a bank with giving you a break because you will declare bankruptcy. It's like robbing a bank and threatening to shoot yourself if they don''t give you the money. If you truly have no money, then it is more fun for them to shoot you.

For starters, banks have underwriters, and the rules state that all legal attempts will be made to recover the money. Saying they just asked you with a frown and a few leal letters making threats is not enough.

Even when they can legally see you have no money, they will take you to bankruptcy, just to prove that that peoples' threats, real or imagined, are no excuse.

If anyone is out there thinking they are going to use the threat of 'no money,' as an excuse of having to pay no money, then they are in for a rude awakening.

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Banks are spiritless entities.

The manager/s that will look at your case will need to decide if accept 600k down or allow you to survive and postpone. 

If you multiply this problem by 10000 the bank's survival itself will be in doubt.

Of course you can threaten the bank.

You can bankrupt, that is a fact, and if you do they will need to get the loss. Do it 10000 times and watch the outcome (lol)

Will the govt bail out the banks? Most probably something like that, with my greatest disappointment, again.

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If they do, they should do it like Iceland not Ireland. Equity / nationalising rather than handouts.

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yup, agree

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Great finally some firm direction. Didn't think he had it in him. Thought he was going to stall like Jerome.

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 RBNZ needs to hike quick to have some leeway for any future disasters that require OCR drops. Maybe another pandemic or even WW3. 

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I wouldn't be surprised to see a drop in the OCR by early 2023 

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Finally, some sense prevails. Expecting .5 in the next one as well. Still a massive amount of unwinding to occur. Expect more FOOP, and expect a doubling down of FONGO. The only way out when selling today is to drop the price. People that have had listings up and not sold during the last couple of years, when we have had the lowest interest rate environment in living memory, are clearly just to bleeping greedy.

Well enjoy. The "popping noise" you can now hear is not my popcorn maker.

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Pssssst! Wanna buy a cheap house?.........

 

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The 2-3 year swaps are actually down after the announcement. Delve into the message from the RBNZ - they are simply bringing forward the hikes/speeding them up. Their assumptions of the terminal level of rates (around a 3.25% OCR) are the same as their February Statement.

 

This is not a hawkish hike, here will be little to no change in mortgage rates in the short term.

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Hard Landing can be delayed but cannot be avoided.

More the delay - Harder the landing.

https://i.stuff.co.nz/business/128332178/interest-rate-rises-and-the-ri…

 

 

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Hard landing would require a "external geopolitical shock".

So an ongoing mutating global pandemic, Chinese manufacturing slowdown, global supply chain crisis, fuel and energy shock, invasion of Ukraine, Chinese property crash, Chinese company defaults (billions), money printing stop in the USA count for nothing. How about all of that at the same time?

The what does Craig Renney mean...?

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Global grain shortage, an IPCC report that highlights our impending doom, all we are missing is a short nuclear exchange and the second coming of Christ to get the full set.

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Almost certainly should have been bigger (was calling for a full percentage point a couple of months ago), but at least they aren't sucking up to property markets anymore.  The intentions here are clear - property isn't a one way bet.  This and the next one is going to give a whole lot of kiwis the wake up call they need.

Keep going though team, OCR needs to be around 4-5% with inflation at these levels.  The longer inflation is elevated, the harder it will be to turn it around with these small rises.

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Very soon will see inflation officaly in double digit.

https://www.stuff.co.nz/business/128350343/us-inflation-hits-85-ahead-o…

Mr Orr should be applauded only if he follows up with another 0.5% in May.

Wait and Watch

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Maybe not with the temporary fuel tax cut will hide the real stats when the next inflation figures come out.

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P8 and HW2 are you still predicting 10-20% increases in house prices in 2022?

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I do wonder about the knock on effects of the raise interest rates. I have a few clients in the home improvement sector which have been absolutely booming recently. Huge wait list for things like Louvres https://www.shadedesign.co.nz/services/louvre-roof-system-auckland and the like. Be interesting to see how these types of home improvement products will fare when belts tighten..

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