ROOM FOR GROWTH, BUT RISKS REMAIN
While New Zealand’ s economy is emerging from a recessionary rut, export prices, particularly dairy, are lifting, driving confidence in regional economies. Meanwhile, Coulson says, inflation is tracking within the RBNZ’ s target band, and home insurance costs, which have surged in recent years, are finally easing as global reinsurance pricing softens.
“ Add to this, the current OCR at 3.25 per cent is close to many economists’ estimates of‘ neutral’ and further cuts, while not guaranteed, are widely anticipated by year’ s end.
THE BUYER MINDSET IS CHANGING
Rising investor participation is another indication of the market’ s gradual shift. Lending to investors has increased at an annualised rate of more than seven per cent in recent months, compared to little under five per cent for owneroccupiers.
“ Cashflow has improved slightly. Lower interest rates, stable rental returns, and modest price gains are nudging indicative gross yields upward. For investors, these marginal improvements, combined with a long-term view, make entry more attractive.”
“ This continues to create a more favourable lending environment, especially for interest-sensitive sectors such as housing and construction.
“ Yet, uncertainty continues to hover. Global trade tensions, geopolitical instability, and persistent inflation mean the road to recovery will be bumpy. The RBNZ, under interim leadership, is erring on the side of caution. Financial markets are split on whether another cut will be delivered in July, underscoring how finely balanced the outlook remains.”
In this context, Coulson says, the argument for waiting until things are perfect begins to unravel.“ As history shows, markets don’ t flash a neon sign when they bottom out. And when confidence does return en masse, sellers face stiff competition and reduced purchasing power.”
Source: RBNZ, interest. co. nz
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