ANZ has moved to raise its fixed home loan rates significantly.
These rate increases come as wholesale swap rates have been becalmed very recently awaiting the US Fed signals on Thursday NZT.
But the increases are consistent with the signals the ANZ's economists have been sending in both New Zealand and Australia. And they are consistent with longer term wholesale rate increases.
ANZ home loan rates have been raised by between +26 bps and +35 bps (see table below). The result is a rate level well above not only their main rivals, but also the challenger bank community.
ANZ already had among the highest offers for the popular one to three year fixed terms. They are out on their own now, for a while at least.
They said when advising these hikes: "With high levels of volatility in global markets and increased inflation pressure domestically, there has been a significant increase in wholesale market rates."
"For home loan customers who haven’t experienced rising interest rates we understand this can add some extra stress, particularly with rising inflation impacting other household costs."
ANZ said they are talking to customers about extending the term of their loans if they face payment stress. We should note that these types of extensions can add significant extra interest cost to a loan over its lifetime, on top of the higher interest rates that will now apply. Use the calculator below, which will show the quantum of those extra costs.
At the same time as rate hikes are pushed though on the home loan side, ANZ are also raising their term deposit rate offers.
These are rising by between +5 and +35 bps. These will result in their six month rate rising to 3.35% and their one year rate rising to 4.10%. At these levels they are similar to some of their rivals and lower than some challenger bank offers. See here and here.
However ANZ's new nine month rate at 3.65% is higher than most for that term.
Wholesale rates are still pushing higher and that is in response to high inflation impulses and the market expectations of US Federal Reserve moves. Another review by our Reserve Bank is coming in early October, and markets are now pricing slightly more than a 50 basis points rise in wholesale positioning.
The next Fed review is on Thursday, September 22, NZ time, and financial markets are coming to accept that another 75 basis points rise is a live possibility. That means wholesale rates will face upward pressure even if the US faces growth challenges. The Fed has clearly signaled they are prepared to pay an economic growth price to get inflation back under control. If they don't their market cred will be shot.
And for New Zealand, that means we won't be able to avoid those upward pressures.
The next time we get a Consumers Price Index reading will be on October 18. That is now only about five weeks away. The best-case scenario is that inflation may have peaked in September with petrol prices having topped out. But the labour market remains tight, the NZ dollar is depreciating, and imported inflation shows no sign of abating. You would be brave to assume the September CPI will be significantly less than the June rate of 7.3%, so no relief in that department is on the horizon.
One useful way to make sense of these changed home loan rates is to use our full-function mortgage calculator which is also below. (Term deposit rates can be assessed using this calculator).
And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But although break fees should be minimal in a rising market, they will start to bite in a falling market.
Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.
| Fixed, below 80% LVR | 6 mths | 1 yr | 18 mth | 2 yrs | 3 yrs | 4 yrs | 5 yrs |
| as at September 21, 2022 | % | % | % | % | % | % | % |
| ANZ | 5.50 +0.35 |
5.45 +0.30 |
5.65 +0.30 |
5.75 +0.30 |
5.95 +0.26 |
6.85 | 6.95 |
 |
5.15 | 5.15 | 5.35 | 5.45 | 5.69 | 5.79 | 5.79 |
 |
4.99 | 4.95 | 5.49 | 5.39 | 5.69 | 5.89 | 5.99 |
 |
5.45 | 4.95 | 5.45 | 5.69 | 5.89 | 5.99 | |
 |
5.05 | 5.15 | 5.35 | 5.45 | 5.65 | 5.75 | 5.75 |
| Bank of China | 4.95 | 5.25 | 5.25 | 5.45 | 5.65 | 5.65 | |
| China Construction Bank | 4.99 | 5.15 | 5.29 | 5.45 | 5.69 | 6.85 | 6.85 |
| Co-operative Bank [*FHB special] | 4.89 | 4.79* | 5.39 | 5.39 | 5.69 | 5.79 | 5.89 |
| Heartland Bank | 4.79 | 5.15 | 5.14 | ||||
| HSBC | 5.04 | 5.09 | 5.19 | 5.24 | 5.44 | 5.64 | 5.64 |
| ICBC | 4.99 | 4.95 | 5.15 | 5.25 | 5.69 | 5.89 | 5.99 |
 |
4.95 | 4.89 | 5.35 | 5.29 | 5.49 | 5.79 | 5.79 |
 |
4.89 | 4.69 | 5.19 | 5.29 | 5.55 | 5.65 | 5.65 |
Also updated with changes by HSBC.
