Consumer confidence at the end of 2021 weakened across three surveys, with a recent 1 News Kantar Public poll showing the worst result in nearly 14 years
Households eager to spend have boosted the New Zealand economy in the past two years, but they’re now under pressure and may not bounce back to the same extent as Omicron enters, Infometrics says.
In 2020, households’ worries about their financial situation were mitigated by rapidly declining interest rates and a fairly quick shift from lockdown back to something approaching normal.
Now, consumers are grappling with a faster-than-expected lift in mortgage rates, significant price increases for other household essentials such as fuel and food, and concerns about the continuing nature of the pandemic and living with Covid-19 in the community, Infometrics chief forecaster Gareth Kiernan said.
Consumer confidence at the end of 2021 weakened across three surveys, with a recent 1 News Kantar Public poll showing the worst result in nearly 14 years.
New Zealanders might be more risk-averse than people overseas, having avoided widespread community outbreaks of Covid-19, and less willing to go out as the virus became endemic he said.
House price growth was likely to slow to 4.5 per cent by the end of the year, with mortgage rates expected to rise to a similar level, Kiernan said.
The softening in house prices after a jump of 27.6 per cent over 2021 according to Corelogic, and a 28 per cent increase according to QV, was expected to be the result of more houses being built and changes to the Credit Contracts Consumer Finance Act that took effect on December 1.
Changes to the Credit Contracts and Consumer Finance Act appear to have been an unintended catalyst for the Government’s sought-after housing market slowdown, Kiernan said.
He said: The apparent credit crunch caused by these changes has proven to be more effective than tougher tax rules for investors, increased loan-to-value ratio requirements, or rising interest rates.