The tide could be turning for those looking to buy a home.
High interest rates are dropping, ANZ dropping its home loan rates amid falling inflation and a softened tone from the Reserve Bank.
Westpac dropped their rates a week prior, cutting its 6, 12, and 18-month home loan rates.
Property Commentator Ashley Church told Kerre Woodham it’s good news for the housing market.
He said he didn’t expect much would happen prior to November, since banks have been following the rhetoric from the Reserve Bank, keeping rates high.
Church said Banks have clearly decided that enough is enough, and are taking a step out.
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Speaker 1 (00:06):
You're listening to the carry Wood and Morning's podcast from
News Talks. He'd be the.
Speaker 2 (00:12):
Tide, as I have said, is turning on high interest rates.
As A and Z, the largest lender, has dropped its
home loan rates amid falling inflation and a softened tone
from the Reserve Bank. Westpac dropped their rates last week.
Does this mean we're finally going to see some movement
in the housing market to discuss I'm joining by property
(00:33):
commentator Ashley Church. Very good morning to you, Ashley. How
are you well? Thank you? So is this good news
for the housing market.
Speaker 3 (00:41):
It is good news for the housing market. It's but
quicker than I would have expected. And to be honest,
I didn't think much would happen prior to November of
this year. And the reason for that is because the banks.
You need to understand it. When we talk about dropping rates,
we're talking about something called the OC the official cash Rain,
which is controlled by the Reserve Bank. The banks themselves
(01:01):
have actually had the opportunity and the potential to drop
rates before now. The reason they haven't done so, it's
because they've been following the rhetoric from the Reserve Bank
and keeping those rates high. So clearly they've decided that
enough's enough and they've now taken a step out in
this case the A and D and the Westpac and
actually said, okay, we're going to drop our rats a
little bit. It will be interesting to see if at all,
(01:22):
if when, how the Reserve Bank responds to this, because
I think this is a little sooner than they would
have liked.
Speaker 2 (01:27):
Stephen Joyce said this morning when he was talking to Mike.
As a former he said, he doesn't he's only having
a reckon like everybody else, but he is informed by
being the former Finance Minister, of course. But he said
that he thought they the Reserve Bank might drop around
November and then because we don't do anything until February March,
it'll be a wait and see if everyone goes nuts,
(01:50):
then they still have wriggle room to pull back.
Speaker 3 (01:53):
Pretty much exactly the same as my view. So when
I talk November, that's what I was referring to, as well,
we know cer in November, and I still think that
will happen. What's interesting about this is that the you
know this was a starting gate and a horse race,
then for the horses have bolted before the starting game,
and it'll be interesting to see, as I say, whether
the Reserve Bank decides and that's too soon and sort
(02:13):
of send some stern messages to the market, or allows
this to happen. Because the thing that will happen now
is depending on how the banks respond to this. There
might be a bit of competition interroom, which means that
they could drop a little bit further well exactly.
Speaker 2 (02:26):
I mean, it's interesting that Westpac and a in set
have gone. ASP were sort of making murmurings yesterday about
going But are they Are they looking to move because
they're responding to their customers, or are they no or
looking for that profit.
Speaker 3 (02:44):
That's a tough question to answer because, as I said before,
you could argue they've been in the position to do
this for quite some day. The banks have been borrowing
at lower rates than the oci from other sources for
a long time, so they've actually had the capacity. I mean,
if you were a cynic, they could say that they're
actually profiting from that because rather than passing those rats
onto their customers of them absorbing them. So but you know,
(03:04):
are they doing a favor to their customers? Now? You
know what's a favor of the context of the bank competition,
the ability to pick up more customer than your fellow bank.
Speaker 2 (03:12):
Possibly because they are so they're closer to the real
economy than the reserve bankers, and they'd rather have customers trading,
and they'd rather have customers paying their their loans back regularly.
Speaker 3 (03:24):
That's true in Phoenix to the Reserve Bank. And that's
not woods that come out of my maent very often,
because I don't rate the current reserve bank covernor. But
in Phoenix to the Reserve Bank, what they're doing at
the moment had to be done. So this approach I've
taken to the economy, they had to get inflation under control.
You're still have on the fringes of this stuff now
because if you look at these figures, and I don't
know if you've gone through them earlier this morning, So
(03:44):
the CPU is currently sitting at three point three, which
is down from you know, I think five point six, yeah, yeah, yeah,
And so but when you actually look at that, there's
a couple of moving parts are quite important. The first
is it's only up point four and three months, which
means it's a heck of a lot lower than that
figure would imply. But the second one is there's two figures,
(04:06):
so that one of them is this thing called tradable inflation,
which is important. That's that's down to point three. That's
that's down to almost mill So it's this non tradable
this basically expenses within New Zealand and inflation. With the
New Zealand they're still seeing it's five point four, but
even that is down at point nine for the last quarter,
which means if you project forward on that, you don't
need to be looking at inflation at three point six.
