Sticking to the path it laid out for us in July, the RBNZ has opted to hold the OCR steady at 5.50% - and they're saying it might be 2025 before rates start to come down again. But global uncertainties, deflationary forces in China and the upcoming election has everyone holding their breath.
Word on the street is that house prices have finally hit "sustainable" levels, after 18 months of significant falls. But are they really "about right"? Chief Squirrel, David Cunningham, digs into the data to tell us whether house prices really are where they need to be.
And there it is, finally - after 12 back-to-back increases - the break in interest rate hikes we’d all been waiting for. The question now is, when will rates start to fall again?
There is an increasing number of signs pointing to a turnaround in the housing market, and quite possibly even gains in house prices and sales. However, the question remains: What factors are driving this shift to happen sooner than anticipated?
Between a weakened construction sector, increasing migration and more businesses starting to retrench (both of which are helping to ease pressure in the job market), there are lots of signs out there to indicate that inflation’s coming under control. So, will there be another OCR increase?
The unemployment rate doesn’t just tell us where the economy’s at, or where inflation’s headed... it can actually also help to predict when house prices will take off again.
With a great number of construction related businesses going into liquidation every week, negatives dominate in the house building sector and buyers need to apply extra caution as they contemplate getting a house built.
I recall mentioning last year there was a good chance that the housing market would bottom out around the end of 2022 then stage a small recovery over 2023 with prices maybe rising by 5%. But then the inflation numbers came in.
We all underestimated the extent to which prices would rise when the pandemic struck in early-2020. Now, almost everyone has underestimated the extent to which prices, and sales, are heading down now that the pandemic is over and the inflation resulting from excess stimulus needs to be brought under control.
It's pretty scary out there right now - but despite appearances, the foundations are already being laid for the housing market's recovery.
A mix of high residential construction levels and a falling population has proven a bit of a nasty cocktail for Auckland house prices. But they're the same factors that will usher in the region's recovery.