Latest Reserve Bank monthly figures show declines in the rate of annual borrowing growth across the personal, housing, business and agricultural sectors

Well according to many sources but hotly disputed by many, the capacity to borrow for mortgages is down by up to 40% in Australia. The banks and media are not going to confirm or deny this for the obvious reasons. With the NZ and Australia economies are now so hitched to property trading, I find this hard to believe, but let's assume it is reality. I cannot see how Australia will be able to trundle on in its merry way and there must be some effect on NZ. Something will have to give. The ANZ CEO's comments were nonsense when he suggested that infrastructure and non-housing activity (trade) were driving incomes and consumer spending. What a load of rot. Consumer spending has been driven to a large extent by the perceived wealth effect, which we know is strongly linked to house prices. Furthermore, there is evidence that the FMCG sector in NZ is under strong pressure as h'holds budgets are too stretched.

Maybe consumer spending has unlinked with house prices? Things do change. Or, maybe it's spend & be damned? More likely, people's habits haven't changed with the new realities. House prices are still holding up in Tauranga & other such places, although we can't be far behind Auckland's 'leveling off' in the curve.
The wave's rings eventually reach every shore.

Must be nearly time to start paying it all back?

In a credit based economy, credit measures are everything.

In terms of the New Zealand economic picture this is the most important article you have written David. Please make it a regular monthly one. I consider it that important that I would disseminate it. Could you expand it to include measures of the money supply? Which should be pretty close to the same figures. My belief is changes to the economy will show up here first. I have already drawn attention to Australian M3, which is flatlining. Ours appears to be holding up despite property doomsters like myself, but not for long by the look.

kiwi's have short memories. The last few months have tailed off. I suspect between now and christmas NZ will revert to the same old, same old.

In a debt fuelled economy, credit doesn't need to turn negative to cause a downturn, all it needs is to see a decrease in the pace of accumulation in household debt. Will the RBNZ act now to add more fuel to the fire, then we may carry on like the Aussies for a another year or so (but they are now busting) or do we leave it alone. It can't get much bigger anyway before it reaches servicing capacity, if we're not there already..

https://www.youtube.com/watch?v=w8fCmUbjDtg&t=5s

There is a simpler, sadder aspect to the 'house-as-ATM' which is a big driver of the Wealth Effect.

It correlates nicely, over the 2002-2008 period, with the Welcome Home Loans debacle. I've related my own experience here and here. The net effect of the whole dopey saga was to spread a price floor far and wide across hundreds of thousands if not millions of NZ residential properties, while giving loan capability to a pitifully few of our poor. The difference between then-current prices and the WH loan limit - often hundreds of thousands on a historic-cost basis - triggered the price spiral and thus the wealth effect. After all, if your mortgage-free shack suddenly had a pool of Gubmint-backed buyers at hitherto nose-bleed prices, why not cash in a little of that newly discovered 'equity'? The house=ATM notion had not really existed up until then, at least in any widespread form. Now, it's nigh on impossible to eradicate as a meme.

Gubmint moves which have necessarily wide visibility, often have Unintended Consequences. This was a doozey......it will make a fabulous case study.