Thursday 30th November, 2023

Yesterday, the RBNZ met for the fourth & final time this year.

The committee agreed to hold the OCR steady at 5.5%.

They also said :

• They are concerned about the ongoing excess demand & inflationary pressures in the economy.

• If inflationary expectations are stronger than expected, increases in the OCR will be likely.

• Wage growth has eased from its recent peak.

• Demand for labour is softening & is now below pre-COVID-19 levels.

• A strong population from inward migration is adding to the labour supply & increasing inflationary pressures.

🚨 Important : RBNZ debated raising the OCR or leaving it unchanged. There were no debates about cutting it. 

What Does It Mean For Mortgage Holder?

Corelogic’s chief property economist, Kelvin Davidson, had this to say …

“Many existing mortgage-holders will still need to budget for higher debt servicing costs when their current loans reprice over the next year or so.”

“These pressures are likely to keep a lid on housing market activity and prices, especially if a few more job losses did start to come through.”

Kelvin Davidson also said, “New borrowers will continue to face challenges in terms of satisfying serviceability testing.”

Is The OCR Likely To Go Up In 2024?

Independent & well-respected economist, Tony Alexander, believes the RBNZ will not raise the OCR in 2024. 

What does this mean for investors?

Rising insurance costs, maintenance, and council rates alongside high mortgage rates, are unfavourable for investors. 

The numbers don’t stack up in their favour.

However, Tony Alexander believes a recovery of the house construction sector may occur from early 2025.

The net migration surge will place extra upward pressure on rents.

Which will encourage the buying of properties, possibly setting the stage for a recovery.

That’s A Wrap

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Talk to you tomorrow,

Alvin Zhong