(04:28):
So what I mean by all ladders that the Reserve
you can say that the Reserve bank's actually getting a
little bit cute now and the approach that it's taking
in that it ablutely wants to hammer out this last
bit of inflation. And you know there's these arguments for
that either way.
Speaker 2 (04:41):
Yeah, I mean, when you've got the Gore District Council
putting its rates up at that's yeah.
Speaker 3 (04:50):
And that's the thing that Tony Alexander's made a point
about over the last couple of over the last couple
of months, he's been and he's quite right, he's been saying, look,
what you really need to see before this thing's fully
under control is councils and large utility providers not passing
on those inflation costs their customers but actually absorbing them.
Because when that happens, that's when you really get inflation
(05:10):
under cross At the moment as you say, a councilor
says okay, acos have gone up tempers, then we're going
to pass it onto our customers. And that's you know,
and only they can do that, and it's just not real.
It's not the real world.
Speaker 2 (05:20):
No, But I mean I can I can see insurance,
you know, multi national insurance companies being able to absorb something,
but I can't see counsels being able to do that.
Speaker 3 (05:29):
Well that, yeah, I guess you could argue. I mean,
if you play the same approach at the current governments
applying to the public service, you can possibly argue that
they could. Yeah, although my you know, my Wayne Brown,
who I admire enormously, is obviously done about as much
as that that they can do in Auckland, and they're
still pushing rates up. So you're probably right.
Speaker 2 (05:46):
When it comes to a morribun housing market, what does
that mean for people who don't buy in cell houses
as sport who actually need to sell one home so
they can buy another for all sorts of reasons. What
does that mean for real estate agents? What does that
mean for mortgage brokers. There's a whole real there's a
world that is affected by people not move well.
Speaker 3 (06:06):
A short to the simple answer to all of those
questions in one is that this will motivate the market.
It will stimulate the market. You'll start to see more activity,
and that activity will be driven by two things. It
will be driven by the fact that money's a little
bit cheaper, and incidentally, there's a psychological element to that,
because there's a lot of people out there who didn't
necessarily even need to see rates come down. They just
need to know that they're not going to go up
any further. So for those people, this is actually quite
(06:28):
a big psychological breakthrough. But there's also another side to them,
and that is people like first time buyers and people
that have been waiting who might have been thinking that
house prices are going to come down a little bit further,
wh will suddenly say, oh, gosh, I need to get
them quick because if they don't, I'm going to be
paying more. So both of those things will have an
impact on the market, and both of them will mean
that there will be a stimulus and you'll see that
quite quickly.
Speaker 2 (06:47):
Perry, what do we need to do to shift the
mindset of the seller to say you are not going
to see twenty twenty two prices again in your life.
Speaker 3 (06:56):
I think that, Yeah, I think that's already happening. So
there are a few of them still out there, But
I think that's you know, basically, now, if you're not
appraised to that by the time you go you put
your house on the market, you're certainly appraised that by
the time you start getting off those office are a
lot less than they might to expected two years ago.
So I think that's just that that's a process of
of mostis that's already been taking place, and that will
(07:16):
just continue. Again. Having said that, this will have the
impact of pushing and pushing house prices, and but I'm
certainly not suggesting there's going to be big increases anytime soon.
But I'm certainly suggesting you'll start to see some sort
of orderly increase in house prices now if this continues.
Speaker 2 (07:31):
So if somebody has been sitting there waiting to sell
their house to take up another job, either within New
Zealand or overseas, or if they're in a relationship breakdown.
There's light at the end of the tunnel.
Speaker 3 (07:44):
There is. It always depends on circumstances. So for somebody
who's in straightened conditions, then obviously this might be the
opportunity for them to get out and do that. For
somebody who's in the position where they can wait, and
a lot of those people in situations such as you
just describe, might have, for example, put that out as
rental or something just to sort of keep it on
a holding pattern for a while. You might want to
do that for a little while yet, because the market's
not going to turn that quickly. I think we're talking
(08:06):
I've made the comment over the last few months that
we will get to a point where we are talking
about house prices exceeding what they were in twenty twenty
in twenty twenty one, but that's a good eighteen months
twenty four months before we're sort of back into that territory.
