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  1. #651
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    Quote Originally Posted by unhuman View Post
    https://www.nbr.co.nz/story/treasury...udget-forecast

    “The key reason we expect house price inflation to slow is rising interest rates. The higher OCR will translate to higher mortgage rates, reducing demand for housing. House prices are forecast to fall slightly on an annual basis over 2023 and 2024, shortly after interest rates peak.”

    Treasury didn't get the memo that rock bottom interest rates are only a bit part in housing hyper inflation.
    Geoff Bascand ex RBNZ said

    "But they could not be expected to "fix" the housing market. "We can lean against house prices by increasing the cost and restricting the availability of credit, but we cannot alter the supply of land or buildings and should not be held responsible for the housing market.""

    Although it looks like treasury and Tony Alexander do not agree with this statement.

    The "leaders" at the RBNZ are doing all they can to deflect any responsibility for runaway house prices. They aren't solely responsible but I would have thought largely responsible. Do really strong "leaders" not accept the consequences of their actions?

  2. #652
    Ignorant. Just ignorant.
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    New Zealand house price to income ratios are well above historic averages. To bring them back into line, either house prices fall dramatically, or incomes rise dramatically without flowing through to house prices.

    Which is more likely? Is either likely?

    Quick, simplistic fixes abound. Are any of them realistic?

  3. #653
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    It sounds like the supply side is ramping up with more houses being built but costs seem to be rising pretty rapidly, on the demand side immigration is down but expected to increase rapidly as more people consuming more stuff is the current economic model.
    The RBNZ could help by raising interest rates but it can't as debt levels have got too high.
    We could scrap inflation targeting. I haven't seen the study that proves constantly rising prices is good for society. Deflation is the natural state as business becomes more efficient prices should go down. Most people would prefer prices going down. Except asset prices.

  4. #654
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    Sam Stubbs' opinion of the governor's performance:

    https://www.stuff.co.nz/business/opi...rnor-really-go

  5. #655
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    There have been arguments the central banks should not have the full employment job, just price stabilty. Do we have price stability?

    “promoting and protecting financial stability and ultimately the prosperity and wellbeing of all New Zealanders”.

    This is a big ask, but have the actions of the Reserve Bank helped or hindered someone wanting to buy a house, has it reduced or increased social mobility, who is most penalised by the current inflation tax being inflicted on all of us.
    Has income and wealth been further concentrated in fewer hands (Sam Stubbs included) due to central bank policies.

    Sam Stubbs would love central bankers no matter who they are. He is a fund manager, lower interest rates and more money make his job easy. I wonder if he will feel the same if Orr actually raises interest rates significantly to fight inflation and worries more about price stability than pushing up asset prices.

  6. #656
    Senior Member Toulouse - Luzern's Avatar
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    Unhappy Passing the Buck

    [QUOTE=Aaron;933113]There have been arguments the central banks should not have the full employment job, just price stabilty. Do we have price stability?

    “promoting and protecting financial stability and ultimately the prosperity and wellbeing of all New Zealanders”.

    This is a big ask ..... and a big risk

    My take is that Grant Robertson has passed the buck to Orr/RBNZ so there is someone else to blame if things go bad.

    Eg the 1BN extra into the economy by the Govt* to assist house buyers, via the RBNZ*, who gave it to the banks* who lent it not to first home or little kiwi battlers but to the biggest borrowers. (* without conditions it would seem)

    Sam apparently thinks you can't blame the Govt, or the RBNZ, but the "greedy banks" who just do what banks do ...

    My take (E&OE) may well be wrong, is the RBNZ has too many priority A responsibilities, may fail on a few ...

    What do you think?

  7. #657
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    [QUOTE=Toulouse - Luzern;933143]
    Quote Originally Posted by Aaron View Post
    There have been arguments the central banks should not have the full employment job, just price stabilty. Do we have price stability?

    “promoting and protecting financial stability and ultimately the prosperity and wellbeing of all New Zealanders”.

