Tony Alexander

Economic Commentaries

Weekly Overview October 29 2015

Thursday October 29th 2015

We’re into a new financial year for the BNZ and being back in NZ after a couple of weeks offshore I am restarting the Weekly Overview after putting it into abeyance in January. On average each issue will be shorter than in the past but I’ll write a bigger summary and make it abundantly clear whether I think there is something truly worth reading or its just filler.

This week I discuss what London was like – basically booming – and how this means NZ builders better not count on sourcing many skilled staff from there to help build houses in Auckland. That means I still expect rising Auckland house prices though at a slowing pace.

Regarding housing I discuss the role being played by rising life expectancy boosting investor demand for housing in a couple of ways.

Regarding the NZ dollar I discuss factors explaining the rise in recent weeks along with a reminder that our currency remains well supported by our reasonable economic growth outlook whilst many economies offshore are still struggling. In Europe more money printing is likely, same in Japan, Australia’s iron ore and coal industry prospects continue to darken as China’s growth slows and steel production falls, and in the US expectations for interest rate rises keep getting pushed out.

If I were a borrower I’d look favourably currently at a two year fixed rate. And in the final section of the WO I discuss the rising use of credit controls in one form or another to perform the job of containing credit growth which interest rates can no longer do because of increasingly entrenched low inflation around the world. This last bit is the most interesting piece in this week’s Overview – page 6.