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How will 4.9% inflation impact on us?

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  • How will 4.9% inflation impact on us?

    Inflation is the highest it's been since 2008 - when it was 5.1%

    At 4.9% what does it mean and how will we be affected by it?

    We know it's been driven by the property sector......


    The main drivers were housing-related costs, such as construction of new houses and local authority rates.

    Prices for construction of new houses were up 4.5 percent for the quarter, and 12 percent for the year.

    “Both supply-chain challenges and high demand are pushing up the cost of building houses,” consumer prices manager Aaron Beck said.

    “Construction firms reported that it is hard to get many materials needed to build a house, and that there are higher labour and administration costs.”

    Wages in the construction industry, as measured by the labour cost index previously increased 3.1 percent in the year to the June 2021 quarter (the most recent quarter available). This was due to high demand for labour in the construction industry in the last year.
    Keen on your thoughts....

    cheers,

    Donna

    The consumers price index rose 2.2 percent in the September 2021 quarter, the biggest quarterly movement since a 2.3 percent rise in the December 2010 quarter.
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  • #2
    Comrade commissar Cindy was warned about her hand-outs and pay increases with no improvements in productivity, so her pigeons are coming home to shit in her roost. All manner of scapegoats will be hunted down and publically pilloried.

    Comment


    • #3
      Inflation is a ratio.

      like 1/2 or 3/4 etc..

      It's the ratio of NZD comapred to the ammount of goods and services.

      Only the Reserve bank can increase the ammount of NZD.

      They use the OCR tool to do this.

      With inflation well over their target range, they have one less excuse to flood the economy with underpriced money.

      they really should have started hiking rates at the start of heavy house price inflation ( 12 months ago).



      Comment


      • #4
        In historical context 4.9% inflation is not unusually high.

        The inflation Rate in New Zealand averaged 4.6% from 1918 until 2021.

        A certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
        ​​​​​​​
        Expect to see higher interest rates and a roll off in house price inflation.

        Comment


        • #5
          To add, professional investors are:

          1. Locking in interest rates for a long term NOW.
          2. Selling off less-desired properties, taking advantage of the high current market prices. Proceeds going to new builds and diversification.

          Comment


          • #6
            Originally posted by Sanya View Post
            To add, professional investors are:

            1. Locking in interest rates for a long term NOW.
            2. Selling off less-desired properties, taking advantage of the high current market prices. Proceeds going to new builds and diversification.
            . Locked mine @ 2.99% for 5 yrs.

            New builds don't do it for me, feel the value is already priced in, existing is getting very expensive interest deductibility wise.
            Personally I think IP is done.

            Shifted some funds to Managed funds achieved 33% pa.
            Everything is ATH all time high.
            I might just DCA , but property going forward doesn't make sense anymore with so many headwinds and poor returns

            Comment


            • #7
              Originally posted by BlueSky View Post

              . Locked mine @ 2.99% for 5 yrs.

              New builds don't do it for me, feel the value is already priced in, existing is getting very expensive interest deductibility wise.
              Personally I think IP is done.

              Shifted some funds to Managed funds achieved 33% pa.
              Everything is ATH all time high.
              I might just DCA , but property going forward doesn't make sense anymore with so many headwinds and poor returns

              Well done.

              I've done the same. Residential property yields at current prices are not attractive. I'm diversifying into other asset classes.

              Comment


              • #8
                Originally posted by Sanya View Post


                Well done.

                I've done the same. Residential property yields at current prices are not attractive. I'm diversifying into other asset classes.
                Good move. Messaged ya.

                Comment


                • #9
                  Tony Alexander wants OCR to 3% ASAP - but wouldn't that kill our economy?
                  • Exports too expensive
                  • Consumer spending dries up
                  Then to stimulate consumer spending and higher export revenue interest rates drop again aye.




                  cheers,

                  Donna
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                  Comment


                  • #10
                    Originally posted by donna View Post
                    Inflation is the highest it's been since 2008 - when it was 5.1%
                    At 4.9% what does it mean and how will we be affected by it?
                    We know it's been driven by the property sector......
                    Keen on your thoughts....
                    Donna

                    IMHO the property sector is only the effect, not the cause.

                    The cause is (was) loose immigration policy and very loose monetary policy.

                    Meanwhile,
                    In the US, the real rate of inflation right now is about 15%, but the CPI there has it down reported as11%.

                    So they're in real trouble.

                    Comment


                    • #11
                      Originally posted by donna View Post
                      Tony Alexander wants OCR to 3% ASAP - but wouldn't that kill our economy?
                      • Exports too expensive
                      • Consumer spending dries up
                      Then to stimulate consumer spending and higher export revenue interest rates drop again aye.




                      cheers,

                      Donna
                      1: Technically he is correct

                      2: No it won't happen because it would take down the entire housing market and economy with it.This is not apart of the RBNZ mandate/The government seems to be doing that job just fine.

                      3: Tony Alexander has changed/he is now apart of mainstream business media and his job is to print sensational headlines for click bait.

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