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169 Comments
Initially I was thinking about 30% mean reduction from peak. Now?
And look, still full employment.
Plenty of space and motivation for downward valuation.
You know what also would be funny. Talk around the office is all about ''oh well its going to recover in 5 years'' yardi yah.
Well not if they wait till it hits the bottom and then whack on those DTI ratios that are waiting in the wings =)
Its not possible to swim against a tide this strong - Fed is getting massively stressed about inflation now and is going to have to take a big stick to it and probably cause a significant downturn now rather than risk a bigger one later. Thus the NZ housing market looks to be totally cooked for a long time and all the ways that could be tried would likely simply cause more medium to long term structural economic issues. Nope - no time to be leveraged up.
If 7 house luxon and his merry band of property investors didnt have so many houses he would be wise to point the finger for the bubble and crash at Jacinda, Robertson and Orr - and make moves to reorient the economy towards tech, agri, climate and manufacturing etc. In doing so attract more of the right immigration talent etc. Unfortunately as National is wedded to housing he will probably waste a ton of money and time trying to save us from ourselves and fail dismally
7 house Luxon - I like that. Yeah imagine how good we could be if we actually focused on innovation and business (National like to portray they are the party for business but they are the party for the wealthy).
Not that any other party is any better and it's really our own collective fault, if an innovative future resonated with voters, the politicians would priorities it, but unfortunately higher house prices and no capital gains tax resonates with voters instead.
The knowledge wave conference in 2001 had the right idea at the right time, led by Helen Clark. If only they actually had followed through with it. Instead we got busy buying houses of each other.
Interest rates are quite normal at this level..COVID cash is gone and everything is getting normal so will the interest rates... In terms of house prices especially in Auckland I would still blame the Auckland Council fees and monopoly with Power/Water/Wastewater/Chorus charges and delay which easily adds up about $180K per section to service and build. Land holding costs are very expensive @ about 10% from Development finance..
I don't think new builds will ever be affordable in desirable locations
Prasad is quite rightly refering to the total development levies and costs per section, eg water meter 14k, stormwater levy 50k (i have seen these as high as 70k), reserve contribution 6% (or val 30m2) 'consutants processing fees (daylight robbery for box ticking) $180 per hour etc etc etc. adding to 180k per section.
where is it 40k for a water connection?
In metro auckland it's 14K for a new water and wastewater connection
https://wslpwstoreprd.blob.core.windows.net/kentico-media-libraries-pro…
This comment is so incorrect I actually laughed.
A watermeter is around $14K
Stormwater levy, reserves contribution is tied up in Development Contributions, which is around $30K per HUE (i.e. 1x new 3 beddy+ house)
Yes you pay for a Resource Consent but that would top out at around $20K including all consultants, design and Council Processing fees.
I think the $180K per section you are referring to is the total cost to subdivide a section into two that would require a decent amount of public drainage works (upwards of $100K) to complete. For a site that is more straightforward the TOTAL cost would be around $100K in Auckland. This includes EVERYTHING, surveyors, lawyers, drainlayers, planners, consents, LINZ fees, power, telecom, Development Contributions.
Source - I do subdivisions for a living.
Don't get me wrong Council and Watercare do make things hard and expensive, but your numbers are way off.
Just completed dividing 1 section into 2. Whangarei district. Cost $100k in total. Exactly what I budgeted. What I didn’t budget was the downright incompetent council planners and engineers justifying their existence. I had 3 major stoppages that cost me 3 months in time and around 20k. The irony is we completed everything exactly in line with our original engineering plan but had to endure their nonsense throughout the process.
Look how inverted the US yield curve is 1 to 10 years.
Trouble ahead.
For anyone interested, have a look at the yield curve on the same day one year ago. And look at today. Its a shambles.
Given where 2yr swap rates are, now equivalent to where they were in mid 2014, 2 year fixed mortgages should be around 6.5% p.a.. Seems as though taxpayer subsidised lending via the RBNZ facility is supressing market borrowing costs (and TD rates), just irresponsible by the RBNZ given the banks never had any trouble raising funding during the pandemic.
Yes both the "village idiots" of property TA and AC - said its good to "buy now" "rates look to have peaked"......let the crazy property party start again.
