Today’s inflation forecast: Subdued, with a chance of increased credit control

What are the chances that interest rates will rise sharply, cause big cash flow problems for home owners, and produce a 10% plus decline in Auckland house prices? Very slim. Why? Because the key driver of rising interest rates is rising inflation and central bank efforts to fight it, and all around the world apart from Venezuela inflation is low and showing little sign of rising. Continue reading…

As low as they’ll go: Interest rates and Auckland’s housing market

The Reserve Bank cut its official cash rate by 0.25% on December 10 so it is now back where it was in March last year before 1% worth of increases to fight expected inflation. The inflation never came. In fact rather than reaching a predicted 1.6% inflation fell away to just 0.4% courtesy of a firm NZ dollar, falling fuel prices, and factors unexpected by the Reserve Bank. Continue reading…

Why property investors should keep an eye on transport developments

I finished last month’s housing blog by noting that if Auckland’s pace of house price rises was not sustainably slowing down then the Reserve Bank would probably take the 30% deposit requirement for investment purchases to 50% or 75%. This probably won’t be necessary because the pace of price inflation has slowed to 3.8% in the three months to October from 6.1% in the three months to July and 8% in the three months to August. Continue reading…