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Influential RBNZ survey sees house price falls over the next 12 months of a little over 1%; expectations of inflation have recovered from the record lows seen the in last survey

Influential RBNZ survey sees house price falls over the next 12 months of a little over 1%; expectations of inflation have recovered from the record lows seen the in last survey

Key business leaders now see house prices falling by less than they expected three months ago, a survey the Reserve Bank watches very closely when making monetary policy decisions has found.

And the business people appear to see the economy bouncing back much earlier than they expected three months ago.

The RBNZ Survey of Expectations is a New Zealand-wide quarterly survey of business managers and professionals. Nielsen conducts the survey on behalf of the Reserve Bank. Respondents are asked for their expectations of future outcomes of a range of key macroeconomic data. 

While the business leaders still see house prices dropping over the next 12 months they now expect just a moderate drop of 1.38% compared with an expectation of a 5.49% fall in the same survey three months ago.

The expectation for house prices in two years time is virtually unchanged in the latest survey, with an expectation of a modest 3.19% rise, which is actually slightly down on the 3.23% expected over the next two years in the previous survey.

As for GDP, the survey respondents now see this growing in a year's time by 4.24%, while in the previous survey they saw contraction in 12 months time of 4.87%. This big change around presumably relates to the country coming out of lockdown restrictions much earlier than anticipated.

The survey respondents now see two year out GDP growth as a more moderate 2.77% compared with 3.21% in the previous survey.

The results in the survey most closely watched by the RBNZ - and bearing in mind the central bank has its next Monetary Policy Review next week (August 12) - are those for inflation expectations.

In the previous survey those expectations absolutely tanked, to record lows.

The latest survey has seen a recovery, but even so, the expectation two years out (which is the key one) is for 1.43% inflation, up from 1.24% in the last survey. The latest figure, while an improvement, still puts the expected inflation level well below the RBNZ's explicit 2% target midpoint of the 1%-3% range it aims to have the economy operating within.

The one-year-out expected inflation rate, which plummeted spectacularly to just 0.74% in the previous survey has at least this time risen to within the 1-3% range, at 1.03%. 

This latest result will presumably give the RBNZ encouragement that its hugely supportive measures in recent months are breathing some confidence back into the market. But with the inflation expectations for two years out still well below the 2% level, it will probably feel it needs to do more.

There's a widespread expectation the RBNZ will next week again increase the amount of quantitative easing (money printing) it is undertaking.

The unemployment rate in a year's time is now seen as 7.9%, down from 9.41% in the previous survey.

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BTW, the company conducting this survey (Nielsen) is breaking up globally. Stock price is down 80% since mid-2016. In the research world, they're a laggard in the adoption of technology. Not sure why RBNZ isn't looking for better insight solution.

RBNZ and business leaders are not a bunch of bunnies.

Don't get me wrong. Nielsen has been a great company with some very talented people. However, you have to ask yourself while RBNZ is still contracting work to Nielsen.

The survey should not be presented as "new."House price expectations have been included since 2017. The "expectations ' are not those of the RBNZ.

Critically, "Data for this report is obtained from 39 business leaders and professional forecasters by the Nielsen Group
on behalf of RBNZ " a large number of those invited 39 are the very same who missed yesterday's unemployment number , but took the time to email Nielsons , with a 50:50 split on house prices. The only interesting data was the OCR seen at between 2-2.5 percent in ten years, by which time most if not all of the forecasters will be gone.

Perhaps Nielson has provided very good service to RBNZ??

I don't imagine that Adrian Orr would waste the RBNZ budget on a bunch of wallies.


I don't imagine that Adrian Orr would waste the RBNZ budget on a bunch of wallies.

Somehow I don't think Adrian Orr fulfills the role of a purchasing officer for RBNZ.

This should be of note to potential FHB - while nothing is certain in life, the RBNZ reported expectations of a moderate (1.38% ?) fall in house prices should give some confidence. If looking for buying well; a market drop of that amount is secondary to buying well and buying poorly on an individual property. The key factor is both income and job security.
Those recent FHB can feel pleased; they should be enjoying the intrinsic value of home ownership, knowing that their life is not on hold, and having security for their family.
I am siting watching and waiting for an investment property but any significant fall is becoming less likely - certainly not in the order of 30 or 50% predicted by a number on this site.
When will the market bottom out? Well, as one indicator, I will be watching the monthly RBNZ mortgage data to see when property investors - who are currently quiet - become more active than presently - they are the ones who have better knowledge of the market and will be prepared to put their money where their mouth is.
I wish potential FHB well, and I would be putting more credibility on RBNZ statements than the DGM both on this site and in one's office.


This survey is a big 'so what' to me.
It's all simply guesswork in these times. There are several quite possible scenarios.

As I noted - nothing is certain in life.
Yes, there are a number of scenarios. However, if I was in a position of being a FHB in the process of decision making and with the range of scenarios, I would be giving more weight to a RBNZ accepted survey of business leaders rather than the those of the anonymous and lesser knowledged DGM in considering those scenarios and making a decision.
Your comment suggests that you don't like the result of this survey.

