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RBNZ expected to put the property investor crackdown, trans-Tasman bubble, slowing growth and higher inflation expectations aside, and take a breather before changing monetary policy

RBNZ expected to put the property investor crackdown, trans-Tasman bubble, slowing growth and higher inflation expectations aside, and take a breather before changing monetary policy

The Reserve Bank (RBNZ) is expected to keep the cost and supply of money the same when it next reviews its monetary policy settings on Wednesday.

Bank economists agree the RBNZ is likely to keep the Official Cash Rate (OCR) at 0.25% and keep its Large-Scale Asset Purchase (LSAP) programme and Funding for Lending Programme (FPL) as they are.

While the Government’s decision to form a trans-Tasman bubble may give the economy a boost, its decision to remove the ability for property investors to write off interest as an expense when paying tax may create speed bumps.

The extent to which the combination of these policies will affect inflation and employment is yet to be seen.

Business sentiment, consumer confidence, retail sales and building consent issuance have also softened in recent weeks. Meanwhile December quarter Gross Domestic Product (GDP) fell by 1% - more than expected by the RBNZ.

ANZ economists aren’t too worried about this reading, noting it came off a massive September quarter bounce. The RBNZ was also expecting growth to slow anyway, as the post-lockdown spend-up ends, government support wanes and the pain from the closed border mounts.

They also believe the RBNZ will look through rising inflationary pressures both here and overseas.

While these are at record highs, according to ANZ’s Business Outlook Survey, ANZ economists recognised prices were higher largely due to supply chain disruptions, the closed border clogging up the labour market and rebounding global activity boosting import prices.

The culmination of such factors creates a muddled picture, “with plenty of chances still for twists and turns”, ASB economists said.

Wait and see

While the landscape has changed in recent months, the RBNZ is expected to largely echo the sentiment of its February Monetary Policy Statement when it releases its briefer Monetary Policy Review on Wednesday.  

“There’s no reason for the RBNZ to deviate from its “wait and see” nor its “least regrets” strategies, or to set out to influence market pricing for OCR hikes, which is pretty mild,” ANZ economists said.

There’s consensus the RBNZ will want to keep monetary settings loose and reiterate it could do more, like cut the OCR into negative territory, if required.

However, with financial markets around the world betting on the global economic outlook improving and thus inflation rising, Westpac economists believe fixed-term mortgage rates will start rising before the OCR is eventually hiked.

“Mortgage rates have reached their lows for this cycle,” they said.

LSAP losing its fire power

There is widespread acknowledgment the RBNZ won’t be able to reach the $100 billion upper limit of its LSAP programme, as the Government isn’t issuing enough debt for the RBNZ to buy without it becoming too big a player in the market.

To date it has bought $48.84 billion of New Zealand Government Bonds and $1.75 billion of Local Government Funding Agency bonds on the secondary market.

While RBNZ staff increased the weekly bond-buying rate for a time last month to keep downward pressure on rising bond yields, they dropped this rate right back down again.

The Government’s housing announcement saw markets bet on inflation rising more slowly than previously thought, as they acknowledged if house price growth slows, people might spend less. So, inflation might not climb as quickly and the RBNZ might need to keep interest rates lower for longer to stimulate the economy.

Indeed, the RBNZ only plans to buy $420 million of New Zealand Government Bonds this week. A few weeks ago, it was buying $630 million a week.

ANZ economists believed the RBNZ will continue buying fewer bonds via the LSAP.  

“With global yields rising and the worst of the crisis behind us, there is less work for the LSAP to do from a macroeconomic perspective, and we expect it to have less of an influence on bond yields and the slope of the yield curve going forward,” ANZ economists said.

“That speaks to a further gradual reduction in the pace of purchases, especially if the pace of [government bond] issuance slows further, which is the risk.

“However, exiting QE elegantly isn’t easy. Reducing the pace of LSAP purchases too quickly could slow the pace of growth in settlement cash (or possibly even drive it lower), which may in turn tighten bank funding conditions and drive up short-term interest rates, both of which would be unwelcome at this time.”

FLP take-up remains low

As for the Funding for Lending Programme, only six draw downs, totalling $2.74 billion have now been made.

The most recent draw down was of $1 billion on March 30. The RBNZ doesn’t name banks that make draw downs, but the size of this draw down indicates it must’ve been one of the big four Australian-owned banks. ANZ and ASB told it wasn't them, whilst BNZ and Westpac declined to comment.

The RBNZ has made up to $28 billion of cheap funding available to banks via the scheme. The aim of providing banks with funding at the OCR (0.25%) is to help them lower their mortgage rates.

Both the FLP and LSAP programme will be operational until June 2022. The RBNZ could, of course, extend the timeframe.

Regulation of mortgage lending another key consideration

BNZ economists maintained the RBNZ’s biannual Financial Stability Report, due out on May 5, will be more interesting than Wednesday’s Monetary Policy Review.

