Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


RBNZ wary of pick-up in housing market

RBNZ wary of pick-up in housing market

By Paul McBeth

Dec. 6 (BusinessDesk) - The Reserve Bank is keeping a watchful eye on the country's property market, which has started heating up as low mortgage rates and easier lending criteria encourage first-home buyers.

RBNZ governor Graeme Wheeler, who held the official cash rate at 2.5 percent today, said the housing market, particularly Auckland, is starting to strengthen with cheaper bank funding costs leading to increased competition and lower mortgage rates. The bank sees house prices as still elevated relative to income and rents, with Auckland house prices growing faster than the rest of the country.

That's led to a pick-up in household credit growth, housing market turnover and house price inflation in recent months, and the central bank is keeping close tabs on the sector to ensure real estate values don't get away on it as they did during the boom of the mid-2000s.

"Higher house price inflation and increased household expenditure would likely lead to higher inflationary pressures than is currently projected," the bank said in special commentary for the December monetary policy statement. "All else equal, such a development could necessitate a higher OCR."

In the October review, Wheeler zeroed in on the country's tepid pace of inflation, which fell below the central bank's 1 percent to 3 percent target band in the September quarter, when the annual pace slowed to just 0.8 percent.

The Reserve Bank is forecasting annual inflation to stay near the bottom of the band in the next year, rising to 2 percent in the March 2015 quarter as building activity ramps up and the persistently strong currency starts to weaken.

New Zealand's property market has been slowly gathering pace this year after a muted period when credit lines dried up in the wake of New Zealand's finance sector collapses and the global financial crisis.

The bank said any credit-fuelled expansion in house prices would also undermine the country's financial stability and could expose households and banks to sharp falls in house prices.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fisheries: Report On Underrsize Snapper Catch

The report found that commercial fishers caught 144 tonnes of undersized snapper in the Snapper 1 area – about 3% of the total commercial catch – in the year ending February 2015. The area stretches from the top of the North Island to the Bay of Plenty and is one of New Zealand’s most important fisheries. More>>

ALSO:

Tourism: China Southern Airlines To Fly To Christchurch

China Southern Airlines, in partnership with Christchurch Airport and the South Island tourism industry, has announced today it will begin flying directly between Guangzhou, Mainland China and the South Island. More>>

ALSO:

Dodgy: Truck Shops Come Under Scrutiny

Mobile traders, or truck shops, target poorer communities, particularly in Auckland, with non-compliant contracts, steep prices and often lower-quality goods than can be bought at ordinary shops, a Commerce Commission investigation has found. More>>

ALSO:

Auckland Transport: Government, Council Agree On Funding Approach

The government and Auckland Council have reached a detente over transport funding, establishing a one-year, collaborative timetable for decisions on funding for the city's transport infrastructure growth in the next 30 years after the government refused to fund the $2 billion of short and medium-term plans outlined in Auckland's draft Unitary Plan. More>>

ALSO:

Bullish On China Shock: Slumping Equities, Commodities May Continue, But Not A GFC

The biggest selloff in stock markets in at least four years, slumping commodity prices and a surge in Wall Street's fear gauge don't mean the world economy is heading for another global financial crisis, fund managers say. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news