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

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news