Reserve Bank concedes its annual house price growth forecasts have been off by an average of 5.2 percentage points over the past decade

Really - I'm shocked.

Actually I'm not and worse still they have created what could be described as inter-generational thievery. Robbing young families of their savings, health and work life balance as they try to repay huge debts.

the RBNZ have completely misused the monetary policy system.

The RBNZ have been a joke for a decade.
So who cleans this mess up now?
We want action and we want it now.

Just as well we're not paying them to get it right...oh, wait

If you buy that line, you'll buy anything....

Treasury are always wrong. They stopped thinking in about 1993.

Wait. The reserve bank is incompetent? Who knew?

There is no supply shortage. There is simply an oversupply of credit and a totally useless government.

To be fair, the RBNZ doesn't control immigration policy, land use policy or tax policy.

A system where the blunt tool of interest rates is used to try and keep inflation (as measured by a crock of a CPI) in a narrow band, while Nat-bour run one of the most aggressive per capita immigration policies in the developed world, restrict land use and have a religious aversion to broadening the tax base, is destined to fail.

That's really poor forecasting performance.
We all know it's an imprecise science but their collective inaccuracy over a decade is hard to fathom.

“In the long-term, house price growth is assumed to converge to around the rate of nominal GDP growth.”

define long term....a couple of lifetimes?

"in the long run we are all dead"
Keynes

Too many economists, not enough scientists. If your model persistently under-reads then you need to adjust the model to account for that. You don't plough on for months and years just hoping that the model will 'come right'.

In any profession if you can't do your job right for which you are hired, you get either sacked or if you have any self respect you will resign.

But this is not going to happen with this failed lot, even after knowing they had done blunders, they are not ready correct it or accept it. I haven't personally seen this kind of Incompetence and shamelessness any where. Shame and disgrace are small words..

OCR up to 5% by end of year, FED etc to follow suit. Asset prices drop 30% but every accepts it needed to happen. We live to learn the mistake of easy monetary policy and it’s never repeated again.

Taking one for the team?

Business as usual, leverage through cheap credit. The most lucrative business in town.

and they stay employed how ??? nothing in the immigration figures that was shocking pre covid -- they were pretty much high and stayed constant -- and the bank sets the interest rates -- so that is not a shock -- surely they could have been more creative in explaining their incompetence than blaming something they controlled

If anyone thinks they could have predicted where we are now from this time last year (given that there is no miracle Covid cure) they are lying through their teeth.

All western economies have suffered the same fate with the same central bank model of regulation and monetary policy.

Time to take back central bank independence and put it in the hands of government. Then we can at least exercise voting control of monetary policy matters. I am compelled to repeat this quote:

Here’s the thing. Despite over a decade of deranged Federal Reserve policy – I use that word intentionally to mean both “wildly outside of the historical range” and “bat$%!# crazy” – bank loan growth has been utterly unremarkable. So the growth we’ve seen in bank deposits primarily reflects the fact that the Fed has replaced trillions of dollars of Treasury bills with base money. That’s really the crowning accomplishment of QE – creating a massive pool of zero-interest hot potatoes that someone has to hold at every moment in time, and that does virtually nothing but destabilize the financial system with yield-seeking speculation. The chart below shows 5-year commercial bank loan growth.

Policy makers sometimes flatter themselves with the idea that holding interest rates at untenably low levels makes it cheaper for borrowers to obtain funds. Unfortunately, it does so only by transferring income from people who are trying to save for the future. Replacing Treasury securities with base money may make savings more “liquid,” but it doesn’t suddenly make people abandon their retirement plans in favor of consuming today. Low rates also don’t magically create productive investment opportunities.

What economic activities suddenly become viable at zero interest rates that were somehow not viable before? Only projects so unproductive that any positive hurdle rate would sink them. The main activities that are encouraged by zero interest rates are activities where interest is the primary cost of doing business: leveraged real estate transactions; “carry trades” that employ enormous amounts of leverage to profit from small yield differences; and speculation on margin. Presently, margin debt as a percentage of GDP is at a historic extreme.
https://www.hussmanfunds.com/comment/mc210614/

Blocked the RBNZ appearing. This from the most transparent government.

Most transparency is evident between the ears of many Ministers.

Surprise surprise, the RBNZ is hopeless at measuring. And the consequences of being hopeless? Nothing.

In saying that, low immigration numbers, building the most houses we have in a long time, questionable shortage of supply all combined with new tools coming online... we might be in for a decent sized or enormous pop.

Economists are like a weather forcaster, they might get it right on the day but a week out they've really got no idea...

"RBNZ admits to underestimating house price inflation over the past decade
Reserve Bank concedes its annual house price growth forecasts have been off by an average of 5.2 percentage points over the past decade"

Hi Jenee,

1 : It took Mr Orr's 10 years to realise.
2 : Were wrong 5.2% but since last year had predicted appox 10% to 15% fall to justify their least regret policy and was up by 30% - SO WERE WRONG BY 40% TO 45%
3: Even in May were they ignorant and the reason they went with WAIT AND WATCH Policy.
4 : House prices were going up on weekly/ monthly basis since last year so what changed in last few months for this realisation.
5 : NOW WITH REALISATION ARE THEY PREPARED TO GO WITH LEAST REGRET POLICY OR STILL WAIT AND WATCH.
6: Will they take personal responsibility and apologise to FHB those who manged to buy house by borrowing in extreme under FOMO and to many Kiwis for killing their aspiration and dream of providing a decent house to their family .

