Speaker 1: You're listening to a shares these podcast. It feels like
Speaker 1: housing has just dropped off the radar as a conversation
Speaker 1: in my world anyway? Is that a feature of the
Speaker 1: economy that we're in at the moment as well?
Speaker 2: What we've seen in the housing markets, there's a period
Speaker 2: where people may have looked around and gone, actually, I
Speaker 2: might get better returns elsewhere. And that's a pretty big
Speaker 2: change for a Kiwi mindset. But you know, we do
Speaker 2: still love our bricks and mortar. The housing market has
Speaker 2: been deliberately squashed by politicians and central bankers, and it's
Speaker 2: gone sideways for you know, three or four years, which
Speaker 2: is highly unusual. But what happened beforehand, with that forty
Speaker 2: six percent gain in eighteen months and then a twenty
Speaker 2: percent drop, that was quite extraordinary, and we're still kind
Speaker 2: of flushing things out. The Reserve Bank was quite clear
Speaker 2: and thereforecast that house prices only go up very gradually,
Speaker 2: and the so called wealth effect that drives Kiwis, has
Speaker 2: driven Kiwis for years, is not part of their forecast trajectory.
Speaker 2: And I think that's quite interesting because Kiwis normally love
Speaker 2: the fact that their house price goes up five ten percent.
Speaker 2: They feel like they're, you know, fifty to one hundred
Speaker 2: thousand dollars better off than they were last year.
Speaker 1: Maybe that jet ski is looking like.
Speaker 2: She's easily affordable now, you know, the.
Speaker 1: New Ford Ranger or whatever it is. Yet all of basics,
Speaker 1: so a lot of that is priced into how businesses
Speaker 1: are expecting to come out of this. Surely then that's
Speaker 1: been the behavior, but it's not there. So what does
Speaker 1: that tell you about where this recovery goes?
Speaker 2: Yeah, and do you know what when businesses come to us,
Speaker 2: particularly the smaller ones, they go to the bank and
Speaker 2: they say, I've got this fantastic idea, and we say, great,
Speaker 2: how much do you want? Well, I want one hundred
Speaker 2: thousand dollars. Okay, you can either just take the one
Speaker 2: hundred thousand dollars and here's your interest rate, or you
Speaker 2: can link your house to that loan and here's your
Speaker 2: interest rate. People go, okay, I'll link my house. So
Speaker 2: that wealth effect. That feeling is present in small business
Speaker 2: owners as well. If their house price is going nowhere,
Speaker 2: they feel nervous about the whole their whole situation, including
Speaker 2: your business.
Speaker 1: Maybe need a banking system that it's not so keen
Speaker 1: to just lean against houses all the time.
Speaker 2: Then you know what we need. We need lower risk
Speaker 2: waitings on business lending. That's what we need. That's what
Speaker 2: Anna Bremen's come from. In Sweden. The ris bank has
Speaker 2: lower risk weightings than us, so you are lower them.
Speaker 1: They basically go, we're prepared to accept potentially higher losses.
Speaker 1: We're just going to lower the amount of capital that
Speaker 1: a business bank, that a bank has to hold for
Speaker 1: business lending. Wow.
Speaker 2: Absolutely, and that means that that first Interestrida I talked
Speaker 2: about is lower. It's not going to be as low
Speaker 2: as linking it to a house, because we've got collateral
Speaker 2: of a house right Whereas you know, linking to a
Speaker 2: business it's high risk. But just lowering that get more
Speaker 2: money into small to medium businesses is something this economy
Speaker 2: really really lacks and does not do well.
Speaker 1: Sounds like an Agreement's got a lot to think about it.
Speaker 2: Investing involves the risk you might lose the money you
Speaker 2: start with. We recommend talking to a licensed financial advisor.
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