New Zealand Housing Bubble At Risk From RBNZ Super-Hawks
The knives are still out for policy doves globally, notwithstanding the first nods to a potential "pause" in the Fed's hiking cycle in September. New Zealand on Wednesday ramped up its "path of least regrets" strategy, which the central bank describes as a preemptive fight to head off rising inflation expectations. RBNZ's 50bps move at the May meeting was the fifth straight hike and the second consecutive oversized increment. Last month's 50bps move was the largest since 2000. We now have two
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Unlike in the US, it is extremely (almost impossible) difficult for a non-New Zealander to purchase a home in NZ. Therefore, any reduction in the number of NZ nationals who are financially qualified to purchase a home will likely result in a much larger drop in housing prices in NZ than I would expect to see from similar conditions in the US- due to the relative easiness for foreigners to purchase real estate in the US.
I have read that foreign buyers account for about 5% of the existing US home sales. Obviously, that percentage is much higher in “desirable” housing markets and almost non-existent in other (non/less desirable) housing markets.