Never a better time to buy, "dont wait"' ....all during 2020/21/22.........to oblivion.
Both these guys will be losing willing disciples, as quickly as cat hosting a rodent party.
Yup... OneRoof and The Herald are both owned but NZME
OneRoof is the NZME property platform play to take on Trademe - if they acquired market share of about 20% of Trademe revenues it’s worth easily $500m+
So to drive traffic to OneRoof they pumped property propaganda stories (led by TA & AC) into the Herald app. Have you ever noticed how there is always 3 property stories in the top 20-25 stories on the herald app (NZ’s most read news app) - that are then replaced rather than fall down the list of new articles? They are basically property ads - "home sells for $2m above CV etc"
So, between Oneroof and RE agents manipulating valuations in homes.co.nz, and everyone else vested in a property boom, we just blew up the biggest property asset bubble in the world over the last 5 years.
Other countries had 10-20% capital gains from the wall of printed money and stimulus - we had more like 50%+ in most places.
So there’s plenty for a Royal Commission in 2025 to pick over when the angry mob of sheeple are wondering how it all went wrong and they are broke.
The upshot of all that I’ve written above is this. As you see predictions of the Reserve Bank raising its cash rate another 1%, you will be invited by the headlines to believe that fixed rates will also rise another 1% and the housing market will be newly slammed. It will not because they will not.
TA, 24 August 2022
https://www.oneroof.co.nz/news/42080
If you read Snows comment below about the advice provided by the PIA - you can add them to the lawsuit.
The property industry and its cheerleaders has a toxic cult like mentality to it. Nothing good comes of it (for the financial and social stability of the nation as a whole - which is more important than a few debt speculators...surely...).
I really couldn't say. Remember though it was only back in February this year that the Swedish reserve bank governor was claiming no rate hikes until 2024.
Central banks' credibility has taken a major hit these past few years, and I think they've lost the ability to jawbone like they used to. The only thing that matters from them now is action, not words.
Because right wing people have the most blinkered vision in the world. If Mike Hosking says something on talk back it must be true no matter how ridiculous it is.
How anyone can claim that Maori is being forced down our throat is beyond belief! Don't we force English language and English culture down their throat?
We will never know,but there is a good chance that without all the money that was pumped in and gratefully accepted by so many in the business and financial community that many,many people would have been without jobs,businesses closed, so here we are,no doubt in a difficult position,but with effectively no unemployed,yes that might change,but can you just imagine the last 2 years if on top of covid we had mass unemployment,a recipe for total unrest and anarchy,sometimes you have to make decisions for the time.
How it works
The FLP works by lowering interest rates and encouraging households and businesses to spend and invest.
The programme allows eligible banks to borrow directly from us at the official cash rate (OCR). The borrowing rate will adjust over the term of the transaction if the OCR changes, whether up or down.
As banks will be less reliant on more expensive deposits and wholesale borrowing, the programme lowers their overall funding costs. Banks can then pass these reductions on to their customers through lower mortgage and business lending rates.
How long it will run
The programme started on 7 December 2020 and will run until 6 June 2022 for the initial allocations, and until 6 December 2022 for the additional allocations.
Please correct me if I am wrong here, but essentially this means that banks are lending at a discounted rate - the difference between swaps and the OCR. The purpose of swaps is to swap lending between a fixed and floating rate, allowing banks to lend money for a fixed rate over a period of time while the official cash rate fluctuates. Depending on how the OCR fluctuates during the fixed term, one side of the swap may make a small profit off a loss of the other or vice versa, but the majority of risk is shared.
When the FLP ends, lending will resume based on swap rates. Banks may increase their market rates to profit from the swaps as they rise, the OCR may be priced in but are the swap rates priced in? I'm unsure, will rates will suddenly jump 50 - 100bps when the FLP runs out of coin?
There is systemic corruption within the RBNZ.
The RBNZ does not work for the best interests of New Zealanders. It works for vested interests.
Anyone who has spent time in corrupt countries knows that systemic corruption always produces bad outcomes for the general population. It always leads to poverty and wasted opportunities.
In the next few years, we will see just how badly the RBNZ has wrecked our economy.
A comment by a commercial real estate agent in our local PIA magazine.
