In today’s headlines with Chereè Kinnear, David Seymour outlines expectations for Pharmac, new speed-camera signage and Tenacious D world tour gets halted.
The latest Stats NZ data showed annual inflation fell to 3.3% in the June quarter.
That is its lowest level in three years and below Reserve Bank expectations of 3.6%.
An expert warns prices in some key sectors are still rising rapidly.
Food prices may be holding steady but Kiwis face more cost of living pain with insurance, rates and rents still “rising rapidly”.
Infometrics’ chief forecaster Gareth Kiernan told the Herald prices are easing across the economy, after the latest Stats NZ data showed annual inflation fallingto 3.3%.
“There are signs across parts of the retail and hospitality sectors that with the lack of demand, prices are stabilising and in some cases there seems to be a bit more discounting going on,” Kiernan said.
“That’s helping to ease some of the budgetary pressures, but then there are still pockets where there’s some pretty hefty price rises.”
Housing pain continues
Kiernan said insurance, rates and rents were “rising rapidly”.
Rent prices increased 4.8% in the 12 months to the June 2024 quarter.
New house construction costs increased 3%.
Council rates increased 9.6%.
Insurance increased 14%.
Infometrics believed it would be early next year before the Reserve Bank started to cut interest rates.
“From the point of view of someone who has a mortgage, that sort of relief in terms of interest rates coming down on your budget, or the affordability of getting into the market is still going to take a bit of time to come through,” Kiernan said.
“There’s emerging signs that we’ve seen over the last week or two that fixed mortgage rates are drifting down a little bit, but [we’re] probably not going to get a lot more momentum in that until late this year or early 2025.”
He added if the official cash rate (OCR) dropped to 4% by the end of next year, New Zealanders might see fixed mortgage rates around the 6% mark.
Infometrics’ chief forecaster Gareth Kiernan.
“So they’re still sitting higher than we’ve been used to over the last five to 10 years.”
But housing affordability was still “pretty tough” and Kiernan didn’t expect a significant number of buyers in the market.
“Our view is that there may just be a little bit of residual demand coming through into the market from the very strong net migration we’ve seen through 2023 ... as they settle into life in New Zealand,” he said.
“From an investor point of view, the yields and returns you’re getting don’t look that great, so [it will be] pretty soft for the housing market still over the next 12 to 18 months, not necessarily seeing prices falling a great deal but certainly not much scope for them to rise either.”
