tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Saturday, December 21st, 2:19PM

News

rss
Latest Headlines

Rising rent and food prices impact households

Rents are rising at the fastest pace since 2008.

Wednesday, September 14th 2022, 12:09PM 1 Comment

Average rents rose by 0.3 per cent last month, but in annual terms, rents are running 4 per cent higher than August last year.

This is adding pressure on many households’ budgets, says Satish Ranchhod, Westpac senior economist.

He says while August’s rise in rents is not a massive increase on its own, the winter month usually has more muted rental gains.

“Landlords have been highlighting strong increases in operating costs. Many are also grappling with increases in mortgage costs and the related fall in property values.”

Ranchhod says combined, these conditions point to the risk of bigger than usual rent increases as the country heads into the summer months when many rentals roll over with larger increases in rents.

Food costs rising

Adding to the pressure is the cost of food, which is also continuing to rise at a brisk pace.

Food products are up 8.3 per cent over the past year. In part, that’s been related to earlier poor growing conditions which have contributed to particularly large increase in the prices for some fresh produce.

However, the pressure on food prices has been widespread, with shortages of many items globally, as well as large increases in production costs including fuel, fertiliser and packaging materials.

Combined, rents and food prices account for about 30% of the consumer price index (CPI).

“The strong gains seen in these prices signal a sizeable squeeze on many households’ buying power,” says Ranchhod.

“That pressure will be particularly pronounced for those households on lower incomes, who tend to spend a larger share of their incomes on necessities.”

Ranchhod says the strength in the rent and food prices also indicates upside risk to the bank’s existing forecast for a 1.4% gain in CPI in the September quarter. The RBNZ is also forecasting a 1.4% gain.

“While inflation is likely to remain strong in the near term, annual inflation is set to trend down over the coming year. While prices for many goods (especially imports) are still rising, they are not rising at the same rapid pace as over the past year. And in the case of fuel, prices have dropped back in recent months.”

Falling house prices

“More importantly, signs of cooling domestic demand are mounting - including the soft housing market data, where the rot has set in.”

House prices fell by another 1.4% last month - the ninth monthly fall in a row. House prices have now fallen 9 per cent from their peak in November last year.

The drop in prices continues to be heavily centred on Wellington in Auckland.

Prices in the capital were down 3.6 per cent last month alone and have now fallen by a total of 17 per cent. Similarly, prices in Auckland have dropped 14 per cent since the November peak.

The drop in other regions has been much less stark, with prices ‘only’ down around 5 per cent from their earlier peaks.

Ranchhod expects demand will continue to cool over the coming months. That will help to dampen domestic inflation pressure, and in turn will cap the rise in interest rates from the RBNZ.

Tags: housing market

« Just a 1.1% increase in house values last monthValues plunge in more than 80% of the country’s suburbs »

Special Offers

Comments from our readers

On 15 September 2022 at 12:54 am Peter Lewis said:
So the widely condemned and much maligned increase in rents is just half that of food.
So which should be capped and controlled?

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • The good guys get told off
    “I can't quite reconcile the rationale, or lack thereof, with the comments so far. Pathfinder were found to have made misleading...”
    1 day ago by John Milner
  • The good guys get told off
    “As a follow on to this conversation: I'm assuming that the Regulator will be consistent by 'naming and shaming' the other...”
    2 days ago by Pragmatic
  • The good guys get told off
    “FMA does not understand the consequences of these type of actions A number of Insurance Companies were taken to court and...”
    2 days ago by LNF
  • The good guys get told off
    “Superlife was censored for using unregistered salespeople however what is not commonly known was that the FMA were aware...”
    2 days ago by Patrickdiack
  • The good guys get told off
    “FMA executive director, Response and Enforcement, Louise Unger said:... Unger was appointed to that role in April of this...”
    3 days ago by Aggressively_passive
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 4.94 - - -
AIA - Go Home Loans 7.49 5.79 5.49 5.59
ANZ 7.39 6.39 6.19 6.19
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.79 5.59 5.59
ASB Bank 7.39 5.79 5.49 5.59
ASB Better Homes Top Up - - - 1.00
Avanti Finance 7.90 - - -
Basecorp Finance 8.35 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.54 - - -
BNZ - Rapid Repay 7.54 - - -
BNZ - Std 7.44 5.79 5.59 5.69
BNZ - TotalMoney 7.54 - - -
CFML 321 Loans ▼5.80 - - -
CFML Home Loans ▼6.25 - - -
CFML Prime Loans ▼7.85 - - -
CFML Standard Loans ▼8.80 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.69 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 6.95 5.79 5.59 5.69
Co-operative Bank - Standard 6.95 6.29 6.09 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 5.99 5.89 -
First Credit Union Standard 7.69 6.69 6.39 -
Heartland Bank - Online 6.99 5.49 5.39 5.45
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society ▼8.15 ▼6.50 ▼6.30 -
ICBC 7.49 5.79 5.59 5.59
Kainga Ora 7.39 5.79 5.59 5.69
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.25 6.69 6.49 6.49
Kiwibank - Offset 7.25 - - -
Kiwibank Special 7.25 5.79 5.59 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 7.94 5.75 5.99 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.49 6.95 6.29 6.29
SBS Bank Special - 5.89 5.49 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 4.94 4.89 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity ▼9.39 - - -
TSB Bank 8.19 6.49 6.39 6.39
TSB Special 7.39 5.69 5.59 5.59
Unity 7.64 5.79 5.55 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 7.70 5.95 5.75 -
Westpac 7.39 6.39 6.09 6.19
Westpac Choices Everyday 7.49 - - -
Westpac Offset 7.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 5.79 5.49 5.59
Median 7.49 5.79 5.69 5.69

Last updated: 18 December 2024 9:46am

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com