Tower has recommended property buyers re-enter the NZ property market this year due to the prospect of rising inflation. We could not agree more, though with the following caveats:
1. NZ will experience stronger offshore buying and a stronger currency relative to EUR, JPY and USD, probably parity or worse with the AUD.
2. Inflationary pressures will be confined to relative productivity falls
3. Imported inflationary pressures will be minimised by a strong NZD
4. The origin of the NZ "inflation" will not be the NZ government debasement of the currency, but rather productivity losses and weaker cross-rates caused by debasement of the USD, JPY and EUR.
I would suggest that the appeal of property will be broad-based for these reasons. The main factors will be stronger rural incomes, as well as tourist and immigration driven investment.
No comments:
Post a Comment