Auckland and NZ housing crash forum

I am calling it, a year early. Auckland is about 1 year behind Sydney.

Last year the media in Australia said we might see a smile correction of under 5%, well we are over 11% down from 2016's highs.

The media are starting to call a "slight" correction for Auckland now.

Anybody from Auckland want to share their views on the property market?

What the housing downturn in Australia could mean for New Zealand

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12188955

Sydney real estate agent Peter McGuinn has witnessed first-hand the recent dramatic shift in the local property market."Fifteen months, two years ago, selling was easy. You could sell a dog kennel for a fortune," he says.But offloading a property in Australia is now hard work following a steep decline in house prices.Take, for instance, the three-bedroom house in Sydney's beachside suburb of Maroubra — 10km from the centre of the city — that McGuinn put to auction recently.

A year ago, it would have been quickly snapped up for about A$1.8 million ($1.90m), says McGuinn, a co-director of South Eastern Reality, but when it went to auction in late November it failed to attract a single bid.As of late December, it remained on the market for less than A$1.6m.Sydney house prices have suffered their steepest decline in three decades and are down 10.1 per cent from their July 2017 peak. Falls in Melbourne are similar.McGuinn says in reality the falls are around 15 per cent and up to 20 per cent in some suburbs. That will be confirmed when updated figures are published in February.It's not just real estate agents and homeowners who are nervously watching the house price decline. The Government, investors and economists are also keeping a close eye on the property market.AMP Capital chief economist Shane Oliver says the housing downturn is now the biggest threat to the economy.

