{"id":608473,"date":"2026-09-22T19:50:12","date_gmt":"2026-09-22T19:50:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/608473\/"},"modified":"2026-09-22T19:50:12","modified_gmt":"2026-09-22T19:50:12","slug":"households-housing-market-may-be-casualties-of-reserve-bank-tackling-inflation","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/608473\/","title":{"rendered":"Households, housing market may be casualties of Reserve Bank tackling inflation"},"content":{"rendered":"

New Zealand’s housing market<\/a>, jobhunters and consumers more generally may be the casualties of the Reserve Bank’s efforts to get oil-fuelled inflation under control.<\/p>\n

The Reserve Bank is expected to keep raising the official cash rate (OCR) into next year, even though new data shows almost every region in the country has seen a sharp downturn in house sales, the unemployment rate is at an 11-year high<\/a> and consumer confidence remains below average levels.<\/p>\n

\"Shamubeel<\/p>\n

Shamubeel Eaqub<\/p>\n

Supplied<\/p>\n

“The Reserve Bank is telling us the economy is too strong and there is too much demand and activity out there,” Simplicity chief economist Shamubeel Eaqub said. “I look at that not in terms of what my models say but what people are doing in terms of their behaviour. House sales is probably the most important measure because they’re falling pretty much across all of the country.”<\/p>\n

He said house sales were down in every region compared to a year ago apart from Manawatu-Whanganui. Rural sales were down everywhere but Otago.<\/p>\n

He said the market was showing the sort of effect you would expect from a 6.5 percent interest rate, but at 5.5 percent.<\/p>\n

“I’m a bit perplexed because normally interest rates where they are should be supportive but the behaviour suggests it’s not.<\/p>\n

“My personal view is I think the Reserve Bank is not doing the right thing in terms of the balance of risks in the economy \u2026 I’m not convinced the recovery is nearly as robust and inflationary pressures nearly as problematic as they make it out to be … I don’t see people getting massive wage increases. I don’t see businesses ramping up the profit margins.”<\/p>\n

ANZ said on Monday it thought the Reserve Bank was now going to need to increase the OCR in October, February and March, in part because it had to offset inflation from higher oil prices due to conflict in the Middle East, and a lower exchange rate.<\/p>\n

ANZ senior economist Miles Workman said that was despite some parts of the economy being soft “and perhaps even softening”.<\/p>\n

\"Miles<\/p>\n

Miles Workman – a senior economist at ANZ.<\/p>\n

Supplied \/ ANZ<\/p>\n

“But the Reserve Bank, they ultimately still have a 2 percent inflation target over the medium term.”<\/p>\n

He said electricity lines charges and council rates were running hotter than average lately. “Even before you start thinking about the oil shock and the impacts that could have on inflation.”<\/p>\n

He said other parts of the economy would have to be weaker to make up for it, including the housing market and the unemployment rate. “This is how the Reserve Bank maintains a 2 percent inflation over the medium term. It does have costs. That’s a tradeoff all central banks around the world right now have to make. If they don’t make that tradeoff, the consequences could be even more severe.”<\/p>\n

He said if people started to expect higher inflation, it could create a wage-price spiral that pushed it higher. “If that were to happen the Reserve Bank would have to become very aggressive with OCR hikes in order to bring this back to this 2 percent Goldilocks zone that it’s targeting. There is certainly no getting away from the fact that the interest rate-sensitive parts of the economy are going to feel rising interest rates. It’s just about how you balance these relative price shifts that are going on across the broader economy.”<\/p>\n

He said higher fuel prices seemed to have meant some households and businesses put plans “on ice”. “We went back to growth mode once the fuel prices started coming down again. Now we’re back to where we were, the fuel prices are back on the way up and there isn’t really much end in sight.”<\/p>\n

BNZ chief economist Mike Jones said it was an awkward balance of subdued economic growth set against problematic inflation.<\/p>\n

\"BNZ<\/p>\n

BNZ chief economist Mike Jones.<\/p>\n

Supplied \/ BNZ<\/p>\n

“The inflation bit is getting more problematic largely due to imported factors from offshore.”<\/p>\n

He said while fuel prices were high, consumer spending seemed to have stalled. “Consumers are still doing it tough \u2026 fuel prices and now a weak currency which is going to make the cost of buying imported goods more expensive as well, but that weak currency is further helping the export sector.”<\/p>\n

He said the housing market was struggling to even go sideways and that was unlikely to change before the election.<\/p>\n

Workman said it could be that the neutral level of the OCR was drifting higher as some of the investment that was happening, particularly in data centres and other AI-related investment was not so sensitive to interest rates. “What that means is if central banks start increasing interest rates, that investment still carries on to a larger extent than it might otherwise would have. So it means to get the economy into equilibrium, you may need to hike your policy rate even more than otherwise.”<\/p>\n

Sign up for Money with Susan Edmunds<\/a>, a weekly newsletter covering all the things that affect how we make, spend and invest money.<\/p>\n","protected":false},"excerpt":{"rendered":"New Zealand’s housing market, jobhunters and consumers more generally may be the casualties of the Reserve Bank’s efforts…\n","protected":false},"author":2,"featured_media":608474,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-608473","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/608473","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=608473"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/608473\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/608474"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=608473"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=608473"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=608473"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}