Our esteemed Reserve Bank Governor, Allan Bollard, gave a speech yesterday during which he enunciated what everyone has known and talked about (OK apart from Real Estate agents but they only marginally fall into the category of people).
Cullen said that the housing market could be in for a hard landing because of the global credit crunch and its effects on New Zealand banks’ funding costs.
Bollard mentioned the issue of the increasing funding costs banks face and consequently the mortgage rates they charge.
This occurs at a time when New Zealand’s housing market is already slowing due to the effects of past policy tightening… while we are projecting the housing slowdown to be of the soft-landing variety, there is obviously some risk of a more pronounced slowdown.
History shows us that either scenario can happen.
You don’t say?