"...... My advice is to build up your debt now. If you can afford to have the debt now you will be walking on air when the interest rates settle back in a couple of years. The banks are full of money. Prise some out of them. I don't promote that you lie in your application, however, don't let the truth get in the way of a good story".
I was one who was predicting 7% mortgages by xmas and a fall in NZD come October. I also predicted increased food inflation through imports and the ukraine effect.
What do I say now?
Cash rate by July 2023 = 8.5% driven by swap rates and imported inflation due to collapse in NZD.
To get this under control we need:
1) Inflation under 2%
2) Unemployment over 6%
3) 50% fall in house prices from NOV 2021 peak
8.8% wage increases = WAGE AND PRICE SPIRAL. That is a precursor to greater than 10% inflation. I now predict 12% inflation by July 2023 and Mortgage rates substantially higher in the near to medium term.
Banks should be very conservative and only lend 3 x income in current environment.
You ain't seen nothing yet.
Flow on effects are GOVT DEFICITS greater due to INCREASED DEBT SERVICING COSTS. God help us if ASB collapses as they are the most leveraged in AUCKLAND MARKET. Define the term "bail-in". And I HOPE I'm WRONG
Needs must. When necessity compels, people adapt. Those who are really strong in character will do just fine - as they have done throughout history.
Those who have been pretending to be strong (and I know many in the current environment who fit this description) probably won't. But over the long run, if one is living a lie, they eventually get exposed.
Hard times -> strong men.
Easy times -> weak men.
The best finance Minister - Michael Cullen repaid all of NZ debt by 2008. And in 14 years 2 successive governments have destroyed our ENTIRE FUTURE. You can not claim GFC and COVID caused all of this, but you can claim government incompetence from both the KEY and ARDERN governments. The current government never ceases to amaze me at their blatantly destructive economics. How you can give money away (AKA cost of living payment, winter energy payment, 25% benefit rate increases, minimum wage increases) while inflation is soaring just dumbfounds me.
It is clear this governments policies are all political decisions and NOT economic decisions. The price to pay for this is going to be huge and I can tell you this as a life long labour voter - "never again will I trust a Labour Government" to act in NZ's best interests.
Winston Peters was good for Labour (2017 - 2020) and kept them centrist - acted as a brake. I never thought I would ever say something good about Winston but he did hold Jacinda to account.
2020 - 2023 - Labour has no brake and look at the difference - certainly not a centrist party which I think MOST kiwis expected.
ACT could be the party that forces NATIONAL to make the hard decisions which it is too gutless to make. I don't necessarily agree with far right policies but the pendulum is far too left right now and needs to move to the center, and move fast.
Top is probably a wasted vote as they are unlikely to make the 5% threshold.
This. Winston got off the hand brake and the Labour Bus skewed out of the left hand lane, across the bike lane, across the footpath, through the fence, through Miss Plums vege garden, through the ditch and into the wetlands with the freedom convoy.
To bring the pendulum back to some sort of normality, an ACT vote may be the best strategic vote.
So we all look forward to a true free market,no accomodation subsidies,the ability to build what I want,where I want..a nice 6 story boarding house for newly released prisoners in an Epsom or Ponsonby side street.No welfare,corporate or otherwise.The removal of charitable status for private schools,religions etc..
"ACT, as a constructive and solutions-focused political party, exists to promote and implement better policy for all New Zealanders, particularly through reducing the role of government and increasing the role of free markets. To this end, ACT puts up candidates for election to the House of Representatives, who are selected by the procedures set forth in rules 122-141."
you don't think its got something to do with the banks turning into building societies
you don't think its got to do with a banker becoming PM
you don't think its got something to do our business organisations being run by banking lobbyists...oreilly and hope...what a team.and in hock with the national party.
its the debt thats the problem and the banks lent the money
the country has been swindled
Clarke and Cullen introduced Working for Families - the biggest political decision/vote buying policy in some time.
We also had a housing affordability/shortage issue by 2008. Is it the government's fault that every Tom, Dick and Harry, Jane and Joe Bloggs jumped on the residential property investment bandwagon?
Evidence would suggest that the debt based monetary system, debt fuelled economic growth and wealth accumulation is not in NZ's best interest environmentally, socially or economically.