The RBNZ is in May also expected to report back to the Government on the possibility of restricting banks’ issuance of interest-only mortgages and preventing banks from issuing large amounts of debt to people with relatively low incomes.

BNZ economists made the point the way the RBNZ goes about regulating banks will affect house prices, which will affect the economy more broadly, and thus the way it sets monetary policy.

Restricting bank lending more may require the RBNZ to keep interest rates lower for longer to stimulate the economy. Leaving bank lending restrictions as they are may see inflation return to target levels sooner and thus prompt the RBNZ to lift interest rates.  

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.



"BNZ economists made the point the way the RBNZ goes about regulating banks will affect house prices, which will affect the economy more broadly, and thus the way it sets monetary policy."

For this very reason RBNZ was supporting and promoting ever growing house price rising (have made it obviously clear that not concerned about ponzi, if it is one) and this is also the reason that will not touch interest only loan and DTI.

Besides both government and RBNZ are playing with time as in month of may are not thinking of controlling Interest only loan (which should have been done much earlier) but will only speak their thought on it, which already is known.

They do agree that how RBNZ regulate their monetary policy does affect house price, so is evident that RBNZ is responsible for this every growing house price and also as this rise suits their purpose will advice accordingly by finding enough reason and excuse for not acting to curb speculative demand.

Best excuse will be that are still waiting for proof.


I don’t know what world Orr is living in, the FLP drawdown has directly been injected into the housing market. What was the aim of the FLP? It was to stimulate economy with cheap borrowing but all the borrowing is going straight into the housing market. Is Adrian Orr now saying that stimulating the NZ economy means buying up residential properties and selling for capital gains with no risk attached? That’s it? We live and breathe to make money off property?

While the government spends 1 billion every 3 months on emergency housing and accomodation supplements, landlords seeing capital gains and purchasing property with interest only loans on their empty houses while housing NZ has a 20k+ waitlist?

A 500k house is now going for 1 million. What is he waiting for? Least regret approach? 20 years from now my kids will be reading about this massive failure by the government and RBNZ and how they single handedly widened the wealth gap and increased poverty and created massive household debts in ECON130. He didn’t wait to see what happened to the economy before he slashed interest rates, so he doesn’t need to wait and see before hiking it or removing interest only terms. I almost find what Orr is doing criminal.


Year old presentation on how change / reset in interest only loan will affect speculators (investors)

This time for once Mr Orr should go for reset but doubts as rising house price suit what he wants. Unless Jacinda or Robertson intervene Mr Orr will not act and why should he as it is Jacinda who has been voted to power and should be her call to ask RBNZ to act or just play with time by asking for advise.


Thank you for this share Stuart. If Orr insists on artificially continually stimulating the property market, then then he is not fit for his role. It is not about what he wants it is about NZ’s financial and economic stability.

The guy in the video with 16 residential properties in the video, really? No sympathy there at all. This is why this is such an uneven playing field. At some stage, if the bandaid doesn’t come off we just need to rip it off. Temporary pain.

Yeah that's what I thought too. The couple had 16 properties but apparently only 8 mortgages. Does this mean they have 8 mortgage free properties? Could they not simply sell a few properties and rebalance things? The discussion about a mortgage going up from 2k a month to 7k a month is just the one mortgage taken out 15 years ago. They need to catch up on the principal payments but surely that house is now worth a lot more? Probably just selling that one and reducing the portfolio to 15 properties would solve the problem fairly simply.

You hear these stories of landlords with 30 plus properties. The other day a commenter said his neighbour had 48 properties. For this to happen the bank must have enabled it. They should stress test the loans at a higher interest rate and paying back P&I. This should greatly limit one's ability to add so many homes to a portfolio. Equity in other homes is usually not enough. You would have to find some fantastic buys to service the mortgage at 2% higher and P&I on rent alone. It doesn't seem credible and I can only assume the bank has been complicit in allowing this.

I've been turned down for mortgages that seemed to be good deal for me and the bank so how do these mega landlords get away with it?

A landlord with 30 homes and 50% equity would be worth about $10,000,000 or more.

Some comments about the video:
1) it is about people investing in OZ, not NZ and rules are different
2) we all have to be responsible for out own decisions, be it the lady FHB or the investor (he's not a speculator btw), the lady had 5 yers to prepare for the IO loan to turn into P&I yet she was totally unprepared.
3) in NZ banks test lending on about max 5.5 - 6.5 time household income, this criteria ensures borrowers are able to pay P&I, banks in NZ would not lend on IO if the borrower cannot prove he/she can afford P&I

Certainly the rules seem to be different here. I don't think that FHB would have gotten an IO loan in NZ.

I can see the investors are simply rearranging IO loans as currently they perceive that to be their best strategy. They also have the option to sell some assets and it will likely come to that down the line. They are in a pretty good position which makes one wonder why they are featured in the news article.

I still wonder about those landlords that manage to acquire so many properties simply by using the equity in their current houses. It does seem that the banks have been kind to them.

