1 00:00:00,480 --> 00:00:03,120 Speaker 1: Housing. Where are we tracking this year? Well, it's only 2 00:00:03,200 --> 00:00:05,720 Speaker 1: January and already we've got our first adjustment. A and 3 00:00:05,800 --> 00:00:07,600 Speaker 1: Z thought it would be five percent for the year. 4 00:00:07,640 --> 00:00:09,719 Speaker 1: They now think it's going to be two. Stronger than 5 00:00:09,760 --> 00:00:13,039 Speaker 1: expected growth, Sticky inflation, interest rates potentially on the way up. 6 00:00:13,080 --> 00:00:15,040 Speaker 1: Sharing's on as the chief economist, of course, and is 7 00:00:15,080 --> 00:00:15,320 Speaker 1: with us. 8 00:00:15,360 --> 00:00:17,080 Speaker 2: Good morning, Good morning to you too, mate. 9 00:00:17,120 --> 00:00:21,919 Speaker 1: The election year one two, The prospect of capital gains 10 00:00:22,000 --> 00:00:24,560 Speaker 1: tax What role do they play in your view of 11 00:00:24,560 --> 00:00:25,840 Speaker 1: where housing goes this year? 12 00:00:26,920 --> 00:00:29,680 Speaker 2: That's very difficult to quantify both of those things. You 13 00:00:29,800 --> 00:00:33,120 Speaker 2: never never had the counterfection, I suppose, but no elections. 14 00:00:33,240 --> 00:00:34,920 Speaker 2: It does make sense is a bit more talk about 15 00:00:34,920 --> 00:00:36,959 Speaker 2: the barbecue. And this does look like an election where 16 00:00:37,000 --> 00:00:40,840 Speaker 2: there could be bigger than usual difference in policies related 17 00:00:40,880 --> 00:00:43,400 Speaker 2: to the housing market. So it's not difficult to imagine 18 00:00:43,400 --> 00:00:46,160 Speaker 2: that that might cause some people to perhaps hold off 19 00:00:46,200 --> 00:00:46,760 Speaker 2: on decision. 20 00:00:47,920 --> 00:00:51,080 Speaker 1: All right, so we have uncertainty with inflation. Why is 21 00:00:51,200 --> 00:00:54,880 Speaker 1: by the way sidebar a question? Why is inflation sticky? Here? 22 00:00:54,920 --> 00:00:57,400 Speaker 1: Is sticky in Australia, sticky in places like Britain? What's 23 00:00:57,400 --> 00:00:58,720 Speaker 1: going on? Is this a global thing? 24 00:00:59,600 --> 00:01:02,840 Speaker 2: Yeah? It is? A global thing, which is very interesting. 25 00:01:03,080 --> 00:01:05,399 Speaker 2: But the surprise here was very broad based, so you 26 00:01:05,440 --> 00:01:07,280 Speaker 2: can't just you can't say I was just this. It 27 00:01:07,360 --> 00:01:09,800 Speaker 2: was just that there were certainly some things the Reserve 28 00:01:09,840 --> 00:01:12,720 Speaker 2: band can't do anything about, like electricity and food to 29 00:01:12,760 --> 00:01:15,920 Speaker 2: some extent, But overall, i'd describe it as a broad 30 00:01:15,959 --> 00:01:19,319 Speaker 2: based surprise. We have been seeing that globally as well, 31 00:01:19,360 --> 00:01:21,400 Speaker 2: and we're starting to see a bit of upward pressure 32 00:01:21,440 --> 00:01:24,480 Speaker 2: on longer term interest rates as a result of that 33 00:01:24,600 --> 00:01:28,120 Speaker 2: and concerns about fiscal position. So that's also part of 34 00:01:28,120 --> 00:01:29,760 Speaker 2: the story here, that it's not just about what the 35 00:01:29,760 --> 00:01:31,720 Speaker 2: Reserve Bank of New Zealand is going to do, but 36 00:01:32,120 --> 00:01:35,160 Speaker 2: potentially also a bit more upward pressure on those longer 37 00:01:35,280 --> 00:01:37,640 Speaker 2: rates as well. It's kind of all adds to the 38 00:01:37,720 --> 00:01:40,880 Speaker 2: picture of country conditions being a little bit tighter than 39 00:01:40,920 --> 00:01:42,119 Speaker 2: they've expected at the moment. 