There seems to be a myth or more likely a miss understanding that the kiwi property market is insulated from international markets, and move's only on forces in New Zealand.
This is incorrect,
Property prices are influenced by interest rates, interest rates are influenced (manipulated) by the RBNZ.
The RBNZs job is to control inflation, but what is less understood they need to control employment.
Employment is made up of government and private, we are an exporting nation so rely heavily on international markets, government relies on tax or international debt in the form of bonds.
Who cares! What's that got to do with my portfolio?
The bond market is dictated by trader's or investors trying to predict were the global economy is going , growth, flat or recession.
China and the US are the biggest markets although I believe the US is the most important.
The 10y bond rate is the most important, it gives an insight on what investors are predicting years in advance, the 2 year bond rate is what pretty much everyone knows is happening in the economy right now, you just have to read about it on the doom and gloom in your click bait news sight.
So?
The RBNZs job is to stabilise inflation, and employment, not many people realise they also need to increase unemployment and have people fail or force mortgagee sales to slow the economy down so they can lower interest rates.
And all this is dictated to by international markets or more importantly the US sharemarket.
The RBNZ will deny this because it's not very politically correct to explain that Kiwis fate's are controlled by the elites in America...get over it, it's been happening well before I was born.
What does this mean for you?
Not much really, you will go on investing in property, prices will double every 8 years or so and you will be oblivious to whom controls it all.
(Note: Central government have very little amount of power in global markets, but can make matters worse for local economies when trying to influence natural forces)
PS
Obviously there is much more to this but I have tried to keep it as simple as possible.
Yours sincerely
K.Jeffa.
This is incorrect,
Property prices are influenced by interest rates, interest rates are influenced (manipulated) by the RBNZ.
The RBNZs job is to control inflation, but what is less understood they need to control employment.
Employment is made up of government and private, we are an exporting nation so rely heavily on international markets, government relies on tax or international debt in the form of bonds.
Who cares! What's that got to do with my portfolio?
The bond market is dictated by trader's or investors trying to predict were the global economy is going , growth, flat or recession.
China and the US are the biggest markets although I believe the US is the most important.
The 10y bond rate is the most important, it gives an insight on what investors are predicting years in advance, the 2 year bond rate is what pretty much everyone knows is happening in the economy right now, you just have to read about it on the doom and gloom in your click bait news sight.
So?
The RBNZs job is to stabilise inflation, and employment, not many people realise they also need to increase unemployment and have people fail or force mortgagee sales to slow the economy down so they can lower interest rates.
And all this is dictated to by international markets or more importantly the US sharemarket.
The RBNZ will deny this because it's not very politically correct to explain that Kiwis fate's are controlled by the elites in America...get over it, it's been happening well before I was born.
What does this mean for you?
Not much really, you will go on investing in property, prices will double every 8 years or so and you will be oblivious to whom controls it all.
(Note: Central government have very little amount of power in global markets, but can make matters worse for local economies when trying to influence natural forces)
PS
Obviously there is much more to this but I have tried to keep it as simple as possible.
Yours sincerely
K.Jeffa.
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