If Jacinda Arden removed tax benifit to investors to remove undue advantage to investor so by the same logic if fhb are not easily able to get interest only and mostly investors can get than even by this logic, it should be removed.

It has been proved beyond reasonable doubts that interest only loan is boosting speculative demand and asking for more time to think or data just reflects that Mr Orr and Mr Robertson have no intention to stopping it and are just mucking around.

If so, is a real shame.

Selective cases of people simply burying their head in the sand making stupid decisions.
What, after 15 years IO on a 30 year mortgage and expects sympathy because it goes to PI?
What, five years on IO and faces stress when it goes to PI? What about the good times when interest rates went down as cited providing more cash in the pocket? Wasn't complaining then, and presumably splashing the cash rather than being prudent.
The reality is that they are just being plain ultra dumb to take an IO and not expecting it not to become PI. Selective examples of stupid is as stupid does.
IO in themselves are necessarily not bad, especially initially when one's budget is tight such as a FHB or one buying the first investment property on the assumption that increases in income or rent will mean that PI will become affordable . . . and keep putting the PI off simply means that the principal part is just going to get larger and larger. As in all financial situations one needs to be prudent and disciplined.
The guy in the video having an IO for 15 years (which from a NZ perspective surprises me as being very unusual in NZ) would have seen two to three property booms in which the house would have increased significantly in price and the mortgage pretty minimal by current standards - if a rental it should have been readily been able to be paid off. However, in this case he seems to have been in the game of continually leveraging - its high risk and he has got caught out.
This is not a new phenomenon. One of the things that put me off the PIA (I resigned) back in 2004/8 at the time of a property boom was that their magazine and meetings regularly highlighted investors - particularly those under 30 including a guy from memory in Paeroa who bought most of a street - building property empires through leveraging. All went well until the GFC - did read that the guy in Paeroa went bust as many others would of too.
"Prudent" is a good word, and without it don't expect sympathy.

Genuine property investors are almost always P&I.

My understanding is NZ banks stress test using P&I even for those who opt to go on IO or at least they are meant to. However, the number of IO loans seems disproportionate if this was the case. Bank greed for profits has taken advantage of rookie investors looking to get rich quick. There will be carnage for those new to the game, as there always is, and the state will probably assist the banks if needed.


The state of the comments on the property investor FB pages is going downhill rapidly. The labour government is the devil and is destroying a property investors 'human rights' by disallowing them interest deductions. How dare they!

They don't seem to see that people being locked out of the housing market just to have home ownership also have a 'human right' - but their human right to make money from someone else's human right is superior (for whatever reason). Bizarre logic.


Warped, self serving logic. They deserve to fail and go bankrupt

Unfortunately this is the way the world has always been. The utopic heaven on earth vision that was promoted by the left and the right is just a myth.


Passerby - exactly. This is why I think we're traveling down the road towards economic hell. And the groups meant to ensure 'stability' are creating the instability. Its madness - but its state backed madness.

Banks don't lend out the money from the FLP, banks create new money when they lend. The money from the FLP goes into their settlement accounts and is intended to lower interest rates. Some further explanation here.

The Reserve Bank have increased New Zealands M1 money supply about 30% since the Covid-19 pandemic started. It would be more surprising if they had yeeted 30% more money into existence and not seen an explosion in asset prices. However for asset prices to be sustained they need to be supported by rapid growth in earnings per capita and corporate earnings.

That's why you are seeing some investors get valuations vertigo. You can see Berkshire Hathaway reduced its overall holdings by cutting stakes in banks, fossil energy and airlines probably believing that they would be unlikely to perform at current valuations. Also businesses that tend to be subjected to prevailing economic conditions.

Have a guess what our analysts, central bankers and politicians are deeply invested in.

The resistance of IO loan & DTI for all within NZ current ponzi scheme were always uttered from the Banking industry.
The real economic mammoth cartel, which always beyond reach of NZ govt & RBNZ.


Oh no interest only in the gun sights. People will have to learn about yield again, and ensure its positive with no personal tax minimisation. All of those that just leveraged to the moon can you spell dead cat bounce?

Oh the calamity...

RBNZ really needs to do a better job of protecting banks from their own greed, and preventing them from putting the risk on taxpayers.

Hi Averageman, 100% agree. IO mortgages should have been banned for purchases of residential properties long time ago. They should be allowed just to developers or for renovations taking time like recladding, new roof, repiling. Developer sells the house once it is built(usually 3-24 months) and repays the whole amount owed at the time of sell. Renovators should start paying PI as soon as their loan is fully drawn and they finished the renovation, if they cannot pass stress tests considering PI repayments, they should not be allowed any IO facility either. In any other case IO loans are just a tool for CG speculation.

I laughed because Averageman mentions "dead cat bounce" in his comment, and you reply.

