The RBNZ Team lead by Adrian Orr was questioned in Parliament today, and we got more insight into the trajectory of rates, and the impact on households, with the debt servicing ratios set to rise higher than before the GFC! There was a sharp intake of breath!
In addition, there was a concession to the fact that if lending had been tighter, QE and money printing more controlled, then inflation would be lower. Is this the first time a Central Banker admitted this?
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The latest REINZ figures for December 2022 show further falls in prices and sales volumes, linked directly to the higher interest rates and reduction in borrowing power, across most of New Zealand.
The NZ Monetary Policy Committee today increased the Official Cash Rate (OCR) from 3.5 percent to 4.25 percent. Core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near-term inflation expectations have risen.
Demand in the New Zealand economy has remained resilient. Worker shortages are holding the economy back and increasing inflation. Global developments are adding to inflation in New Zealand but weakening our economic growth outlook. Higher interest rates are needed to meet our inflation and employment objectives
So, The Committee agreed that the OCR needs to reach a higher level, and sooner than previously indicated, to ensure inflation returns to within its target range over the medium term.
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The latest from the REINZ Home Price Series, with some interesting twists, but still looking weaker in terms of sales volumes, longer days on markets and some compositional change as illustrated by the differences between the HPI Index and Median Prices.
With more rate rises expected, and higher fixed rates ahead, expect more weakness.
Today we look at what the RBA says about recession risks, examine the US Bond market ahead of the Federal Reserve decision on rates tomorrow, the start of Bank of England QT and its implications, and the latest data from New Zealand which underscores the expectation that even higher interest rates are to be expected. All up, inflation is created a wide range of casualties!
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Today’s post is brought to you by Ribbon Property Consultants.
The latest from Stats NZ shows that New Zealand population is growing more slowly than for years as a result of weak migration, and inter-regional movements. More bad news for property prices?
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Today’s post is brought to you by Ribbon Property Consultants.
New Zealand Household Finances Are Being impacted by the change in interest rates and falls in property prices as inflation continues to bite. The trouble is though these aggregate numbers do not really tell the true story. Whilst we do not run our surveys in New Zealand, we think the parallel with Australia would tell us that the rule of thirds applies. One third of households are under severe financial pressure, one thirds have no issues at all and are enjoying strong income growth and buffers and one third is in between, but slipping towards pressure as interest rates continue to rise, putting upward pressure on mortgage repayments and rents, and downward pressure on home prices and savings.
However, Stats NZ said The net worth of New Zealand households fell $88.9 billion, 3.7 percent during the June 2022 quarter. The June 2022 quarter decline is more than twice the $40.1 billion fall in the March 2022 quarter. The two consecutive quarters of declining household net worth follow ten consecutive quarters of gains.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
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Digital Finance Analytics (DFA) Blog
New Zealand Household Finances Under The Microscope... [Podcast]
New Zealand Household Finances Are Being impacted by the change in interest rates and falls in property prices as inflation continues to bite. The trouble is though these aggregate numbers do not really tell the true story. Whilst we do not run our surveys in New Zealand, we think the parallel with Australia would tell us that the rule of thirds applies. One third of households are under severe financial pressure, one thirds have no issues at all and are enjoying strong income growth and buffers and one third is in between, but slipping towards pressure as interest rates continue to rise, putting upward pressure on mortgage repayments and rents, and downward pressure on home prices and savings.
However, Stats NZ said The net worth of New Zealand households fell $88.9 billion, 3.7 percent during the June 2022 quarter. The June 2022 quarter decline is more than twice the $40.1 billion fall in the March 2022 quarter. The two consecutive quarters of declining household net worth follow ten consecutive quarters of gains.
The latest edition of our finance and property news digest with a distinctively Australian flavour.
Go to the Walk The World Universe at https://walktheworld.com.au/
While New Zealand Inflation has fallen very slightly to 7.2% for the year to September, down from the 32-year high of 7.3% hit in June, the 6.6% domestic inflation figure is the highest since Stats NZ started that data series in 2000, up from 6.3% last time.
Stat NZ today released their latest data and advised that the consumers price index increased 7.2 percent annually in the September 2022 quarter.
This signals a likely 75 basis point rate hike from the Reserve Bank of New Zealand in November. Already this year the OCR has been hiked by a record (for a calendar year) 275 basis points to 3.50%.
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