"nothing is certain in life'.. up one day could be down the next.. Can't go up forever...

Actually nominal prices *can* go up forever. (with some dips along the way)

Hi Chairman Moa,

Agree - things can't go up forever.

But long-term trends can be upward - as with the NZ housing market.


As with the DOW

Do we have any data to determine the accuracy of this survey's previous predictions? Fritz is right, these surveys are only opinion and nothing more. The more telling data we should be looking at to determine price direction is the availability or more importantly growth of residential credit lending. This plummeted last month. Let me be the devil's advocate and state that we will have to wait to see if this is a one-off or a developing trend rather than giving more weight to the lesser knowledged spuikers on this site.

A hell of a lot more accurate than the the anonymous keyboard warrior scaremongering posters.
Check these out as a sample:
- "be -30% drop cone end April"
- "Prediction: House prices will be down 20% by October."
- "Its obvious now that the market is about to plummet and there is absolutely nothing anybody can do about it. We are going back to 2006 prices."
- "Til next month"
- "Here comes the freefall. Hold on . . ."
- "The housing market is going to tank big time."
- "the biggest hurricane in history just made landfall."
- "looking like a tsunami."
- "That means approx April 18th for when housing market will freeze over."
- "This will mean 25% drop in house price medians by end of 2021"
- "I'm guessing 30% to 50%."
- "Shares just correct instantly, housing will follow like night follows day."
- " damn well it will be more like 30%."
- "Another dreamer. 30% drop minimum."
- "here we go! TIMBEEEEER!!!!"
- "in 6 weeks when price go backwards (6 March) . . . "
- "I am picking 30 plus percent . . . Also was picking NZX down to 6000 soon." (20 March)
- "to drop 40-60%"
- " double the banks prediction of 10-15% fall "
- "Blood, blood everywhere. Also known as a Blood Bath."
- " the"black swan" has arrived"
Anybody interested in owning up to any of these?

RBNZ originally estimating up to 10% - seems a hell of a lot more accurate. Forecasting is not an exact science, and need to review as factors change or further information becomes available - but useful for planning and decision making including at a personal level.

Oh yes, I love this one rubbishing bank estimates - "It’s our job to disseminate this non bias information to as many of our friends as possible . . . (bank) absolutely dreaming." Albert2020 | 15th Jun 20, 12:12pm

Hi printer8,

Yes - I remember a reasonable number of the quotations you list above.

They depict the self-interest of the DGM and, as such, cannot be considered intelligent, objective or credible.

What irks most though, is that the DGM never take responsibility for what they say/forecast here......

If, when they were wrong, the DGM "took it on the chin" then we could allow a modicum of respect for them.

Instead they tell us that black is white, night is day, round is square, wet is dry, hard is soft, big is small, high is low - and so forth. None of it very compelling, I'm afraid.


Wow.... it must be all over then is it?

You got any actual evidence to back up your claim that these surveys have been accurate or are you and the other spruikers going to just be content with regurgitating variations of each other’s vested narrative? You’re critiquing my assertion that banks have been historically found to be less than wholesome with the truth? Surely you aren’t that naive? Timmothy and yourself need to pull your head out of the sand and develop some independent critical analysis.

P8 - RP comes to mind reading your fabulous list of DGM statements, I recall him saying it was going to be a L shape recovery with big falls in house prices and rents LOL !

Good god you have nothing better to do! Hopefully you hot me on that list of those who can see the dump coming. Latest tenancy rules will help things along nicely.
Isn’t gold doing well of late?

Please don't put words in my mouth. That's not what I said.
As you know I bought late last year. I would prefer prices didn't drop much.
All I am saying is it's just guess work. Business leaders tend to be optimistic on the economy, often unrealistically.

Firstly congratulations on your first home. Apologies for any misunderstanding.
What really concerns me is that there are a number of anonymous posters on this site who post extreme baseless comments - rubbishing the likes of RBNZ - which rather than assisting in personal decision making, appears to be little more than anti-homeownership.
As a recent FHB you would have been concerned at the outset of Covid and naturally concerned; while the likes of RBNZ and bank economists were estimating around 10% fall we have a deluge of comments predicting 30 to 50% falls which were unnecessary and baseless alarmist scaremongering. That needs to be challenged.
And here we go again. While nothing is certain, credibility and some weight should be given to this survey rather than simply rubbishing it. Those doing so need to be called out.

Agree. And I was never one that thought the drops could be 30-50%.
I thought more in the realms of 10-15%.
I now think it could be 5-10%.
But it's hard to know. The economy could still weaken quite a bit.
My main point about this survey is that it surveys people who are naturally more on the optimistic side. So there is a bias towards an overly optimistic viewpoint.

