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The bigger picture, some important facts
Whilst I don’t claim to have any qualifications as an economist, it is important I believe to have some appreciation of what is happening globally and what flow on effect or influence this may have on our local economy. The state of overseas economies particularly where our major trading partners are involved does impact on us and has an effect on business confidence. Looking across the board, perhaps New Zealand is faring better than most?
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Trends remain encouraging
Trends remain encouraging
Late last year there was a significant upturn in business activity and this momentum has continued throughout the first quarter of 2012. Our clients generally have shown a noticeable desire to make financial decisions and to get on with their lives. This trend has been evident despite economic uncertainty being the order of the day globally and particularly in some European countries. Leading real estate agencies in and around Wellington have also enjoyed greater activity recently compared with the preceding 2/3 years.
So does this increase in activity represent a change in mindset that applies to all? Is it sustainable or is it merely a surge that may come to an abrupt end? From our observations, since the upturn became apparent in October/ November last year, this momentum has continued unabated. We have not witnessed months that have spiked followed by a period of reduced momentum. In fact, the business activity can be better described as being constant and definitely at a higher level than what the previous year or two had produced.
So what do the experts say on the subject? In reviewing the Official Cash Rate a month ago, The Reserve Bank Governor stated, “Inflation has settled near the middle of the Bank’s target range and inflation expectations have fallen. The domestic market is showing signs of recovery. Household spending appears to have picked up over the past few months and a recovery in building activity appears to be underway. That recovery will strengthen as repairs and reconstruction in Canterbury pick up later in the year.” A further review of the Official Cash Rate is scheduled for 26th April but changes (if any) are expected to be minimal.
Extracts from the National Bank’s February business outlook stated “NZ business confidence regathered momentum at the start of the year, with a pick-up in the construction sector leading the way. The report stated that 28% of survey respondents expect better times for the economy in the year ahead and that 44% of businesses expected a lift in residential construction related work. The Bank’s Chief Economist commented that the survey showed that 2012 had started in good cheer.”
The latest Home Affordability Report from Massey University indicated that homes are becoming more affordable across New Zealand but suggested that this trend may only be temporary and was influenced by historically low mortgage interest rates and a relaxed lending criteria by the Banks bringing more first home buyers into the lower end of the market.
These expert opinions tend to back our assessment that we are likely to enjoy a continuation of better times and reinforces the desire of Moneybox personnel to be part of any sustained growth and to assist our clients in meeting their housing and financial objectives. While our specialty is mortgage brokering, please don’t overlook the fact that we are also insurance consultants and welcome the opportunity of assisting anyone requiring financial services for home purchase or business acquisition and expansion. Give us a call free of obligation; we are here to assist you.