40 00:01:42,640 --> 00:01:46,320 Speaker 1: So election here, capital gains, tax sticking, inflation, possible rising 41 00:01:46,360 --> 00:01:49,280 Speaker 1: interest rates. So that's your uncertainty. How do you dovetail 42 00:01:49,360 --> 00:01:51,920 Speaker 1: that in with this so called recovery we're supposed to 43 00:01:51,960 --> 00:01:52,480 Speaker 1: be enjoying. 44 00:01:53,560 --> 00:01:56,080 Speaker 2: Yeah, that's the interesting thing. I mean, the fact that 45 00:01:56,200 --> 00:01:58,240 Speaker 2: growth has been strong and you're expecting is of course 46 00:01:58,440 --> 00:02:00,560 Speaker 2: great because of the economies and it's has been in 47 00:02:00,600 --> 00:02:04,320 Speaker 2: a very dark hole. So it's been really encouraging that 48 00:02:04,680 --> 00:02:07,120 Speaker 2: GDP growth was stronger than expected going all the way 49 00:02:07,160 --> 00:02:09,720 Speaker 2: back to September last year. It's looking like it will 50 00:02:09,720 --> 00:02:13,520 Speaker 2: be again in the last three months of last year, 51 00:02:14,000 --> 00:02:17,040 Speaker 2: and the indicators have remained pretty positive going into this year. 52 00:02:17,160 --> 00:02:20,280 Speaker 2: That's all great. However, the economy and it does have 53 00:02:20,280 --> 00:02:22,560 Speaker 2: a speed limits and there's a lot of uncertain about 54 00:02:22,760 --> 00:02:27,000 Speaker 2: how UT is and some of the inflation indicators have 55 00:02:27,120 --> 00:02:31,079 Speaker 2: started to move in the wrong direction. So the market's 56 00:02:31,160 --> 00:02:34,520 Speaker 2: already now expecting two hikes this year, and that is 57 00:02:34,639 --> 00:02:38,119 Speaker 2: the main change in our housing forecasts is that those 58 00:02:38,160 --> 00:02:40,840 Speaker 2: mortgage rates have already started to move up again. 59 00:02:41,280 --> 00:02:43,760 Speaker 1: Is there a regionality I'm assuming there is. Q Town. 60 00:02:43,880 --> 00:02:46,560 Speaker 1: Queenstown sort of defied gravity by a plenty. Is the 61 00:02:46,560 --> 00:02:48,560 Speaker 1: most expensive place in the country, and there will be 62 00:02:48,600 --> 00:02:50,440 Speaker 1: places who will do well places who won't no matter 63 00:02:50,480 --> 00:02:51,320 Speaker 1: what happens. 64 00:02:51,840 --> 00:02:55,320 Speaker 2: Absolutely, the average hides a lot. In fact, it's hadden 65 00:02:55,360 --> 00:02:57,760 Speaker 2: a lot over the broader economy. The South Island's in 66 00:02:57,840 --> 00:03:00,240 Speaker 2: like a different country over the last few years. That's 67 00:03:00,280 --> 00:03:03,440 Speaker 2: really strong agriculture background, so at the moment. For example, 68 00:03:03,520 --> 00:03:05,799 Speaker 2: South of the house prices are up six percent, whereas 69 00:03:05,800 --> 00:03:08,720 Speaker 2: Wellington house prices are down three percent, and everyone else 70 00:03:08,800 --> 00:03:12,120 Speaker 2: is somewhere in the middle. And those regional disparities are 71 00:03:12,280 --> 00:03:15,160 Speaker 2: likely to persist even within the city. You know, the 72 00:03:15,200 --> 00:03:17,760 Speaker 2: different price brackets can move quite differently. And of course 73 00:03:17,760 --> 00:03:20,040 Speaker 2: it's important to remember we haven't got a single month 74 00:03:20,040 --> 00:03:22,799 Speaker 2: of data for this year yet, so there's a lot 75 00:03:22,840 --> 00:03:25,760 Speaker 2: of uncertainty. Obviously that have a feeble pair nout, but 76 00:03:25,840 --> 00:03:29,680 Speaker 2: we think forecasters two percent balances the up and down 77 00:03:29,800 --> 00:03:32,280 Speaker 2: risks a bit better than our previous forecasters five. 78 00:03:32,480 --> 00:03:34,520 Speaker 1: Okay, go, well, we'll talk lots of this year. 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