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News for today
02 August 2005
By JAMES WEIR
There is little evidence that the Reserve Bank has broken the back of the housing market boom, with households still borrowing.
Reserve Bank figures showed that borrowing rose more than 15 per cent in the June year, with household debt up about $16 billion to about $112 billion.
Last week the Reserve Bank said the housing market represented "an upside risk for the future path of household spending and inflation".
The blistering rate of growth in household borrowing has been steady for the past nine months around 15 per cent.
The racking up of debt was "frothy", according to Bank of New Zealand economists, and was aligned with continuing strength in the housing market.
But households were not the only big borrowers.
Business debt was up 15.6 per cent, by $7 billion, in the June year. Farmers borrowed another $3.3 billion, up 15 per cent.
The debt buildup across all sectors suggested the economic growth was continuing and suggested a "soft landing" was the most likely path for the economy, BNZ economists said.
House sale volumes were still well above usual, the time taken to sell was still "heated", and house prices were still rising, BNZ said.
Quotable Value's latest figures showed national house prices up 14.2 per cent in the past year to June, slightly higher than the 13.5 per cent in the May year.
Strong migration in the past few years has been a strong driver of house prices, but migration is cooling with 300 more people leaving to live overseas than arrived in June.
In the year to June, New Zealand gained about 8600 more people than it lost, 61 per cent down on last year.
House sale volumes rose late last year during the fixed-term mortgage rate price war, but then eased back before steadying more recently, according to UBS Investment Research economists. Sales volumes were down about 4 per cent in the past year, but 24 per cent lower than the peak volume in the market in 2003.
Building consents for homes were slowing down and a fall in actual building work was due in the third quarter of the year and beyond, UBS said.
With house prices still rising, but building work slowing down, the inflation risk from the house sector was from continuing price rises, "adding to wealth and fuelling household spending", UBS said.
But it said the boost in prices in the March quarter was just another symptom of the mortgage price war late last year and would be temporary.
Bank of New Zealand led the market down, dropping two-year fixed rates to less than 7 per cent, compared with most rates now about 7.65 per cent.
There is still some skirmishing in the mortgage rate war, with Public Trust offering an 8.75 per cent floating rate, undercutting the big four banks. Its 7.6 per cent one-year rate was also lower than the big players.
Kiwibank is offering a 6.99 per cent rate for five years fixed.
News Source
Cheers
Marc
News for today
02 August 2005
By JAMES WEIR
There is little evidence that the Reserve Bank has broken the back of the housing market boom, with households still borrowing.
Reserve Bank figures showed that borrowing rose more than 15 per cent in the June year, with household debt up about $16 billion to about $112 billion.
Last week the Reserve Bank said the housing market represented "an upside risk for the future path of household spending and inflation".
The blistering rate of growth in household borrowing has been steady for the past nine months around 15 per cent.
The racking up of debt was "frothy", according to Bank of New Zealand economists, and was aligned with continuing strength in the housing market.
But households were not the only big borrowers.
Business debt was up 15.6 per cent, by $7 billion, in the June year. Farmers borrowed another $3.3 billion, up 15 per cent.
The debt buildup across all sectors suggested the economic growth was continuing and suggested a "soft landing" was the most likely path for the economy, BNZ economists said.
House sale volumes were still well above usual, the time taken to sell was still "heated", and house prices were still rising, BNZ said.
Quotable Value's latest figures showed national house prices up 14.2 per cent in the past year to June, slightly higher than the 13.5 per cent in the May year.
Strong migration in the past few years has been a strong driver of house prices, but migration is cooling with 300 more people leaving to live overseas than arrived in June.
In the year to June, New Zealand gained about 8600 more people than it lost, 61 per cent down on last year.
House sale volumes rose late last year during the fixed-term mortgage rate price war, but then eased back before steadying more recently, according to UBS Investment Research economists. Sales volumes were down about 4 per cent in the past year, but 24 per cent lower than the peak volume in the market in 2003.
Building consents for homes were slowing down and a fall in actual building work was due in the third quarter of the year and beyond, UBS said.
With house prices still rising, but building work slowing down, the inflation risk from the house sector was from continuing price rises, "adding to wealth and fuelling household spending", UBS said.
But it said the boost in prices in the March quarter was just another symptom of the mortgage price war late last year and would be temporary.
Bank of New Zealand led the market down, dropping two-year fixed rates to less than 7 per cent, compared with most rates now about 7.65 per cent.
There is still some skirmishing in the mortgage rate war, with Public Trust offering an 8.75 per cent floating rate, undercutting the big four banks. Its 7.6 per cent one-year rate was also lower than the big players.
Kiwibank is offering a 6.99 per cent rate for five years fixed.
News Source
Cheers
Marc
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