Government has control over people through media and fear, the last two years with Covid and vaccine push is a example of how easy it is to brainwash population, if you decided not to take vaccine you were a outcast people lost jobs could not eat In a restaurant with family or friends this was only a few months ago total control of population. I hope this never happens again as peoples freedoms were abused, it would not have taken much more for them to persuade most of population to lock up unvaccinated in some countries they were forcing people to take vaccine. Some doctors were struck off if they did not go along with narrative people band from social media for telling there experience with vaccine if it was a negative one. This was a wake up call to us all, next time people should respect people freedoms.
Standard MO since forever and it's only gotten worse. How else does the few rule over the many? Divide and conquer and the masses are too busy competing and fighting amongst each other to rise up. Modern day advertising is the refined version manipulating people through fear. The premise of economic growth and wealth accumulation is the fear of not having enough. Civilization as we know it is simply social engineering via fear.
Geezez, this comment section just got hijacked by the tin hat wearing telegram app mob.
The ruling elite? Any couple on dual income and low debt as at 2014 could be multi-property owners by now. Any FHB or renter as @ >2019 are feeling the pinch.
You can blame Jacinda and JK all you like, but we are all culpable for exploiting cheap rates to get ahead at the expense of our fellow (poorer) man.
papa - whilst I get your point, if you see a profit to be made due to poor govt decisions, are you saying morally that you should not take advantage of it? This is capitalism and the driver of capitalism is profit.
But when you have a government or governments that make political decisions that ruin our future that is the true destroyer of capitalism and a move to either facism or communism.
I come from a world where I expect a government to make decisions which are in the best interests of NZ. And I expect nothing less. Next year I will be carefully choosing who I vote for, not simply voting for the party that will give me an election sweetener (there they will try).
Then you won't have much of a choice, sorry to say.
Far as I can tell, all the parties vying for a seat at the table next year have a "what can I get out of it?" attitude.
Sure. Maybe there are honest politicians in the party, but generally members will sugar coat their policies or pretend that they're for the good of the community or the country, as a politician can only achieve results if they obtain and hold onto power.
That power is initially granted by the voting public but is built upon in the halls of Government by deals, favours, lobbying, bribery, collusion, falsification, and manipulation.
Honest, hard work? Yeah. For a junior who hasn't learnt the ropes, but all that gets them is doormat status.
I wish I wasn't this jaded. I wish I could point to one of our Government and say, "I trust them to do what is best for everyone.", but I can't.
These record low rates were never going to last. People who borrowing these meg a amount and thought that rates couldn't jump up quickly in a short period have taken a huge gamble. In the US you can lock in rates for the life of the mortgage, eg. 30 years. But in NZ the longest is 5 years, after they removed the 7 year ones. I bet many would love to lock in rates at 10 years or longer now. It is time to pay the piper.
Maybe the ones paying the piper should be the ones who spiked property prices through the roof with their ridiculous attempts to finance a loss-making enterprise using taxpayer-funded interest concessions that never turned a profit but generated massive tax-free gains?
The people buying a single home to keep a roof over their head aren't the problem.
The FOMO wave was huge for price increases. But those buyers were squeezed from both sides, not only the real estate industry talking up the dangers of waiting, but the government remaining silent on the risks that high prices were bringing to everyone (while continuing to be ineffective at any affordable housing policy)
Not simple peer pressure. FHB in 2021 faced an opposition of a Reserve Bank pumping the market, and politicians who have for years subsidised the market and exempted it from tax. They faced the prospect of suffering greater damage from the impacts of those in governance who've fostered house price rises.
That's right, first home buyers faced a very tough situation of having to sacrifice their financial wellbeing in order to secure themselves a home. So why weren't there mass protests outside parliament if it was such a big deal? If we're only able to identify this in hindsight that's not good enough, we're doomed to repeat it in future.
At heart, because we've had some rather perverse philosophical norms in our society in recent years and decades. E.g. that it's good for house prices to keep going up because of a "wealth effect" that is in reality us living beyond our means by drawing wealth from coming generations. And that people are entitled to the value of their major asset to keep rising.
Also, that people doing productive work should be the ones funding all of society's services for everyone, while the means by which most money was actually being made - speculation for capital gains - should be exempted.
When it comes down to it, it just seems to be entitlement mentality that has brought us to this precipice. A desire to live off others rather than by creating value.
If Kiwis buying a single family home are a 'problem' then you're either insane, or the prevailing circumstances are. Pick one.
The buck cannot stop with Kiwis simply trying to raise families in stable accommodation. At some point you're just blaming people for being alive.