The private sector lenders are best (or at least should be) placed to make a call about whether they are making prudent lending decisions, not the RBNZ (how many people at the RBNZ actually have real world lending experience?). So if banks want to lend to someone on an interest only basis, it should be their call to make based on their own judgement of risk and return. The RBNZ has already imposed higher equity and liquidity ratios on the banks to protect the taxpayer from systemic bail out concerns and there is the OBR too which is at least there to make depositors/bank investors aware a bailout is not a given should equity buffers prove insufficient. So banning IO loans seems like over regulation to me and can end up opening up a shadow banking market.

Yet, I agree that interest only lending seems excessive and reliant on ever increasing property values to be sustainable. So the question is, is the banking sector, making these interest-only lending decisions because they believe they have no real risk i.e. that the property and banking sector is too big to fail and will be bailed out by taxpayers and printed money? I fear this is their underlying belief given the historical evidence, e.g. Orr suddenly removing the LVR speed humps, a reluctance to impose DTIs and overpowered money printing all point to not wanting to see the property market correct.

Incentives are skewed for private banks when it comes to risk as they know they will be bailed out if they fail. Therefore regulation absolutely required.

That argument may hold water IF they didnt have an implicit guarantee from the public purse.... they have thrown caution to the wind, and that strategy has been shown to be valid with the reaction to the GFC...we allowed the banks to regulate themselves since the 80s and are paying the price.

'RBNZ expected to put the property investor crackdown, trans-Tasman bubble, slowing growth and higher inflation expectations aside, and take a breather before changing monetary policy'

Take a breather sums up their intention.

Have mentioned earlier that the way Robertson in his earlier announcement passed on DTI and more importantly interest only loan to Orr itself suggested an understanding between both that political compulsion forces them to mention but is only to show that are concerned but in reality are not suppose to touch as that is one tool that may actually do the job.

So this time the excuse will be "waiting for affect of current action" as their interest is in favour of rising house price.

Did they say that are waiting for affect of panademic last year before implementing tools to avoid fall in house price Or did they no acted overnight with all tools possible. So what is different this time, why the same thought is not applied and acted to control rise as was applied to avoid fall. This in itself sums up their intention.


Orr will keep sitting on his hands & do nothing to reduce house prices. If anything he'd prob cut OCR to keep rates lower. Remember this is the guy that said 11/2020 "The fact we're talking here and complaining about house prices or these types of activities, that's a problem but it's a first-class problem."

Absolutely Nifty1. And of course every man and his dog currently resetting the most popular mortgage , the two year fixed will find that repayments are generously 200bps lower. House prices will continue to rise over the next 12-18 months, its not only the 'speculators' that are benefitting from the recent OCR decisions. .

Yep and most people can see that, that's why there's such demand to buy houses

The ability to transfer younger generations' wealth to one's self is indeed a first-class problem to have, as our older politicians and leaders have noted on more than one occasion.


Orr needs to take a breather after & #$$* kiwis up the *) #@$&

Him and Grant both eh.

However, with financial markets around the world betting on the global economic outlook improving and thus inflation rising, Westpac economists believe fixed-term mortgage rates will start rising before the OCR is eventually hiked.
“Mortgage rates have reached their lows for this cycle,” they said.

Low Rates Aren't a Central Bank Providing Accommodation

However, with financial markets around the world betting on the global economic outlook improving and thus inflation rising,

PPI today. Scorching. Blistering. Armageddon? Nah.

Base effects + commodity rebound = we've seen this all before. Bernanke in '11 was right about "transitory" just as Powell(!!) will be in '21.

Even the market agrees we're nowhere close to inflation. Link


Interest Only loan together with low interest rate is a deadly cocktail and who would know better than Orr and Robertson and if are serious to control rising house price and as PM said that wants to target speculators, should put restriction on Interest Only Loan and should not be waiting for advise till may (what advise are they waiting for) but should act immediately.

Both Robertson and Orr like any bureaucrats and politicians are expert in manipulating, fibbing and spinning, so if no intent can come up with number of reasons and excuses to avoid or delay and can do as not to forget their other qualities of being thick skin, so does it matter what other thinks or what is good for the country in long term over their self centered, biased, vested short term gain.


The easy decisions become the hard decisions later....

He is better to make the necessary changes to interest only loans now whilst the economy is tracking considerably well...having to take these actions when interest rates are climbing will be twice as difficult for highly leveraged landlords.

I think these comments from the bank economists are wishful thinking...time will tell.

gnz agree with you 100% that this is the best time to take action... Reset when economy is doing much better than expected and house prices have gone up so fast and si high that any fall, if any will not adversely affect the economy.

Problem with likes of..... is that they are not open for ideas and their nose is too big to see beyond. To add besides politicians and bureaucrats, media too overall is in support being a part of powerful and elite, so is difficult to change status quo and need a leader (not politician) with wisdom to lead.

A leader that changed Singapore from third world country :

Whether Orr increases rates from here is secondary only to what the rest of the world is doing. Small open economies like ours are at the mercy of the monetary policy settings and interest rate markets of the US, Japan, China, Europe etc.