QUESTION : Will they still continue with their attitude of supporting and promoting speculation or take real meaningful action.

Highlight: A house bought in March ( when house price was at peak as experts) for 1.15 million sold recently for 1.565 million and in condition as bought .......This is the current housing situation in NZ courtey RBNZ.

Mr Orr realisation is good and begging forgiveness will...........sin.

“Over the past decade, the key drivers of this deviation have been that migration has tended to turn out higher than forecast, and mortgage interest rates have tended to be lower than our forecasts would imply"

Ok, I get that the RBNZ had no control over the non-sensical immigration policy during the last decade but to say they were surprised by lower mortgage interest rates! WTF they set these things with OCR. They are the CENTRAL bank. How dumb do they think we are? What a farce.

Remorse is the first step towards salvation but only if one rectifies and take appropriate action.

Will he ?

"The RBNZ provided this written commentary after the Labour members of the Finance Expenditure Committee blocked a request by Green MP Chlöe Swarbrick, supported by National and ACT, for the RBNZ and Treasury to appear before the Committee to discuss how they derive their house price forecasts."

Jacinda Arden led Labour is guilty otherwise why would they stop .......Culprits.

I get the feeling that there is so much out of wack in our economy that it is on the cusp of collapsing into instability. Wild and uncontrollable economic and social lurches from one extreme to the other. I would not be surprised if we see a god almighty crash sometime within the next 6 months.
It is all very well to blame the RB, but successive governments have studiously avoided taking responsibility for many very fundamental flaws in the country and been very happy to hide behind the RB. The RB can only do a very limited amount and whether directly or indirectly government is ultimately responsible.
When the RB CPI/OCR model was set up we were struggling to control run away inflation and it was a logical and effective tool at higher inflation rates. The government also took a lot of responsibility and changed a lot of things. Since then the government has taken very little responsibility and hidden behind the RB. The CPI/OCR has remained untouched and over time the world has drifted into low to very low inflation zones. One of the few changes that they did make to the RB controls was to strongly reduce the influence of house prices in the CPI measurement. (why and what were they trying to achieve? what happened and was that was what they were after) The RB control model of lowering interest rates at the low end of the CPI control band has been totally ineffective at stimulating ours or any body else's economy, and we have been witnessing this even before the 2008 crash and certainly since. All that has happened is that it has stoked successive asset bubbles. They just assumed that it would work at the low end of the CPI range because it seemed to work at the top end. That was purely an assumption. Bad enough, but they never learned or altered it when it clearly did not (or did it suit them). Who's fault is that - Government.

On reflection, having criticized the RB control model at low inflation rates and saying it was OK at the upper end, I have to say that even at the upper end it often does not work. One of the consequences of increasing interest rates is that our currency can appreciate far too much. There was a period in the Clark and Key governments when our currency swung between US 45 to 88 cents to our dollar. the Japanese "housewives" we borrowing money at very low rates and depositing them in NZ, inflating our currency in the process. How do you run an export dependent economy under those circumstances. That and absolutely incompetent management is how we lost F P appliances.

I think that the whole RB regime needs a complete overhaul.

Not often me and Schwarbrick are on the same page. Not often Greens ACT and National line up either. Mercury must be in retrograde

False Assumption by RBNZ created a monster and are so egoistic that all data / noises suggesting otherwise was ignored by ORR with attitude that let dogs bark.

Dogs can also bite Mr Orr.

Time to resign Adrian Orr, and time for Labour to get their sticky beaks out of the RBNZ's business of keeping inflation under control.

To be fair, an economic forecast 12 months ahead having a 3.9% MAD is actually not a poor forecast.

People should remember that RBNZ was establish to maintain financial stability and risk from the housing activities are only one component of it.

It is the ruling government that is responsible for legislation, housing policies and fiscal planning.

Stop blaming RBNZ, they'd actually done a good job. The world envy us but that we ourselves have an insatiable appetite for fantasies that will never be met.

There's a concentrated minority venting on this website. The vast majority of NZ just keeps living life to the fullest!

The RBNZ predictions v REINZ actuals doesn't look that bad on the graph in the article.

To quote Greg Mannarino….,.”Duh”

What a complete load of rubbish , they knew exactly what would happen if you print money and lower interest rates. They even expressed on 3s morning show last year that with this round of QE and low interest rates they will be expecting to see assets inflate and they still did nothing. This what happens in a Ponzi scheme its the biggest swindle ever and unfortunately its not going away anytime soon. If they increase the OCR which everybody is expecting from .25% to .5% they are infact doubling the interest rate on all government debt, keep doing that a few times and the government will be bankrupt along with alot of people.

What a complete load of rubbish , they knew exactly what would happen if you print money and lower interest rates. They even expressed on 3s morning show last year that with this round of QE and low interest rates they will be expecting to see assets inflate and they still did nothing. This what happens in a Ponzi scheme its the biggest swindle ever and unfortunately its not going away anytime soon. If they increase the OCR which everybody is expecting from .25% to .5% they are infact doubling the interest rate on all government debt, keep doing that a few times and the government will be bankrupt along with alot of people.

Only off by 5.2% a year? Ha!! I think that statement is off by 200%!