Mixed outlook for 2015

Posted by MarkL on December 15, 2014

It is a mixed bag for New Zealand’s economy as 2014 draws to a close. 

Housing, in Auckland anyway, is booming with reports of house prices rising at “eye-watering rates” according to valuers QV.

The Herald on Sunday reported this week that one in five suburbs had a median house price of $1million or over, 13 in total up from three in 2009.

Major banks have reported home owners remortgaging their houses and using the money for a range of things including home improvements, new cars, boats and a holiday home.

Property website RealEstate.co.nz recently reported a surge in interest from buyers for properties in traditional holiday-home towns such as Whangamata, indicating perhaps the Auckland boom was spreading.

Added to that a continued drop in petrol prices it might seem as if the year had ended on a high.

The party has been slightly ruined by weaker commodity prices, particularly timber and the all important dairy. Add in the Canterbury rebuild coming to an end and the picture so not so rosy.

A report released recently backed up it could be a challenging year for the economy.

The NZIER Consensus and Forecast is an average of economic forecasts from a quarterly survey of financial and economic agencies including the major banks, Treasury and the Reserve Bank.

The report said the economy next year was facing a number of pressures and predicted economic growth would slow to around 3 per cent. It also said household spending would drop into the year, but it predicted a rise in commodity prices.

The report forecast a rebound in exports that would offset the weakened domestic economy.

The predicted hike in interest rates didn’t happen in 2014, and the forecast said they would remain lower for longer, which was likely to continue to fuel Auckland’s rapidly overheating property market.

For most people though the economy will take second place after Christmas as they head away for summer – if it ever arrives – and enjoy some time off. The economic issues will always be there when they get back.