Auckland nears housing boom: Alexander

His latest weekly overview points out that many recent data releases have been weaker than expected: People are still controlling their spending and job numbers are falling.

He says the likelihood of an official cash rate cut has risen, but is still not very high, partly because the Reserve Bank does not want to push even more investors into the Auckland housing market.

“The housing market is rising already and will become a source of inflationary pressure from next year, so cutting rates now and encouraging even more aging investors to quit low-yielding bank deposits for residential property investment vehicles will not only hasten and enlarge the housing boom-bust but eventually destroy the wealth of many unsophisticated and unlucky people.”

Inflation is also likely to rise when construction spending accelerates.