New Zealand’s consumers price index (CPI) increased by 2.2% in the December 2024 quarter (when compared with the December 2023 quarter) and this annual increase follows a 2.2% annual increase in the September 2024 quarter meaning things seem to be quite controlled again now.
Prices are still rising, but at least not as much as previously recorded. The most recent peak was in the June 2022 quarter when the annual inflation rate reached 7.3% and that caused the Reserve Bank to hold interest rates at high levels.
While the CPI announced today was marginally higher than the Reserve Bank’s forecasts of 2.1% it’s unlikely to prevent a further 0.50% cut to the Official Cash Rate (OCR) at the next meeting on 19th February.
So What About Rents?
Annual rent inflation continues to grow at a consistent rate.
Between the December 2023 and 2024 quarters, annual rent inflation ranged between 4.2% and 4.8% which makes rent one of the larger contributing factors to the inflation figures announced.
These increases are driven by the fact that landlords are paying higher property rates and insurances, but it still hurts for the tenants that are forced to pay increasing rents when wage growth is low.
What options do tenants have?
Most people in New Zealand do not want to be tenants for too long, but it’s hard to buy a first home and so many feel stuck renting.
The reality is many might be able to buy if they only knew what all the options are.
Too often people just believe they are not able to buy, and so continue renting and paying someone else’s mortgage. They might be paying a similar amount to what a mortgage might cost (sometimes even more) but they have other debts, poor credit or only a small deposit and therefore believe that they cannot buy.
It may also be the case that they have spoken to a bank and been declined. The message is don’t go to the bank when they only have one option to offer. It’s always better to speak to an adviser and have choice and then makes sure that it’s a good mortgage adviser.
People should speak to someone that has access to all the options from bank mortgages, specific deals for first home buyers, non-bank options, shared home ownership and others.
There are options that many people are not aware of or have not considered.
