This morning the Reserve Bank cut the official cash rate as expected from 2.25% to just 2.0%. But because they signalled only one further rate cut whereas the markets were positioned for two the NZ dollar has rallied to near US 73 cents – in spite of the RB again saying it would be good if it fell.
In this week’s Overview we take a look at recent data showing booming prospects for the construction sector, hints of slowing in the Auckland housing market, the likely cut in interest rates from the Reserve Bank next week, and deliver some thoughts on the deteriorating global geopolitical environment. We also again try to put into perspective the plan to facilitate construction of 422,000 dwellings in Auckland in the next 25 years. That is roughly the number that were built over 161 years between 1840 and 2001.
This is the last Weekly Overview until I return from leave in a couple of weeks time. To tide everyone over until then the issue is devoted entirely to the focus for many people of housing. We take a look at whether there are parallels with 1986-87, the implications for policy and housing here of Brexit, the Aussie election, rising nationalism in Europe and the rise of Mr Sanders and Mr Trump in the United States.
Like everyone else this week we take a look at the Brexit vote and offer some thoughts as an outsider looking in as a disgruntled bunch of Remain losers debate ditching democracy, taking votes away from old people, and portray Leave voters as racist Neanderthals.
As we all bide time waiting for the Brexit referendum result, this week we take a quick run-through of NZ economic data reinforcing our view that current NZ growth is good and reasonable prospects lie ahead.
This week I am at Fieldays so start the Overview with a few observations on the mood at Australasia’s biggest agricultural gathering. I also take a look again at the housing market, focussing in on two things. Firstly a list of structural changes helping to explain the apparent downward trend in home ownership. Second the data suggesting near 40% of house sales in our three biggest cities are to investors.