Robertson and Orr says that rising house price is one of the side affect of low interest rate, which is must for now, agree but if they know rising house price is a side affect of low interest rate, why are they not putting counter measures in place like controlling interest only loan and DTI to try reduce the side affect even if it cannot be totally eliminated.

Agree, we live in interdependent world, more now than ever but not trying to manage side affect is and should not be acceptable. Reserve Banks governors world over has been given too much power which is too dangerous now as are able to fulfill all their whims and fancy under the guise of panedemic and accou stability of their action is missing.

As mentioned by other, intent is missing and no amount of reasons and excuse will justify, if they delay or avoid taking any action.


A game of spot the equivocator(s) anyone?

Central banks abetted by politicians are cuckoos in the nest. The war on savers (devaluation of fiat currency); historically, the introduction of income taxes; GDP goals premised on infinite growth in a finite system. I don't trust these people to fix a system they have created and still support. At least Labour appear to be taking some brave measures but who knows what goes on behind the scenes.

You could rage on about how all this money printing has grotesquely (and disproportionately) gone into the coffers of Sports stars, celebrities and rent seekers. Nothing against them except that the real economy is providing on a farmboy's wages. Unstable times ahead I fear. Luckily, our household is doing okay having purchased our home three and a half of years ago, my wife is a teacher and I work in the primary sector. I just don't know how some others cope. Anyway, I hope for more egalitarian times ahead.

I've never been convinced fiddling the interest rate down benefits 'the economy'. Worse it smothers the other useful signals.
There is always some sector keen on lower rates, but the fiddling seems to create serious messes and distortion which is harmful to the economy.

Most of the flak by commentators on this website has been directed at Orr and insufficient to Robertson who holds a lot more tools to direct events for certain outcomes. It's difficult to apportion blame but I'd say Robertson and hence the Labour party must account for at least 50 % if not higher. I suspect Robertson is taking substantial financial/economic/political advice from others outside of govt. He is quite happy to let Orr take the brunt of the criticism. I omit Jacinda as she is more the mouthpiece rather than taking a lead in these matters.


If Jacinda is just the mouth piece or a face, do we need such PM to lead our country.

It is also evident that Mr Orr works for self and his group and this is the reason why we need more intelligent and bold PM to take advise from all but do what is best without being influenced by lobbyist and bureaucrats.

As for Jacinda Ardenand Robertson, they are taking their traditional support base for granted and are trying to woo national supporters and did succeed but now stand exposed and in trying to please all will be left with no one. Insread of pleasing anyone they should do what is goid for future of the country as a whole and use this opportunity that they have in reset for better NZ.

U.S. President Harry S. Truman had a plaque on his desk that read "The buck stops here". Jacinda doesn't even know what a buck is.

She knows what buck is and that Fast and Big Buck in form of Capial Gain which they are promoting by their actions and inactions.

Closing comment from John Mauldin in his latest notes:

The Federal Reserve is forcing investors to move out the risk curve to generate income from their portfolios that they spent decades accumulating....this is an absolutely insane policy.

So it's not just the view of a lunatic fringe of posters on this site. It's widespread in the community; everyone that isn't part of the RBNZ and Central Banking Cartel community that is.....

Why is it a bad thing to "force investors to generate income form their portfolios" ?

Risk vs reward Yvil. Central banks are supposed to create stability - but they're creating and encouraging massive instability.

You now have to take insane risks just to generate a tiny amount of income. That isn't wise...its a recipe for a future economic train wreck.

Agreed, so "Why is it a bad thing to "force investors to generate income form their portfolios" ? it surely is less risky than having a portfolio that doesn't produce any income

Yes, it is simply asking them to reduce risk I would have thought. Seems reasonable.

No ZS - its the opposite. In the past, people would invest their money and generate income at the risk free rate (and a bit) using bonds/TDs.

Now they are going searching for income by buying properties and shares (much higher risk assets).

Ok, I understand, I think it was poorly worded originally, what is really meant, is that in order to get a similar income, passive investors have to take more risks like investing in shares or real estate rather than bonds or TD's, which really is a very obvious statement since interest rates have dropped so much

Yes why in the 80's and 90's most people could comfortable retire and live off bonds.

Now bonds (or treasury notes which set the risk free rate) give a near zero return, or a 'real' return of below zero when viewed in inflation adjusted terms. And there's a significant risk of interest rates rising - meaning you could lose a significant amount of their value if sold on the secondary market (interest rate up, bond price goes down).

So they (bonds) give near zero return at the risk free rate, but have significant risk of losing a large amount of their value.

If that doesn't sound insane to you, I'm not sure what will.

'There is no risk, but there is significant risk' - the two terms shouldn't be used in the same sentence. But that is what the central banks are trying to tell investors. If there was risk, those bonds should be providing a much higher rate of return at the risk free rate. But they are not - which makes me think our financial markets are now a sham.

Sham is one way to describe it...confidence trick another. We traded a productive economy for a debt based one and its reached the end of the road.