    This is a big ask ..... and a big risk

    My take is that Grant Robertson has passed the buck to Orr/RBNZ so there is someone else to blame if things go bad.

    Eg the 1BN extra into the economy by the Govt* to assist house buyers, via the RBNZ*, who gave it to the banks* who lent it not to first home or little kiwi battlers but to the biggest borrowers. (* without conditions it would seem)

    Sam apparently thinks you can't blame the Govt, or the RBNZ, but the "greedy banks" who just do what banks do ...

    My take (E&OE) may well be wrong, is the RBNZ has too many priority A responsibilities, may fail on a few ...

    What do you think?
    My understanding of it all is pretty limited.
    But what I see is central banks pushing up asset prices with lower interest rates and easy money. This is benefiting the "risk takers" while hurting savers and with inflation rising the poorest parts of society. Pushing up asset prices has exacerbated wealth inequality and in NZ it is getting to a point where it is starting to affect social mobility. Trickle down economics does not work and inflation targeting seems like an idea that has had its time.

    Not sure what the extra $1BN was that you mention but Large Scale Asset Purchases by the RBNZ ended up being $53BN and was largely designed to keep interest rates low in the covid crisis. Mostly to the govt and I did read that the banks had more than enough money if they wanted it but they pushed back against the RBNZ as they did not want to get too reckless with their lending.

    I think the RBNZ has made a great effort to deflect blame for the house price rises, but the govt has not done anything that would significantly reverse the trend either, tinkering with interest deductibility aside.

    The RBNZ mandate to provide "prosperity and wellbeing for all NZers" is f**king ridiculous. The RBNZ is not an omnipotent organisation. The ability to print money might seem to give them great power but money printing is only handy up to a point and it is possible that the latest inflation figures indicate that point might be in sight. Anyone who owns a house is feeling prosperous but there is another 40% of the country who don't.

    Sorry all over the place but as to your question I agree the RBNZ does have too many responsibilities.

  8. #658
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    A credit crunch, as predicted by TeslaGod at some stage earlier in this thread.

    https://www.stuff.co.nz/business/mon...g-rule-changes

    She said there had been five changes in a relatively small period of time – the CCCFA, LVR rules, rising interest rates, banks implementing debt-to-income ratios and the tax changes for investors.

    “The introduction of so many levers in the marketplace is already resulting in a reduction in access to finance for New Zealanders. We don’t believe this is the intention and our member financial advisers are reporting the impact on the average New Zealander.”

    Maybe if the interest rate lever was used and house prices crashed you would not have to dick around denying finance to poor people. All the other things seem to be a way to get

  9. #659
    Senior Member TeslaGod's Avatar
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    China has begun to lower interest rates/

    China were the leader's in elimination*

    China were the first to re open as the world went into lockdown in March 2020

    There economy/markets benefited from easy credit/low interest rates

    They were also the first to show signs of a slowing economy and deflation.

    NZ will follow suit in the next 12 months if not earlier on the long term of the yield curve (lower longer term interest rates)

    The US will soon follow after

    Negative interest rates mid decade for NZ and US/OZ.

    Robertson is screwed, short term inflation will only go higher hurting labours core voter's in the pocket.

    The extension of the boarder closure is only going to push inflation higher.

    The only way to drive short term inflation down for now is raise interest rates (painful for the middle voter's) and open the boarders to increase the labour constraints pushing down wages and prices.


    Both are deflationary and with an election 20 months out it's going to happen, people vote with there wallets.

    If you're struggling to pay 2.50 at the pump the last thing you are worried about is buying a house.
    Last edited by TeslaGod; 22-12-2021 at 09:07 AM.

  10. #660
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    from BD
    Both Quigley's and Robertson's responses to the staff exodus were in the nature of pulling a rug over an evident problem and telling us: move along, nothing to see here.

    So, not encouraging, so far, that changes in form will lead to substantive changes.
    For clarity, nothing I say is advice....

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