A MESSAGE FROM OUR CHIEF EXECUTIVE
Dear Property Owner ,
New Zealand might still be waiting to finalise some important policy decisions , but Kiwis are transacting with greater confidence .
This is despite lending rates pushing higher recently and opposing economists ’ views being split starkly between an aggressive and a cautious economic stance .
Two schools of thought are forming around the path of monetary policy – which will be a crucial determinant of purchasing power for the year ahead .
Forecasters advocating for higher interest rates and tighter policy controls ( the hawks ) believe migration has significantly lifted demand , with the housing market on its way up and further interest rate rises required to quell inflationary effects .
On the other side of the fence , dovish forecasters - who support lower interest rates , economic growth , and employment objectives - believe it will still take some time for the impact of the current tightening cycle to work its way through the financial system .
With nearly 60 per cent of fixed-rate mortgages due to roll over onto substantially higher lending rates within the next 12 months , we ’ re beginning to wonder if they may be right .
These crystal-ball gazers expect the Reserve Bank of New Zealand ( RBNZ ) has done enough to contract the economy and are picking interest rates to recede sometime around mid-2024 , following a little more economic pain for ordinary Kiwis .
The long list of variables makes for an interesting discussion here . Immigration , building and construction activity , geopolitical tensions , market expectations , employment rates , wages , commodity prices and housing market performance all play critical roles in the push-pull influence of policy .
In its latest Financial Stability Report ( FSR ), the RBNZ made it clear New Zealand is navigating unchartered waters , noting “ the combination of high interest rates and low unemployment makes the current economic climate unique in recent history .”
Much like the RBNZ can ’ t control the worldwide move to nationalisation ( as opposed to the previous decade ’ s globalisation , which favoured growth and kept borrowing rates low ), we can ’ t control the financial factors motivating Kiwis to buy and sell property .
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