Speaker 2 (08:19):
I thank you very much for your insight as you
Church property commentator.
Speaker 1 (08:22):
For more from carry Wood and Mornings, listen live to
news Talks it'd be from nine am weekdays, or follow
the podcast on iHeartRadio,
You're listening to the carry Wood and Morning's podcast from
News Talks. He'd be the.
Speaker 2 (00:12):
Tide, as I have said, is turning on high interest rates.
As A and Z, the largest lender, has dropped its
home loan rates amid falling inflation and a softened tone
from the Reserve Bank. Westpac dropped their rates last week.
Does this mean we're finally going to see some movement
in the housing market to discuss I'm joining by property
(00:33):
commentator Ashley Church. Very good morning to you, Ashley. How
are you well? Thank you? So is this good news
for the housing market.
Speaker 3 (00:41):
It is good news for the housing market. It's but
quicker than I would have expected. And to be honest,
I didn't think much would happen prior to November of
this year. And the reason for that is because the banks.
You need to understand it. When we talk about dropping rates,
we're talking about something called the OC the official cash Rain,
which is controlled by the Reserve Bank. The banks themselves
(01:01):
have actually had the opportunity and the potential to drop
rates before now. The reason they haven't done so, it's
because they've been following the rhetoric from the Reserve Bank
and keeping those rates high. So clearly they've decided that
enough's enough and they've now taken a step out in
this case the A and D and the Westpac and
actually said, okay, we're going to drop our rats a
little bit. It will be interesting to see if at all,
(01:22):
if when, how the Reserve Bank responds to this, because
I think this is a little sooner than they would
have liked.
Speaker 2 (01:27):
Stephen Joyce said this morning when he was talking to Mike.
As a former he said, he doesn't he's only having
a reckon like everybody else, but he is informed by
being the former Finance Minister, of course. But he said
that he thought they the Reserve Bank might drop around
November and then because we don't do anything until February March,
it'll be a wait and see if everyone goes nuts,
(01:50):
then they still have wriggle room to pull back.
Speaker 3 (01:53):
Pretty much exactly the same as my view. So when
I talk November, that's what I was referring to, as well,
we know cer in November, and I still think that
will happen. What's interesting about this is that the you
know this was a starting gate and a horse race,
then for the horses have bolted before the starting game,
and it'll be interesting to see, as I say, whether
the Reserve Bank decides and that's too soon and sort
(02:13):
of send some stern messages to the market, or allows
this to happen. Because the thing that will happen now
is depending on how the banks respond to this. There
might be a bit of competition interroom, which means that
they could drop a little bit further well exactly.
Speaker 2 (02:26):
I mean, it's interesting that Westpac and a in set
have gone. ASP were sort of making murmurings yesterday about
going But are they Are they looking to move because
they're responding to their customers, or are they no or
looking for that profit.
Speaker 3 (02:44):
That's a tough question to answer because, as I said before,
you could argue they've been in the position to do
this for quite some day. The banks have been borrowing
at lower rates than the oci from other sources for
a long time, so they've actually had the capacity. I mean,
if you were a cynic, they could say that they're
actually profiting from that because rather than passing those rats
onto their customers of them absorbing them. So but you know,
(03:04):
are they doing a favor to their customers? Now? You
know what's a favor of the context of the bank competition,
the ability to pick up more customer than your fellow bank.
Speaker 2 (03:12):
Possibly because they are so they're closer to the real
economy than the reserve bankers, and they'd rather have customers trading,
and they'd rather have customers paying their their loans back regularly.
Speaker 3 (03:24):
That's true in Phoenix to the Reserve Bank. And that's
not woods that come out of my maent very often,
because I don't rate the current reserve bank covernor. But
in Phoenix to the Reserve Bank, what they're doing at
the moment had to be done. So this approach I've
taken to the economy, they had to get inflation under control.
You're still have on the fringes of this stuff now
because if you look at these figures, and I don't
know if you've gone through them earlier this morning, So
(03:44):
the CPU is currently sitting at three point three, which
is down from you know, I think five point six, yeah, yeah, yeah,
And so but when you actually look at that, there's
a couple of moving parts are quite important. The first
is it's only up point four and three months, which
means it's a heck of a lot lower than that
figure would imply. But the second one is there's two figures,
(04:06):
so that one of them is this thing called tradable inflation,
which is important. That's that's down to point three. That's
that's down to almost mill So it's this non tradable
this basically expenses within New Zealand and inflation. With the
New Zealand they're still seeing it's five point four, but
even that is down at point nine for the last quarter,
which means if you project forward on that, you don't
need to be looking at inflation at three point six.
