Forecasts for housing market off with the fairies
The Reserve Bank and 10 forecasters surveyed by the NZ Institute of Economic Research (NZIER) are predicting strong growth in residential building activity over the next two years, at the same time as interest rate rises, but Dickens, managing director of Strategic Risk Analysis, says the two trends don't go together.
"The housing market is the most interest rate sensitive part of the economy and there is no basis for expecting robust housing market activity to coexist with significant interest rate increases," Dickens says.
"It doesn't and won't happen - the forecasters are off with the fairies."
The Reserve Bank is predicting solid growth in residential building activity over the next two March years of 24.6% and 7.4% respectively, followed by a slight fall of 0.8% in 2012/13.
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