It's hard to think of anything other than the devastation cyclone Debbie has caused this week, but here's some news on household borrowing that's also been in the news of late.
New Zealand households are now borrowing more relative to their disposable incomes than they did before the global financial crisis when a red-hot housing market was encouraging consumers to tack a little onto the mortgage to pay for big ticket purchases.
Kiwi household debt is now a record 167 per cent as a proportion of disposable income, and New Zealand Institute of Economic Research senior economist Christina Leung says that's a key risk to the economy.
Reserve Bank data show total household borrowings were up 8.7 per cent to $248.16 billion in January from a year earlier. The bulk of that was in housing, which was up 9 per cent at $232.07b.
However, a 4.6 per cent increase in consumer credit to $16.1b continued a trend of accelerating growth.
"With consumers feeling more confident about discretionary spending we're seeing a pick-up in consumer credit growth," Leung said.
"There are two key risks from these growing debt levels in terms of serviceability: interest rates are likely to be on the way up, and the potential for a downturn in the labour market meaning reduced incomes for households."
The Reserve Bank is watching local consumer spending closely after being surprised by an acceleration in consumption through the second half of last year.
Record levels of net inbound migration and tourism have been bolstering the country's retail sector, while at the same time jobs have been plentiful enough to meet the demands of an expanding population, with high participation rates and unemployment by global standards.
RBNZ governor Graeme Wheeler today reiterated his fears about the local housing market, which has faced an imbalance between supply and demand, pushing up prices at a time when tepid inflation called for record low interest rates.
While he noted there's been some moderation in house price inflation in recent months, those imbalances and the debt servicing costs will "likely be important influences on household spending and the level of aggregate demand in the economy".
Wheeler reaffirmed the central bank's view that the official cash rate was unlikely to move from the 1.75 per cent level it's currently at until mid-2019, although NZIER's Leung expects the RBNZ will move next year as inflation returns to the 2 per cent mid-point of the bank's target band.
Lenders are already raising mortgage rates as credit growth outstrips their ability to fund it through term deposits, forcing them to raise money from more expensive international wholesale markets.
"We do expect these trends to continue and for further lifts in mortgage rates over the coming years," Leung said.
Still, the RBNZ will "wait and see and remain on hold until the middle of next year" to ensure consumer prices start rising before moving the OCR.
Once interest rates do start rising, Leung said the "highly indebted household sector is a key risk to watch out for in terms of how this increasing debt will be serviced".
Source - Business Desk, NZ Herald.
10 Pumice Glade, The Lakes, Tauranga
For Sale: $995,000
Marketed by Emma Tillott 0277 366 256
This stunning architecturally designed family home oozes class and style with its own tranquil feel. Solid plaster over brick construction with high stud interior sets the stage for elegant living in this 7 years young home. Featuring 4 bedrooms, 2.5 bathrooms, spacious open plan living, dining and kitchen with huge 2nd living area (cinema room) perfect for those cosy winter nights in front of the gas fire and TV. Double garage, off street parking, separate laundry and numerous special features that must be seen to be truly appreciated.
825m² of land surrounds this unique piece of real estate, offering multiple outdoor entertaining areas all flowing effortlessly together throughout this multi-level home, providing everyone with their own space to relax. Situated at the end of a quiet cul-de-sac, with elevated views to the Kaimai's to appreciate those spectacular sunsets. Just minutes from the shops, supermarket, schools and the motorway for quick assess to all areas of Tauranga.
So Call Emma today on 027 736 6256 to arrange your private viewing. You'll be glad you did.
To view more photos go to http://www.nz.open2view.com/properties/394338
1406-72 Devonport Road
For Sale: By Negotiation
Marketed by Colin McGonagle
Two bedrooms (master with ensuite and walkin wardrobe), modern kitchen with gas cooking, spacious living and balcony. Secure carpark and locker. Onsite restaurant and gym an option.
You can choose to live permanently in this Award winning highrise, as a holiday retreat (lock up and leave) or rent it out. Downtown shopping, cafes, theatres and walks at your doorstep. This is sure to delight.
Phone Colin for your personal inspection.
To view more photos go to:
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42 A/B/C/D/E Olivine Street Poike
For Sale: By Tender
Listed by: John Foot (mob. 021 525 258) & Rose Thomas (mob. 021 284 6627)
This is a unique opportunity to purchase six purpose built unique student accommodation dwellings with the potential to be used for whanau housing, single adults or seasonal workers. A 3 bedroom home could house an on-site manager or caretaker.
Six dwellings on five separate freehold titles with a total land area of 3,751m².
42A: 3 bedrooms renting for $450pw with double garage
42B: 6 bedrooms renting for $170pw per room including power
2 bedroom disabled unit renting for $450pw including power
42C: 6 bedrooms renting for $150pw per room including power
42D: 6 bedrooms renting for $150pw per room including power
42E: 6 bedrooms renting for $760pw total
Water, power (where shown), rubbish collection, grounds maintenance and weekly cleaning of the bathrooms and common areas are included in the rent of the 6 bedroom units.
Total current cash flow when fully let = $4,480 per week = $232,960 per annum.
For sale by Tender closing at 4pm on Thursday 27 April 2017. Offers may be for all or any combination of the individual properties.
Viewing is by appointment only as the properties are currently tenanted.
Call for an information pack - John Foot 021 525 258 or Rose Thomas 021 284 6627
To view more photos, go to http://www.realestate.co.nz/3045408