Article: Our House = Our Home

Market Update with Carie TownleyMarket Update with Carie Townley

NZ house prices: the latest
According to the folks at Quotable Value (QV), residential property prices in 2018 have, for the most part, continued their onward and upward trajectory – albeit more slowly. In the year to April, prices rose 7.6% to average $679,000. Houses in and around Auckland, which has led NZ gains for the past five years, were not so fortunate, with a 0.3% drop to $1.05m. Ouch!
National prices are still rising but not with quite as much gusto. The reasons for the slowdown, say QV, are a mix of the usual hibernation for the approaching winter, and jittery investors watching anxiously from the sidelines. Interestingly, the national rise is now being driven in regional centres as main centres come off the boil.

The RBNZ’s pressing challenge
The longest run of rates inertia continues with the official cash rate unchanged at 1.75%. The broad story remains the same: the economy and labour market are going forward but price and wage growth are going absolutely nowhere. Ergo, not much reason for the RBNZ to raise rates in the short term. In fact, given NZ’s continued low inflation environment, it’s quite possible we won’t see a rate rise until 2019.

Unemployment, you’re hired
Unemployment has been falling steadily for the past few years, and just fell for the fifth consecutive quarter, to 4.4%. That’s pretty-much full employment, and the lowest it’s been for a decade.
So, what’s wrong with this picture?
The script should read … higher employment shifts power to workers because employers scramble to hire and will pay more for good people (the immutable laws of supply and demand in action). With more income, comes more disposable cash to spend on goods and services, which eventually pops the inflation genie out of its bottle, rates rise, etc., … end of story. Unfortunately, our economy isn’t following the script. Despite more demand for the supply of workers, wage growth is MIA. It rose a mere 0.3% in the quarter and barely kept up with inflation. And this, BTW, is a global phenomenon, with the US, UK, Australia and Japan facing the same challenge. It’s partly due to automation, underemployment, and the timeless march of globalisation. But, primarily, a debt-laden workforce, in fear of being shown the door if they ask for a pay rise, isn’t doing too much spending. And, like its counterpart across the ditch, the RBNZ will only raise rates if the inflation genie starts getting restless. Collectively, this points to a steady-as-she-goes holding pattern on rates for some time yet.

What happens in an annual review with your client?
Once settlement is done and dusted for a client, an adviser will reach out to the client for an annual review each year. The review is conducted to check that the loan that was originally set up for your client is still right for their current situation and is helping them meet their financial goals.
What does an adviser look for in a client’s annual review?
• Has the lender changed the client’s interest rate?
• Is the client’s interest rate still competitive?
• Has the client’s situation, needs or requirements changed?
• What are the client’s future plans such as starting a family, upgrading their home
or buying an investment property?
• Are the current loans features being used effectively?
• Is the client going through any financial hardship?

An adviser doesn’t only look at your clients current loans but can also help them with:

• Appropriate insurances to protect themselves, their family and their assets if
something was to happen.
• Car and personal loans.

Although an adviser will conduct a review of your client annually, an adviser is still on hand to help your client at any time. As always, the advice that is given to your client is obligation free, so if they prefer to stay with their current lender and loan that is no problem at all. If you have any questions about the process or would like to know more, don’t hesitate to get in contact with me.

For a personal mortgage reduction analysis to identify the strategies that are in your best interest, contact Carie today on 0275 228 940, email .(JavaScript must be enabled to view this email address).

 


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