If we had a stable market, income would be generated by almost yield alone (and prices lower relative to income), and there would be no need to force anyone to do anything.

Everything the Govt. is doing is adding to the speed wobbles as they can't stop the runaway bus this housing market has become due to their policies.

It is now not working for either landlords and renters. In a stable market it works for both.

I'm assuming you don't understand finance or economic theory around the concept of the risk free rate.

In the past you could generate a reasonable amount of income at the risk free rate.

Now you have to go searching with higher and higher risk to generate anything near what used to be sufficient income (at the risk free rate).

That isn't a great thing - it means we're building up significant instability in the entire system.

System was probably too stable before. It's not ethical for people to have 'risk free' returns. You seem to forget that it wasn't risk free anyway in that inflation ate away at the capital relentlessly. That's why Auckland property was such a good investment.

Even so there is no way we want Boomers selling their houses and living off high interest like before.

It's good that there is risk everywhere. Let the game begin and government should stay out of it.

If the government (and central banks) stayed out of it, we wouldn't have negative real yields on 'risk free' assets. Make no mistake, governments globally are engaged in financial repression.

When you say the system was probably too stable 'before' - like before what. The global financial crisis?

Yeah ok :-)

And we're only in this mess because the government and central bank have been way to involved in the market. Lets set the historical average interst rate of 4-5% and remove all accommodation supplements and see what the true market value of a house is without interference. I bet it is significantly lower than current prices.

Just one comment. The Crown accounts show considerable ownership of property, as well as debt. The Crown has very good reasons to not see its asset base drop in value. Like so many ministers, the Crown has a conflict of interest in pursuing revenue from taxpayers vs its own asset base. Check out the Crown accounts (balance sheet) on the Treasury website. Then add up debt vs net asset backing. Why media journalists fail to do so, or economists get distracted with debt to GDP, instead of asset backing, is just a sign of how much ministers can influence the picture. Robertson's favourite line "compared to other countries our GDP to debt is great !".

Problem of conflict of interest but who to rectify.

For that very reason need a leader and not just politician to lead the country. Still time for Jacinda Arden but will she be able to rise......

The only thing that will rectify this craziness is a giant train wreck. The only real question is timing.

The timing will never be good, you mean its just a question of when ? Its pretty clear now that those with the hands on the controls are going to do bugger all to stop house prices increasing. The reason is not only vested interests but the wealth effect. All those who own a house or are paying down a mortgage get the feel good effect of their asset rising in price. Its a false feeling but even I cannot help it, its a core human emotion and the government is playing on it. My place on Homes is now just shy of the $1mil upper price mark, the expectation is palpable.

And that is the irony of it all. Govt. want to build more houses to improve 'affordability' but are paying full market value for the land which is being pushed up in price, in part by the Govt., by buying are putting more demand on a static undersupply of land.

By using this method, which is adding more non-value added costs into the system, it is impossible to supply more affordable housing, unless, as prices increase, the Govt. can subsidize the price to 'make it affordable,' using taxpayers money of course, but in doing so all other builders (ie the ones the Govt. does not buy their houses from) cannot do this, and will not be able to compete in this market.

This will mean the Govt. will have to increase their involvement, either directly or extending the scheme to all builders, because as house prices increase, if you can't buy a subsidized house through the Govt., then you won't be able to afford to buy.

This will continue either until they run out of other people's money (ie the taxpayer) or they overbuild and prices collapse.

good to see local government benefiting from the LSAP program, perhaps the CRL will have funding to be completed.

Kill I/O for ALL residential lending on loans with a greater than 10 year loan term. The term is important too, otherwise banks will just start writing 75 year mortgages.

They can exert far more control over asset prices using LSAP and FLP, they don't need to lower rates.

In the long term we will need more monetary support because our fundementals like cashflow and per capita income don't support current valuations. That's a 'future us' problem however.


Interesting, the RBNZ didn't "wait and see" before removing the LVR's last year nor did it when it decided to start printing money… There is a clear bias towards fear of a downturn and a lack of action when the economy performs better than anticipated, that's why the RBNZ over-stimulated in the first place and why house prices are so high today.

Indeed. The system is rigged.

Thats why moving funds to Bitcoin is increasing - no one can rig that market.

True Frazz because it was rigged by the creator right from the start. Bitcoin is the best Ponzi ever created because people cannot see its a Ponzi. Its still manipulated like many things, someone buys up a big chunk of it like Elon Musk and the prices goes up because everyone else thinks Elon is such a Wizz and must know its going to go up and then it does go up, its just self for filling. Anyone with a big enough chunk of any market can manipulate it.

I'm glad you post these comments Carlos ..keeps me amused.


Absolutely - you know why Yvil? Because they're shit scared that if prices in assets start falling a small amount, it will gain momentum and they won't be able to stop the carnage.

Agreed !


Which wouldn't be a major issue if they hadn't manipulated the price of assets so ridiculously high to start with.

