Tony Alexander

Economic Commentaries

Weekly Overview December 10 2015

Thursday December 10th 2015

This is the second to last Weekly Overview for the year. In it I take a look at the decision by the Reserve Bank to cut the cash rate another 0.25% but essentially rule out any further cuts. This makes sense as although inflation is low at 0.4% and not set to rise much, the ability of lower interest rates to boost inflation is limited these days and lower rates simply imply even faster growth in home lending and house prices.

Concern about financial risks stemming from this debt growth means extra credit controls are likely to eventually appear to supplement the existing loan to value ratio rules and 30% deposit requirement for investment property purchases in Auckland.

I also provide a simple list of dot-points of some of the key fundamentals in the housing market, plus put a plug in at the end for a budding entrepreneur.