Face facts GV27 it was a market bubble and everyone who participated helped make it worse. Being emotional about it won't help, in fact a market run on emotions is exactly what went wrong.
EDIT: Maybe I'm wrong. You're suggesting it's unreasonable for the average kiwi to consider such radical concepts as a market bubble and inflation and extreme interest rate rises etc when simply buying a home for their family, and you could be right.
OK, so it was a bubble. We all sat back and watched it blow up for years before Covid hit, at which point everyone doubled-down on making the bubble bigger. So, my question is, how is it moral to push the burden on navigating this onto people trying to plan their lives and expect them to defer milestones or sit on the sidelines, because someone might at some stage do something completely at odds to what everyone capable of doing something about had chosen to do.
You can call it 'being emotional' but I tend to think it reflects on one's morality rather well; whether they expect people on an individual level to bear the burden of a decade or more of abject fiscal and monetary policy failure. You know, after they've been told constant that there isn't an affordability issue and they just needed to work harder or live a more frugal lifestyle or whatever enabling bullshit we got fed for the past 10 years.
Well to attempt to answer your question, if we're a democracy we the people are ultimately responsible for guiding public policy or electing the right leaders to do so. If we recognise a problem at some point we have to put our own lives aside and address this issue for the greater good of the country. I do recognise it was a failure of multiple governments to act, you're saying we shouldn't put the onus on individuals, but everything being equal we the individuals are meant to run the country.... failure to do this and were accepting that we live in a dictatorship not a democracy which is kind of depressing.
I agree with your last point. What I saw was excessive greed and everyone out for themselves. That's why I blamed recent home buyers - they saw the issues plaguing our country and decide to just save themselves. But it probably wasn't intentional behavior so I shouldn't have gone that far.
Unfortunately, just because we have a democratically elected leadership doesn't mean they have to adhere to the policies they were advertising to get the votes. Even if they do the opposite of what they "promised", if people can still go about their daily lives then nothing happens.
Look at the Petition of Maarten Wagenaar - No confidence vote against the current Labour Government and Jacinda Ardern. Just shy of 17 thousand signatures out of an enrolled population of just over 3 million.
Granted that was started back in 2020 during the height of her popularity, and maybe there are other petitions in the works, but that is telling me that people are not all that upset about what is currently happening. The unending tales of doom and gloom, while mostly true, are actually only affecting a small proportion of the population.
We have 1.2 million owner/occupiers who are probably pretty happy to have a home that's appreciating in value, and the majority of them won't be troubled by the recent interest rate changes. The 600 thousand odd renters would not be as happy, given that rents have increased faster than wages, but they will probably welcome increasing interest rates if it means higher returns on their TD's.
I guess we will see how this pans out at the next general election, but voting for a different leadership doesn't necessarily mean anything changes.
RBNZ C31 Total Lending $ & QTY per month
- 2014 - 2017
- FHB Average $656m across 1800 borrowers
- Investor Average $1.6b across 4700 borrowers
- 2017 - 2022
- FHB Average $1.05b across 2276 borrowers
- Investor Average $1.24b across 3156 borrowers
As you say, anyone who says FHB are part of the problem needs their head checked.
Not long before 5 before interest rate too becomes invisable just like 4.
Matter of time before we see all mortage rates with 6 in front and should worry about it not reaching 7m which it will evantually
Had paid 7.65% in 2008 but the problem is earlier it was from 9% to 7.65% ( so was use to and made decession accordingly) but today is from 2.65% to........ ( Thanks to ponzi promoted by RBNZ with full support of government under guise of pandemic).
Need shock treatment and for once should raise OCR by slightly more than expected to get desired result( hopefully) but will Mr Orr ....no it will be only 0.5% and even 0.5% as is forced and is under spotlight so no longer able to kick the tin down the road.
One day the younger generations, who have been fleeced by the government and the older generations ability to build property portfolios, will vote to put in place a capital gains tax. It only takes enough people to be shut out of affording a home of their own to live in before they push through the one thing to shift NZ's obsessive and destructive addiction to property. Maybe then we will finally look to other means of being a productive economy in real terms, however with the boomer generation letting houses go as they go, or as they need cash in older years (illness, retirement village costs etc etc), this will determine the time until people get to the point they will vote for a CGT. Then again if the depression comes next year and house prices do tank back to affordable levels, then hoorah might be another decade or 2 until this day comes.