(04:28):
So what I mean by all ladders that the Reserve
you can say that the Reserve bank's actually getting a
little bit cute now and the approach that it's taking
in that it ablutely wants to hammer out this last
bit of inflation. And you know there's these arguments for
that either way.
Speaker 2 (04:41):
Yeah, I mean, when you've got the Gore District Council
putting its rates up at that's yeah.
Speaker 3 (04:50):
And that's the thing that Tony Alexander's made a point
about over the last couple of over the last couple
of months, he's been and he's quite right, he's been saying, look,
what you really need to see before this thing's fully
under control is councils and large utility providers not passing
on those inflation costs their customers but actually absorbing them.
Because when that happens, that's when you really get inflation
(05:10):
under cross At the moment as you say, a councilor
says okay, acos have gone up tempers, then we're going
to pass it onto our customers. And that's you know,
and only they can do that, and it's just not real.
It's not the real world.
Speaker 2 (05:20):
No, But I mean I can I can see insurance,
you know, multi national insurance companies being able to absorb something,
but I can't see counsels being able to do that.
Speaker 3 (05:29):
Well that, yeah, I guess you could argue. I mean,
if you play the same approach at the current governments
applying to the public service, you can possibly argue that
they could. Yeah, although my you know, my Wayne Brown,
who I admire enormously, is obviously done about as much
as that that they can do in Auckland, and they're
still pushing rates up. So you're probably right.
Speaker 2 (05:46):
When it comes to a morribun housing market, what does
that mean for people who don't buy in cell houses
as sport who actually need to sell one home so
they can buy another for all sorts of reasons. What
does that mean for real estate agents? What does that
mean for mortgage brokers. There's a whole real there's a
world that is affected by people not move well.
Speaker 3 (06:06):
A short to the simple answer to all of those
questions in one is that this will motivate the market.
It will stimulate the market. You'll start to see more activity,
and that activity will be driven by two things. It
will be driven by the fact that money's a little
bit cheaper, and incidentally, there's a psychological element to that,
because there's a lot of people out there who didn't
necessarily even need to see rates come down. They just
need to know that they're not going to go up
any further. So for those people, this is actually quite
(06:28):
a big psychological breakthrough. But there's also another side to them,
and that is people like first time buyers and people
that have been waiting who might have been thinking that
house prices are going to come down a little bit further,
wh will suddenly say, oh, gosh, I need to get
them quick because if they don't, I'm going to be
paying more. So both of those things will have an
impact on the market, and both of them will mean
that there will be a stimulus and you'll see that
quite quickly.
Speaker 2 (06:47):
Perry, what do we need to do to shift the
mindset of the seller to say you are not going
to see twenty twenty two prices again in your life.
Speaker 3 (06:56):
I think that, Yeah, I think that's already happening. So
there are a few of them still out there, But
I think that's you know, basically, now, if you're not
appraised to that by the time you go you put
your house on the market, you're certainly appraised that by
the time you start getting off those office are a
lot less than they might to expected two years ago.
So I think that's just that that's a process of
of mostis that's already been taking place, and that will
(07:16):
just continue. Again. Having said that, this will have the
impact of pushing and pushing house prices, and but I'm
certainly not suggesting there's going to be big increases anytime soon.
But I'm certainly suggesting you'll start to see some sort
of orderly increase in house prices now if this continues.
Speaker 2 (07:31):
So if somebody has been sitting there waiting to sell
their house to take up another job, either within New
Zealand or overseas, or if they're in a relationship breakdown.
There's light at the end of the tunnel.
Speaker 3 (07:44):
There is. It always depends on circumstances. So for somebody
who's in straightened conditions, then obviously this might be the
opportunity for them to get out and do that. For
somebody who's in the position where they can wait, and
a lot of those people in situations such as you
just describe, might have, for example, put that out as
rental or something just to sort of keep it on
a holding pattern for a while. You might want to
do that for a little while yet, because the market's
not going to turn that quickly. I think we're talking
(08:06):
I've made the comment over the last few months that
we will get to a point where we are talking
about house prices exceeding what they were in twenty twenty
in twenty twenty one, but that's a good eighteen months
twenty four months before we're sort of back into that territory.
Speaker 2 (08:19):
I thank you very much for your insight as you
Church property commentator.
Speaker 1 (08:22):
For more from carry Wood and Mornings, listen live to
news Talks it'd be from nine am weekdays, or follow
the podcast on iHeartRadio,
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