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Westpac expects government policy to "cool" housing market and GDP

Lender believes housing plans will slow spending and economic growth

Monday, March 19th 2018, 5:33PM

by Dan Dunkley

Westpac expects the government’s housing policy to cause a further slowdown in New Zealand's GDP growth, after data revealed the economy grew by only 2.9% in 2017.

Westpac’s team of economists have predicted the government’s plans, including curbs on foreign investment, will “cool” the housing market, leading to lower household spending and decreased confidence among employers and investors.

It comes after data released last week showed the economy running at softer-than-expected 2.9% growth, significantly lower than 3.9% in 2016. 

In their weekly update to the market, Westpac economists said they expected the more “subdued backdrop” to persist in 2018, “as the new government’s policies weigh on growth”.

Economists believe the muted outlook will see the Reserve Bank retain the OCR rate at an historic low of 1.75% this week. Westpac said it expected “no surprises” after reading the GDP data: “Last week’s GDP and current account data were the final data releases ahead of this week’s RBNZ OCR review. With the GDP data printing only a touch below the RBNZ’s expectations, there was certainly nothing to prompt a change of tone from the RBNZ.”

Others are more upbeat about the nation’s long-term economic prospects, however. The latest New Zealand Institute of Economic Research Consensus Forecasts, released today, projects a stronger growth outlook over the next few years. NZIER's forecast from the major banks said government spending would increase consumer confidence, but warned the outlook for business was “mixed”. NZIER's report said inflation would remain “contained” until 2021.

 

 

Tags: RBNZ Westpac

« OCR call takes backseatBNZ slashes mortgage fees »

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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