<p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"That weakness in the housing market is slowly starting to show up in a downturn in the housing construction cycle which, on its own, is not necessarily a major problem because there's other parts of the economy that will keep things going," says Oliver.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"More importantly, the weakness in the housing and house prices is and will act as a dampener on consumer spending."</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Household spending is already soft, growing just 0.3 per cent in the third quarter of last year, and a major factor behind quarterly GDP growth to just 0.3 per cent.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Australia goes into the new year, after the economy grew around 3 per cent in 2018, on the back of infrastructure spending, improving business investment and strong exports.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Despite the risk from falling house prices, Oliver expects growth to continue and for Australia to enter its 28th year without a recession.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"My feeling is that it turns out to be a relatively soft landing although I think, if you're in Sydney or in Melbourne and you borrowed recently and bought into a house in the last year or so, you probably may not regard it as a soft landing," he says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Oliver expects the economy to grow 2.5-3 per cent in 2019, underpinned by strong exports of commodities, business investment and ongoing infrastructure investment.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">However, global economic weakness could hit export volumes and prices, as could US President Donald Trump's game of brinksmanship with China over trade tariffs. There is a risk weaker consumer spending could flow over to a slowdown in business investment.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">House prices have surged in Australia for the past decade, putting a home beyond the reach of many in the capital cities, but making those who already own a home feel increasingly affluent.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">This so-called wealth effect has underpinned consumer spending, as homeowners have felt more relaxed about dipping into their savings or their mortgages as they watched the value of their homes rise by literally thousands of dollars a week.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">But with headlines now telling homeowners how much money they have lost, economists are concerned consumers will keep more money in the bank.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">The Reserve Bank of Australia is also concerned. "The outlook for household consumption continued to be a source of uncertainty because growth in household income remained low, debt levels were high and housing prices had declined," minutes from the RBA's final board meeting of the year revealed.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Anna Carrabs, chief executive of premium furniture maker and retailer King Living, says she expects consumers will be more cautious in their spending as home values fall.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">However, she is hoping this translates into a focus on quality and better spending decisions at the company's 16 stores around Australia (it also has a store in Auckland's Parnell).</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"I think there will be more caution, but I think usually caution means, if we're going to make the investment, let's make it last. People think a lot more like that rather than, 'Hey, let's just buy it and then we can always get rid of that if we don't like it next year and just change it again'," she says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"That's the message that we're putting out there."</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Adding to the risk from the house price fall is that Australian consumers already have high debt levels and banks are making it harder for people to get loans.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Banks are tightening up their loan requirements in response to tougher new regulations but also after the Banking Royal Commission, which has put a spotlight on the sale of unsuitable products to customers and on unsustainable lending.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">According to news reports, a bank recently went so far as to look through a potential borrower's bank statements and asked why he was spending so much on kebabs.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">It will put further downward pressure on house prices, particularly in Sydney and Melbourne where many buyers load up with as much debt as possible to enable them to compete with other homebuyers.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">On top of that, regulators have placed a brake on the amount of money banks can lend for investment properties.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Adding to pressure on property investors is the possibility of a Federal Labor government taking power next year. Labor's pledge to wind back the favourable tax treatment of investment property will deal another blow to the housing sector.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">While consumers will be more cautious, the average household will save about $10 a week from lower petrol prices and that will provide some support to household spending, says Shane Oliver.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">There is also the prospect of large income tax cuts this year. At its mid-year economic update in late December, the Government announced the deficit was shrinking and the 2019-20 year was on track for the first annual surplus in a decade.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">More importantly for consumers (and voters) the Government has put aside A$9.2b for what the Treasury papers coyly calls "decisions taken but not yet announced", which are actually tax cuts.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Treasurer Josh Frydenberg will hold off the details until closer to the election due by May, although analysts estimate they will be worth about A$6 a week to middle income earners.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Low income earnings are already in line to receive a A$500 tax refund in July thanks to previously announced tax cuts.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">While the Government insists the return to surplus is due to its good economic management, in reality it's due to higher commodity prices, infrastructure spending and higher company tax collections.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">But the Treasury papers suggest the economy will slow to 2.75 per cent growth in 2018. Investment bank UBS has a similar forecast — growth of 2.7 per cent in 2019 and of 2.5 for 2020.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">The slowing growth and benign inflation will keep the Reserve Bank of Australia on the sidelines and keep the official cash rate at 1.5 per cent, where it has remained steady for the past two and a half years.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Certainly, UBS economist Carlos Cacho doesn't expect a rise in interest rates until after 2020, particularly as lower oil prices keep inflation low.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"We don't think they're going to hike any time soon. With soft consumption, falling house prices, it's not an environment they want to hike into," he says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Cacho says a rate cut is also unlikely, unless the economy deteriorates further.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"The housing market is the key downside risk to the domestic economy, mostly to the consumption channel but also through employment and the construction sector if we do see activity slow down," he says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">For his part, McGuinn is optimistic about the property market and economy.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"At some stage, probably in the next month, in the next six months, things will bottom. And then, people will say, 'S***, the whole world didn't blow up. Property prices doesn't go back down to pre-2000 numbers. It did drop back a bit, but they're still better than they were in 2014. Now is a good time to buy — while the market's bottomed'," he says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"And then, all of a sudden, there'll be a change."</p><h2 class="element element-heading" style="box-sizing: border-box; font-family: &quot;Stag Book&quot;, Georgia, serif; font-weight: 500; line-height: 1.2em; color: rgb(49, 60, 61); margin-top: 20px; margin-bottom: 10px; font-size: 30px; font-kerning: normal; letter-spacing: normal; width: 620px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; orphans: 2; text-align: start; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Kiwi economists keep eye on transtasman troubles</h2><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Should New Zealanders be worried about dark clouds over Australia's economic outlook?</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">As our largest trading partner, Australia's fortunes always have some influence on New Zealand's GDP. But right now our cousins across the ditch are dealing with two key issues which could flow directly on to New Zealand this year.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Property prices have fallen sharply — particularly in Sydney where they are now off by more than 10 per cent.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Last month ASB economist Mark Smith looked at the historic house price data for both nations over the past 25 years.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">The results showed a positive two-way relationship between the two markets, with Australia typically having a stronger influence on the New Zealand market than vice-versa.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Sydney prices also appeared to show a stronger influence over Auckland prices than did the prices in cities like Melbourne and Wellington.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Typically the New Zealand market responds to Australian house price movements, with a peak impact after about six months, he found.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">However, he noted some of the key variables in the two markets may temper the flow through to New Zealand this time.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Both New Zealand and Australia have moved to address supply issues in the past few years but Australia has generally been more successful — building more dwellings in relation to population size than we have in here.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">A regional analysis showed that while Auckland building consent issuance "has ramped up considerably over the past few years it pales in comparison to sizeable increases in Sydney".</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">"This could be one factor resulting in New Zealand house prices outstripping those in Australia," Smith said.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">New Zealand's relatively high levels of immigration may also temper downward pressure.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Also conversely, the slump in Australia has put downward pressure on mortgage rates which has flowed through to the New Zealand market and will help to underpin prices here, he says.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">But the case could be made that the Aussie property downturn is pushing the banks to be more caution with their lending.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">So even if rates don't rise we could see credit conditions tighten — making it harder for first home buyers to get loans and squeezing cash strapped businesses needing to refinance.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">On top of the wobbly market, Australia's banks are under intense political and regulatory scrutiny after the Royal Commission Banking Inquiry.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">The inquiry has already resulted in changes within the banks, which are now said to be making more thorough assessments of loan applicants' personal expenses.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Credit growth in Australia has slowed as a result and banks have lost market share to non-banks.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">Mortgage brokers here have reported that banks are also asking for more information on people's expenses, although just one bank — Westpac — says it has made changes to its methodology.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">The double whammy of tightening credit and falling property prices has the potential to become a vicious cycle.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;">It will certainly be an issue to watch closely in 2019.</p><p class="element element-paragraph" style="box-sizing: border-box; margin: 0px 0px 10px; text-align: left; font-size: 17px; line-height: 1.5em; color: rgb(0, 0, 0); width: 620px; font-family: &quot;Source Sans Pro Light&quot;, Helvetica, sans-serif; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: rgb(255, 255, 255); text-decoration-style: initial; text-decoration-color: initial;"><i style="box-sizing: border-box;">- Liam Dann</i></p>