We’re not sure about you but we feel as though we blinked and much of 2023 rapidly raced past us! Suddenly we’re at the end of August and in two weeks it’s Spring. Hold onto your hats dear readers the slippery slope towards Christmas is certainly on the horizon...
It’s been a very interesting first half of the year indeed. What began with very slow activity in the housing market, and with most forecasting it to remain suppressed for the short term at least, we feel has fairly quickly turned and we can report there has certainly been recent heat injected over the past couple of months. Much of the current commentary has been is predicting the bottom of the market has been reached and we have to say, we agree. Activity seems to be resuming, we’re seeing more first home buyers re-entering the market and more interest from homeowners to make a move too while investors are starting to circle, looking for pre-election bargains.
A lot of the near term impact as to what happens in the housing market next will come down to the election result in October. We are seeing many clients, in particular investors, taking a “wait and see approach” as to their next step pending this outcome. If there is a changing of the guard, we’re expecting house prices to rise fairly quickly as investors are given some much-needed certainty around the feasibility of their assets and the much needed return of interest deductibility on rental property. If not, then there could be some challenging times ahead unless red can somehow work out how to steer the country back to the black. We wait.
Have interest rates peaked? The Reserve Bank announcement yesterday stuck to script, leaving the Official Cash Rate unchanged at 5.5%. This was widely anticipated by economists and the RBNZ Committee ‘agreed that the OCR needs to stay at restrictive levels for the foreseeable future to ensure annual consumer price inflation returns to 1 to 3% target’
Interest rates may remain higher for the long haul. The issue is that haul just keeps growing longer...Economists remain divided as to the requirement for further rate rises to follow with two of the main banks expecting further tightening ahead. While Inflation is showing signs of slowing and there are still plenty of mortgages yet to reprice from historic lows (around 40% of mortgages fixed on or below 4%) the RBNZ deduces that holding the current rate is contractionary enough. This remains to be seen and your editors faith in the RBNZ’s skillset is eroding about as quickly as his Pacific Peso’s buying power at the local New World.
If you’re in the ‘soon to reprice boat’ and feeling unsure about what higher interest rates could mean for you, do get in touch. We can work with you to ensure you get the most competitive rates available and more importantly help structure your loan to hedge your risk and benefit from rates as and when they begin to come down again.