Next question, what will the country do when there isn't enough retirement homes for the boomer generation in their older years?
Wow, there is some pretty extreme DGMs here! We have growth, very low unemployment, pay rises, and a much needed housing market correction that so far isn't causing the pain that anyone expected. Yes we have inflation, but mainly because the economy is doing too well!
Sure the outlook for next year might not be so great, but realistically when has anyone predicted that correctly? Remember after GFC they were "kicking cans" and it was all going to blow up any day, but it actually turned out fine for 13 years+.
House mouse I was just thinking about this point.And casting my mind back to 1991.And thinking how long ago it is now and how many won't remember or have been working at that point.
But the reason I raise it is because it took four years for the shockwaves of the crash to work their way through....and more.
And in 1991 the economy came to a grinding halt.We had nearly three months of ultra low orders and then finally enough was enough.We had enough inventory produced to keep the business running if the low orders persisted for a year, without producing more.
Our company laid off all the factory staff bar the core essential staff with machine setting skills.About 75% of the staff finished up.
We weren't the only company for sure.I know of others that had the same situation.
And people forget this can happen again.Ive got a very bad feeling about where the construction sector is headed.The numbers just don't add up for building a house anymore.I think we may see a deep recession in NZ while we wait for land values to recorrect and building costs to stabilise.
And there are thousands of companies that supply the industry indirectly.People have become very complacent about risks and very complacent thinking the banks will keep funding the whole thing.
Im not so sure.
Not that long ago people were drawing parallels to Japan and we were never going to see inflation or higher interest rates again.
No one knows the future, sure we may have reason to believe that next year will be bad, but so many are certain of that fact every year and are almost always wrong, the classic DGM IMO.
Next year is always bad, until it isn't. Roll on 2023 and there'll be commentary saying 2024 will be bad. Unless we get hit by an ELE (to borrow from Deep Impact) next year will always come around. Some people will suffer, some will prosper, most will just trudge along as they have always done.
Jimbo - you may not know the exact future but you can see the signs.
8.8% wage rises in the last 12 months = Wage and Price Spiral = Upward inflation trends.
Those that say inflation has peaked are dreaming and those in power be it banks or RBNZ or Govt who say the worst is over are simply trying to blind us from the reality.
Every month they come out with more deteriorating forecasts. I think in the back rooms they know what is happening but they can't scare the public ahead of time.
Sadly most people wouldn't know how to balance their own budget let alone understand economics or finance.
Interest rates will need to rise to prevent a freefall of the NZD. The Fed is raising at 0.75 - 1.00 points each meeting, and RBNZ are raising at 0.5 per meeting. We are effectively 200 basis points below where we should be when you simply compare the Fed to RBNZ otherwise what is the point of buying NZD? It will simply become an irrelevant currency.
I'm predicting RBNZ will move 75 basis points in the next 2 meetings and we will have 4.5% cash rate by XMAS
Jimbo things will keep ticking over.Im not saying we will get a depression but I think a sector of our society is in for a wakeup call.
https://www.oneroof.co.nz/news/42256
Not quite sure what you mean.
I have been pretty clear and consistent in saying over the past two years that economic pressures would build second half of 2022, but not really hit home until 2023.
And that is due to the lagging effect of rising interest rates, especially as it affects the residential construction sector (which is a big part of our economy, directly and indirectly)
If the economy is buoyant this time next year, then I would have been wrong.
you think our economy is going to be ok in 2023?
I would say it doesn’t look great, but I also said that after the GFC, before Covid lockdowns, and many times in between and was wrong. There does seem to be a theme here of commentators saying it’s obviously going to be a recession / depression next year and anyone who disagrees must be an idiot - by the same people who were wrong the last 14 years they have said it.
Economic predictions are very tricky, there are always bad signs, but what about the good signs like very low unemployment, to me one of the most important aspects of any economy.
My gut feeling is saying about 50% chance of a recession this year or next. Yet so many here are 100% convinced, many are more sure of a depression next year than that global warming exists! If the TAB took odds on it, what do you think they would pay right now?
I wonder if this site should have a mental health expert on call, a lot of the commentators seem to have depression, I think they would honestly be happy if we fell into a massive recession next year. I can understand people wanting house prices to fall, but a lot of the other negativity is borderline crazy.
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