I agree with you that there is still uncertainty and that view is supported by a number of reputable economists including banks.
I agree that this survey might be slightly positive - but then many of those economists are commenting in the same vein that the situation may not be as severe as first thought.
It is important that these business leaders are not simply dairy owners, but rather one expects leaders in medium to larger sized enterprises and will be fully informed by their CFO.
Of note also is that RBNZ is considering further QE as a possibility and whether one agree with it or not, one needs to take that into consideration.
I note that a number of sharebroking firms - eg Forsyth Barr - see some risk of downside in shares.
Everyone has a different risk profile. For me I am reasonably conservation and wish to protect my investment capital; in part being retired my time frame is short and the amount of money is significant to my income (although I am not drawing on any return). For the options that suit me, I am currently prepared to sit in neutral and waiting and watching for little cost.
Someone younger, with a longer time frame, and a lesser sum versus income, they are obliviously likely to be prepared to take higher risk. For example, for those who have been talking gold etc, make sense but the big unknown will be the timing to sell. (I also have memories of Goldcorp)

I do think that it's an ok time for a FHB to buy...if the can - provided they have good job security.

I would be giving more weight to a RBNZ accepted survey of business leaders rather than the those of the anonymous and lesser knowledged DGM in considering those scenarios and making a decision.

It depends on your objectives and what you want to know. If I want to do a popularity poll on Donald Trump and I draw from a sample of cap-wearing MAGAs, I'm fairly confident of what kind of response I will get. But that poll may not be representative of a population or universe (except for cap-weating MAGAs).

"nothing is certain in life" vs "knowing that their life is not on hold, and having security for their family."

If nothing is certain in life, what exactly do you mean by "having security for their family"? What if they lose their jobs, for example? If nothing is certain, that "security" will become a burden, a nightmare. Most people are MUCH more secure having $200k in the bank instead of having $200k equity in a house.

P8 - How embarrassing for all those well known economists that as usual got it so wrong !! Nothing but scaremongering ! Re your situation when to buy my call would be asap given the rapid recovery in the economy/confidence, pre election which normally holds some people back and of course the banks easing up next year when it is crystal clear how strong the market is.
I do find it fascinating how they can come up with a 1.38% drop really, my money is on no drop at all. Happy investing I do enjoy your well thought out sound comments. Happy investing !

Not in Ponsonby it ain't. I'm looking and it's white hot

Wow, all those OneRoof articles are so positive. Almost seems more extreme than the heady days of 2016.

I'm in the unusual position of not being particularly happy about this having sold a house a couple of years ago that my wife wanted to keep. She usually makes all the major decisions by applying a lot of pressure on me. So when the lockdown hit and the world was going to hell in a handbasket I was feeling rather smug, finally I had got one up on her, yet now I find I have to avoid bringing the subject up.

Haha. I had a similar experience. Wife wanted to keep, i sold 2 years ago. Would have made an extra $500k selling now. Everytime we sell a house in Auckland, there is big regret in 2 years. I don't think anyone could have picked this madness of recent price increases

Please tell me you two didn't listen to the negative property narrative on this site?

I done goofed, good to know I wasn't the only one. Damn those DGMers.

That's hard to read cuz....

40 Pompallier Tce sold for $3.32 M

Economies tanking, second wave virus coming; the paper valuation cheap credit ponzi scheme ran It's coarse and is not immune.

So please anyone, why are the NZ banks running such a tight course right now? Flush with reserves, why are the banks not trucking cash out of the door? Is it because they expect a more substantial fall in the markets and the economy and just ignore the jawboning everywhere?

Careful KB, the spruikers will be on your case, with labels of DGM; they don’t like it when you question the status quo

Reality is still artificially being avoided for the interests of the few, and the detriment of the many. As a result debt stacked property is being used as a tool of exploitation against most kiwi's and businesses.

Once Lab rules alone, as the polls indicate, will they continue to allow this to happen...based on their rentals, the answer is obvious.

For those suffering, you can no longer flee to Aussie or Europe/London. Your chance for change is coming. So get off your phone, vote for meaningful tax base change away from wages, and onto a universal land tax. Promote productivity and punish idle debt speculation.

Read TOPs tax and housing policy and .....actually vote.

Yep. Any young voter on this site should make an effort to understand the TOP policy on housing. No other party will make the necessary call, history tells us that.

What a one trick pony the NZ economy is. Everything relying on the increased indebtedness of households. The New Slave Trade!

It is a form of enslavement by bank shareholders.

my guess is the govt will keep spending and printing to keep things afloat but once the govt debt blows out beyond the 32% of GDP expected by the end of 2020 and starts to head towards 50%, they will be forced into austerity measures.

Being unable to create jobs to replace those lost by tourism and intl students, and the lack of a vaccine they will have to reconsider our boarder options.

Wise move would have been to spend wisely and targeted now, let some businesses go into hibernation and house prices drop a bit. We cant try and spend our way out of this crisis, only to crash the economy and currency in 2 years time.

Honestly this election could be a good one to lose!