29 May 2014
Could NZ home sales slow RBNZ hiking cycle?
FXStreet (Bali) - The drop in NZ home sales following macro-prudential measures and higher rates may result in a “significant risk” to the economy, which may lead the RBNZ to reassess their interest rates target in the coming years, despite soaring house prices, according to NZIER.
Bloomberg reports: "Changes in home-sales trends typically presage shifts in New Zealand’s economic growth by about six months. Sales plunged 20.2 percent in April from a year earlier, according to data published by the Real Estate Institute of New Zealand on May 12. The lower panel shows the nation’s house prices are above the peak reached before the global financial crisis, unlike those in the U.S, based upon the S&P/Case-Shiller 20 City Home Price Index."
Bloomberg quotes NZIER principal economist Shamubeel Eaqub, noting: “A sudden stop in house sales could make banks more careful in lending; that would put the brakes on broader economic growth. In an investor-driven market, sales and prices can turn rapidly; the RBNZ will be wary of causing a housing bust in the provinces and sectors outside of Auckland housing, which are not overheating. A pause in hikes is possible after June if the economy slows too quickly.”
Bloomberg reports: "Changes in home-sales trends typically presage shifts in New Zealand’s economic growth by about six months. Sales plunged 20.2 percent in April from a year earlier, according to data published by the Real Estate Institute of New Zealand on May 12. The lower panel shows the nation’s house prices are above the peak reached before the global financial crisis, unlike those in the U.S, based upon the S&P/Case-Shiller 20 City Home Price Index."
Bloomberg quotes NZIER principal economist Shamubeel Eaqub, noting: “A sudden stop in house sales could make banks more careful in lending; that would put the brakes on broader economic growth. In an investor-driven market, sales and prices can turn rapidly; the RBNZ will be wary of causing a housing bust in the provinces and sectors outside of Auckland housing, which are not overheating. A pause in hikes is possible after June if the economy slows too quickly.”