In a just world their necks would be in a guillotine.

"A just world" Brock, feel free to give most of what you have to the hundreds of millions in Africa, South America, Asia who have so much less than you, to make the world more "just".

How does that make the world more just Yves?

All those millions are lucky they don't live in the third most unaffordable city on planet earth.

If you cannot see that helping truely poor people who don't have a proper place to live in or enough food, then you should not be talking about fairness or things being "just"

I've already spent years of my life helping people like that, on the ground. I am still quite able to see that the way the system has been manipulated in NZ to transfer wealth from younger workers to older asset owners is unjust.

It's not that hard nor is experience working in a developing country as I have a prerequisite.

If our elder generations of leaders use financial and monetary policy to transfer wealth to their own assets we should not expect younger generations of Kiwis to thank them for it nor excuse their lack of moral character.

Hi Jenee,

From your heading : RBNZ expected to put the property investor crackdown, trans-Tasman bubble, slowing growth and higher inflation expectations aside, and take a breather before changing monetary policy

1 : Change in Tax is good but not a crackdown as though so called investors are crying foul but will still go and bid in auction as have equity to support and source of easy money to fund through interest only loan and in this low interest environment RBNZ is yelling for speculators to go out and plunder without fear as have entire government and RBNZ to protect them.

Real crackdown for future, will be by controlling the ammunition / supply of easy and cheap fund used by speculators to fund their activities - Interest Only Loan ( Just like have to stop supply of blood money / unaccounted money to try and contain drug cartel).

2 : When you mention will take a breather implies that you have been made to understand that wait as want to delay, if cannot avoid taking any action.

So what they will announce on 5th may has already been announced, so why the farce of being serious about housing crisis and this directed towards Robertson and Jacinda as we voted them to power and not likes of orrs

I used "crackdown" because the interest deductibility change is a significant one.

And I said take a "breather" because the RBNZ has made seismic moves on the monetary policy front over the past year, and economists reckon it'll just hold fire for a bit before moving.

The article is aimed at previewing Wednesday's monetary policy review. 

I try to keep these stories distinct from opinion pieces that critique politicians' actions or provide my view on what I think will happen next. For a story like this, see the opinion piece I did last weekend:

Jenée, you don't have to justify yourself to alittle

Yvil, chill.

Thanks Jenee. Always enjoy reading your articles.

A truly Cornelian dilemma.

Pain now or latter.....but undoubtably pain.

Mr Orr aim is avoid the pain for next two tears as than will be someone else headache as he will be enjoying with his wealth and same goes to robertson as they too know that third term is doubtfull and in worse scenario will be kicked out but who cares as have ruled for six years and our PM can plan for a role in UN.

As long as narrow thinking people run the country, will never get real solution though Jacinda Arden has an opportunity with full majority but as they say absolute power.....corrupts.....

Pleasure now, pain later, it's human nature

Some interesting research on that by Kahneman in 'Thinking Fast and Slow' - especially around removing a bandaid. Is it better to do it fast or is it better to do it slowly.

I personally think we should have a significant and sharp reset as opposed to what central banks are trying to favour. Which is a long slow painful deleveraging.

I'm agreeing with you again IO, unusual lol.
For your band aid analogy there is one crucial difference in politics and central banking which is: "Not on my watch, the next government or central bank can remove the banks aid" and they therefore do whatever it takes to keep things afloat as long as they're in power, whether it is good or bad in the longer term, is not their concern

I just proof read my post above, there's an autocorrect
"...the next government or central bank can remove the BANKS aid"
I was going to edit it to "band-aid" but I on second thought, it's such a good autocorrect, I'll leave it, LOL

Not sure if you've watched Princes of the Yen but when central banks, governments and retail banks all have incentives to keep the party going, they do so for a long as they can regardless of the long term implication/s. Feels like the anglosphere is walking in the shoes of Japan in the late 1980's.

A very hopeful slow deleveraging...I doubt they believe they can achieve that themselves...once it starts all bets are off.

rather "Pleasure now" (Boomers) pain now & later - (their offspring)

I wonder if the corporate sector is beginning to channel funds to purchase residential property somehow. I mean why would they not wish to join the income streams and asset growth?

I have decided to sell my House, buy it back at a much higher price then buy another, then repeat it till the cows come home. It is the best way to 'Make Munny".

I was gonna work for a living, now I do not have to.


Mr Orr, not forgetting my Partner Grant who Granted me the Opportunity and the Ponzi Banks, I deal with.

PS...You Taxpayers are mugs.

Learn to play the system, its not going to change anytime soon. Most people are not interested in morals anymore, just interested in staying on the right side of the law while still going for the odd loophole if they can. Its a dog eat dog world and its only going to get worse as resources shrink and prices go up.


Unfortunately its these attitudes that have created this mess. No offense meant Carlos, but we require a higher level of thinking than that to solve these problems.

Society is interdependent so the manner in which we treat each other is going to determine the quality of our society and human experience going forward. We can make the future worse for ourselves if we want to, and that simply requires the level of thinking you are showing in the post above.

