Latest / The SME Stream / Sharon Zollner: ANZ Chief Economist on their house price inflation forecast being revised down to 2%

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Sharon Zollner: ANZ Chief Economist on their house price inflation forecast being revised down to 2% · The SME Stream

• 0:00
  Speaker 1: Housing. Where are we tracking this year? Well, it's only
• 0:03
  Speaker 1: January and already we've got our first adjustment. A and
• 0:05
  Speaker 1: Z thought it would be five percent for the year.
• 0:07
  Speaker 1: They now think it's going to be two. Stronger than
• 0:09
  Speaker 1: expected growth, Sticky inflation, interest rates potentially on the way up.
• 0:13
  Speaker 1: Sharing's on as the chief economist, of course, and is
• 0:15
  Speaker 1: with us.
• 0:15
  Speaker 2: Good morning, Good morning to you too, mate.
• 0:17
  Speaker 1: The election year one two, The prospect of capital gains
• 0:22
  Speaker 1: tax What role do they play in your view of
• 0:24
  Speaker 1: where housing goes this year?
• 0:26
  Speaker 2: That's very difficult to quantify both of those things. You
• 0:29
  Speaker 2: never never had the counterfection, I suppose, but no elections.
• 0:33
  Speaker 2: It does make sense is a bit more talk about
• 0:34
  Speaker 2: the barbecue. And this does look like an election where
• 0:37
  Speaker 2: there could be bigger than usual difference in policies related
• 0:40
  Speaker 2: to the housing market. So it's not difficult to imagine
• 0:43
  Speaker 2: that that might cause some people to perhaps hold off
• 0:46
  Speaker 2: on decision.
• 0:47
  Speaker 1: All right, so we have uncertainty with inflation. Why is
• 0:51
  Speaker 1: by the way sidebar a question? Why is inflation sticky? Here?
• 0:54
  Speaker 1: Is sticky in Australia, sticky in places like Britain? What's
• 0:57
  Speaker 1: going on? Is this a global thing?
• 0:59
  Speaker 2: Yeah? It is? A global thing, which is very interesting.
• 1:03
  Speaker 2: But the surprise here was very broad based, so you
• 1:05
  Speaker 2: can't just you can't say I was just this. It
• 1:07
  Speaker 2: was just that there were certainly some things the Reserve
• 1:09
  Speaker 2: band can't do anything about, like electricity and food to
• 1:12
  Speaker 2: some extent, But overall, i'd describe it as a broad
• 1:15
  Speaker 2: based surprise. We have been seeing that globally as well,
• 1:19
  Speaker 2: and we're starting to see a bit of upward pressure
• 1:21
  Speaker 2: on longer term interest rates as a result of that
• 1:24
  Speaker 2: and concerns about fiscal position. So that's also part of
• 1:28
  Speaker 2: the story here, that it's not just about what the
• 1:29
  Speaker 2: Reserve Bank of New Zealand is going to do, but
• 1:32
  Speaker 2: potentially also a bit more upward pressure on those longer
• 1:35
  Speaker 2: rates as well. It's kind of all adds to the
• 1:37
  Speaker 2: picture of country conditions being a little bit tighter than
• 1:40
  Speaker 2: they've expected at the moment.
• 1:42
  Speaker 1: So election here, capital gains, tax sticking, inflation, possible rising
• 1:46
  Speaker 1: interest rates. So that's your uncertainty. How do you dovetail
• 1:49
  Speaker 1: that in with this so called recovery we're supposed to
• 1:51
  Speaker 1: be enjoying.
• 1:53
  Speaker 2: Yeah, that's the interesting thing. I mean, the fact that
• 1:56
  Speaker 2: growth has been strong and you're expecting is of course
• 1:58
  Speaker 2: great because of the economies and it's has been in
• 2:00
  Speaker 2: a very dark hole. So it's been really encouraging that
• 2:04
  Speaker 2: GDP growth was stronger than expected going all the way
• 2:07
  Speaker 2: back to September last year. It's looking like it will
• 2:09
  Speaker 2: be again in the last three months of last year,
• 2:14
  Speaker 2: and the indicators have remained pretty positive going into this year.
• 2:17
  Speaker 2: That's all great. However, the economy and it does have
• 2:20
  Speaker 2: a speed limits and there's a lot of uncertain about
• 2:22
  Speaker 2: how UT is and some of the inflation indicators have
• 2:27
  Speaker 2: started to move in the wrong direction. So the market's
• 2:31
  Speaker 2: already now expecting two hikes this year, and that is
• 2:34
  Speaker 2: the main change in our housing forecasts is that those
• 2:38
  Speaker 2: mortgage rates have already started to move up again.
• 2:41
  Speaker 1: Is there a regionality I'm assuming there is. Q Town.
• 2:43
  Speaker 1: Queenstown sort of defied gravity by a plenty. Is the
• 2:46
  Speaker 1: most expensive place in the country, and there will be
• 2:48
  Speaker 1: places who will do well places who won't no matter
• 2:50
  Speaker 1: what happens.
• 2:51
  Speaker 2: Absolutely, the average hides a lot. In fact, it's hadden
• 2:55
  Speaker 2: a lot over the broader economy. The South Island's in
• 2:57
  Speaker 2: like a different country over the last few years. That's
• 3:00
  Speaker 2: really strong agriculture background, so at the moment. For example,
• 3:03
  Speaker 2: South of the house prices are up six percent, whereas
• 3:05
  Speaker 2: Wellington house prices are down three percent, and everyone else
• 3:08
  Speaker 2: is somewhere in the middle. And those regional disparities are
• 3:12
  Speaker 2: likely to persist even within the city. You know, the
• 3:15
  Speaker 2: different price brackets can move quite differently. And of course
• 3:17
  Speaker 2: it's important to remember we haven't got a single month
• 3:20
  Speaker 2: of data for this year yet, so there's a lot
• 3:22
  Speaker 2: of uncertainty. Obviously that have a feeble pair nout, but
• 3:25
  Speaker 2: we think forecasters two percent balances the up and down
• 3:29
  Speaker 2: risks a bit better than our previous forecasters five.
• 3:32
  Speaker 1: Okay, go, well, we'll talk lots of this year. I'm
• 3:34
  Speaker 1: sure Sharon's on the Who's the AMZ Chief Economist?
• 3:37
  Speaker 2: For more from the mic Asking Breakfast, listen live to
• 3:40
  Speaker 2: news talks.
• 3:40
  Speaker 1: It'd be from six am weekdays, or follow the podcast
• 3:44
  Speaker 1: on iHeartRadio.