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ASB Bank said housing and inflation challenges were looming. Photo / NZME

By RNZ

According to ASB Bank, slowing house prices, rising inflationary pressures and earlier-than-expected interest rate hikes will be important to the near-term economic outlook.

In its latest quarterly forecast, the bank said there were growing difficulties ahead as the economy continued to recover from the pandemic.

Chief Economist Nick Tuffley said the rollout of the vaccine around the world indicated above-average growth this year.

He said the Trans-Tasmanian bubble, global demand for commodities and the rebound in domestic spending had all been positive for the economy, which had outperformed many other developed economies.

But housing and inflation challenges were looming.

“The increasing headwinds that have intensified over the past year, including government tax changes, will slow investor demand and we may also start to see a natural slowdown with house prices very high relative to incomes. and mortgage rates unlikely to fall. lower, ”Tuffley said.

ASB Bank said cost pressures were also increasing for a variety of reasons, ranging from supply chain issues, labor shortages and higher wages, to the supply of raw materials.  Photo / Supplied
ASB Bank said cost pressures were also increasing for a variety of reasons, ranging from supply chain issues, labor shortages and higher wages, to the supply of raw materials. Photo / Supplied

ASB predicted that house price growth would decline by more than half to 10% by the end of the year, and again to half to 5% by the end of 2022.

He said cost pressures were also increasing for a variety of reasons, ranging from supply chain issues, labor shortages and higher wages, to the supply of raw materials.

“Cost pressures have started to intensify significantly in New Zealand, and these are expected to be passed on to consumers over the next few months.”

The SBA expects inflation to reach 3% by the end of the year, the top of the Reserve Bank’s inflation range.

Tuffley said the RBNZ would move faster than expected to raise its official cash rate, with the ASB picking the first move in May next year, which would add further downward pressure on house prices.

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Source: www.nzherald.co.nz
This notice was published: 2021-06-10 22:20:35

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