However those attitudes are realistic. Your utopian ideals are noble but how to be achieved? Does your higher thinking on society actually know how to better human kind? I have noticed, If you ask the so called righteous not to apply for a job, don't win a auction or go share their house/land , take in the poor, give half their pay etc they are usualy no where to be seen. I'm curious when persons don't agree with your utopian plans will you force them out of their homes/Jobs by gun point? or just a good talking to? When you get your way, who do you give it to?

The realitiy of society is just a illusion. If law and order/ systems fall the philosophy, word precision, high level of thinking even altruism disappear. It comes down to violence, might, tactics... All the hairy fairy stuff goes out the window. I'll give you a example in a smaller scale. I'm talking to rather solid individual, they have taken up the two car parks. I get out of my car and use my higher level of thinking to explain how we should share the car parks. The result he beat's the crap out of me.....

I'm struggling to make any sense of this Comyn. Either references to utopia or who metophorically the car park bully might be.

If affordable housing for FHB's is utopia, then we must have arrived in hell already.

Orr does not conjure up houses and fix economic imbalances by manipulating policies and tweaking interest. Get real. That is govts job and they have created the mess. Pandering to special interest groups is a big part of it. This goes back to the 80s, 90s and 2000s where many large sections could not for vaious reasons, be developed much. Just compare all the multi unit sites from the 60s and 70s which have been doing an awesome job housing singles and small families. Can anyone spell "supply side of the equation"? But when the pressures build up then maybe the dam will burst with new affordable homes flooding not just auckland but the rest of the country too. Article in waikato times today that quotes Mayor Sandra Goudie who basically says this. Look it up.

I guess you're suggesting that there isn't a 'Housing Shortage' as such, but a 'Housing For Sale' shortage?"
Sounds right.
When any singular buyer already has 10, 20 or 100 properties on their books and buys more stock via the Revaluation Process, and rents them out, that takes "Houses For Sale" out of the pool, and the competition to buy "What's Left?" compounds the problem, and pumps up prices.
We don't have a Housing Shortage problem - What we do have is a Housing Ownership Concentration problem.
Solve that, by 'encouraging' multi-owners to release them back into the Pool, and when they meet the new supply in the pipeline, that supposed to address the phantom Shortage issue, let's just see what happens!

Im not sure if you followed my post or just regurgitated your last comment... theres a definite shortage, what excuses are you suggesting bw?

"Orr does not conjure up houses and fix economic imbalances by manipulating policies and tweaking interest."

Orr himself would disagree and correct you on that sentence.

No one stating this but TOTAL sales in Auckland have been falling since January 1st.
Not just residential counted here but ALL sales, including land and sections etc.
Pre xmas sales were rising 35-39% pcm, camped to year earlier.
Since Xmas, fallen 1.47%
February total sales were 8.9% below that of February 2020.
The splurge of leverage and fiscal expansion petered out.
People are pulling horns in compared to pre xmas.
This fits with consumer spending dive for first quarter rcecently reported.

I've seen some very ambitious agents out there having pretty empty open homes while asking for $1.3mill for houses that were going for $1.1mill late last year. Wonder how they are doing.

Just listened to Q+A questions to JA on housing, she stated that seeing an open home across the street from her is what reinforced her decision to act on housing. So, she basically acted on information that came to her incidentally. She also stated that the housing problem is an Auckland problem (!??!!!!)This, folks, is why our beautiful country is stuffed-burgers. As a 6th gen kiwi who's ancestors from Shetlands left for a better life and surveyed Wellington streets, cannot express how angry I am that this pathetic [part of comment removed by editor] is calling any shots whatsoever and creating devastation with her negligence. As an Aucklander she ignores teh rest of the country, and is more ignorant than your average person on the street

Don't be fooled.

She's dumb as a stump. But not that dumb.

She was acting. Just like she acts everyday in the role she initially wasn't voted to do, just put there by an old guy on the way out.

JA is known as a good communicator. Communicating involves acting at times.

If she came across as being genuinely surprised by house prices, guaranteed... she was bluffing. She knows it's a problem.

If you believed she wasn't acting then she's an even better actor than you think and you're the one that just got played.

She's just stalling for time till the UN job. A puppet, nothing more. Tell the people what they want to hear.

I totally agree with your comments Dago. I too watched Q +A today with Jacinda talking about how it only just dawned on her about sky rocketing house prices when the property across the Road from her sold recently. Where has she been in the last 7 months!

Agree, it is a real shame. Living in ivory tower.

The so called investors crackdown is just PR stunts for now, a lot of hot air without a substance. But indeed gave unpleasant smell.
NZ has long been milked by OZ banks, nothing will change that, any NZ govt knew that, any RBNZ head+team knew that.. BAU folks.. invest & buy more of those lands, houses etc. - soon you'll be rewarded with cheap overseas dollar seeking refuge in NZ.