r/PersonalFinanceNZ • u/ReincarnatedCat • 4d ago
Housing How will this turmoil affect house prices?
Currently stock market indices are a sea of red and alarmingly this is seen as likely to continue. Many seasoned investors and advisors are really not sure what will happen. This time it is different it seems.
With interest rates unlikely to fall much now, an outflow of kiwis to greener pastures, rising unemployment and a shrinking kiwisaver, what do people see as likley for the property market over the coming year or 2?
Im predicting more falls, but have a bias as keen to buy in the near future. Would like to hear others thoughts.
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u/Ok-While-728 4d ago
Quality houses - ie family properties on 500sqm plus in good areas will sell well. Other stuff will be challenging, I certainly wouldn’t want to be trying to bail out of a newish build townhouse right now.
If you are buying somewhere to live, just find something you like and do it. Time in the market always beats timing the market over the long term.
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u/Longjumping_One_9164 4d ago
Yeap this exact scenario, even in the darkness of 2024 the freehold family homes were continuously selling for good money. It was townhouses, worse areas and regions that really struggled.
Personally I think we are going to get more cuts. Export may slow down, which reduces demand so requires more stimulus to sustain inflation.
We are getting closer to neutral rates and in Auckland City I have seen many good properties go for well over 2021 CVs. It's pretty eye watering.
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u/Fellsyth 4d ago
I don't see how we would logically get more cuts unless the RB stops following their mandate. If anything the world should expect to see stagflation where we both have high inflation and a reduction or freeze in growth while the world realigns itself to the new norm. We may be a bit insulated from it due to us not putting in place our own tarrifs but I suspect the overall drop in productivity will still hit us anyway. But yeah, unless inflation craters it doesn't make sense, based on what they are meant to focus on, for a reduction to occur on the face of things.
The biggest ? Is how exchange rates respond as how this impacts us in real terms is of more interest than nominal shifts. If you look at the tarrifs the idiot put on China in his first term the impact has normalized to very little other than long term shifts in exchange rates.
What I have found odd in this sub is the focus on nominal interest rates and only that. Sure it increased my nominal repayments but the inflation over 2020 - 2024 ate a lot more of my principal in real terms than the increase I rates cost me in nominal. Like we are talking an increase of maybe $15k increase in nominal repayments but a $200k reduction in real value of that debt.
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u/NotGonnaLie59 4d ago edited 4d ago
Good point, although I don’t think everybody got payrises equal to the 2020-2024 rate of inflation, which naturally leads them to care more about nominal
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u/Longjumping_One_9164 4d ago
The biggest thing is what has happened to swap rates, they've already unwound meaningfully because of the risk to demand in totality.
Also the nominally vs. Inflation based reduction is great ij theory, but what has happened to wages versus inflation. Majority of peoples spending power has likely reduced. So while the debt has reduced in real terms, so has earning or saving power (you may have beaten individually though).
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u/Fatality 4d ago
If you are buying somewhere to live, just find something you like and do it. Time in the market always beats timing the market over the long term.
Guessing you haven't seen the statistics that show most of NZ can't even afford the deposit
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u/FickleCode2373 4d ago
I like this take. Looking at market statistical averages is only mildly useful...
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u/Relative_Drop3216 4d ago
Town houses will be the biggest rip off to buy, barely any land but squashing them all in with no privacy or yard space. Some are building just a house in a small space with a walk way and get owners to park on the road. Nah fck that those ones won’t hold their value in the long run. Then you have those ‘terrace’ apartments when really they are just modern flats, you are living wall to wall with your neighbour and can hear them through the wall. The living space is like a hallway so narrow, fetching 800k to live like you living inside a book shelf.
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u/catlikesun 4d ago
I’m looking to buy a townhouse because they are new and warm, unlike most of the housing stock at the same or a higher price point.
People aren’t stupid, they buy what suits them
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u/ReincarnatedCat 3d ago
I agree, suits my needs perfectly as a low maintenance lock and leave. 10 year warranties and cute and cosy.
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u/JPR0627 4d ago
Agree, in our area of the north shore there are heaps of 4 bed town houses and very few 4 bed freehold quality homes, those that are on the market go quickly for really good money. I kinda think house price averages in Auckland isnt painting a true picture as the townhouses are dragging everything down. If you think you’re getting a bargain on a quality freehold home you’re in for a rude surprise
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u/Longjumping_One_9164 4d ago edited 4d ago
Yeap, the problem is people are looking at broadband based indexes, not the areas and segments within those. I have not seen one report on what is happening on dwelling or land type.
In the last weeks I have seen close to us properties go for streets records, +15% to +20% versus 2021 CVs.
Auckland specifically is the murkiest because there is a huge array of intensification happening, with a huge variety in areas. Even in mid 2024 for family homes in central suburbs it ws crazy the money things were selling for. In early 2025 it has kicked on even further due to the forward looking nature of the market.
People want it to not be true for various reasons, but even in broad index in the past quarter and month you can see it's turned.
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u/JPR0627 3d ago
We just paid 8% over CV for a house. After following the market for 6 months, following auctions, multiple opens homes I think we paid fair market value. It’s a recently renovated, 4bed, 250sqm home on 800sqm freehold section with a pool on the shore. In this area there have maybe only been 4-5 decent examples under the 2mil mark listed in the last 6 months. All have sold for around or above CV with other lesser examples selling above cv. Houses with major issues that aren’t easily solved, ie weird layouts, bad access, flood plains. These will go well below cv but you’re getting what you pay for in this market
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u/Longjumping_One_9164 3d ago
Yeap not surprised, there are so few houses that have had any sort of maintenance or renovation done that hit the market.
Just endless properties with 100's of thousands of deferred maintenance. Of course those properties are hardly turning over. But ones that have, people recognize and are more than willing to pay for.
Nice job and definitely sounds like fair value considering area!
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u/Inspirant 4d ago
Turmoil in the stockmarket just makes investors turn to property.
Good standalone family homes that are freehold fee simple will hold value.
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u/x2lazy2die 4d ago edited 4d ago
aren't those historically very tied together? the hedge was always healthcare, or commodities where they have inherent value or just still necessary despite economic downturns. 2008 was a housing crisis but the stock market obviously got dragged along with it because the world isn't in isolated bubbles. house values is pretty much speculative nowadays and tracks closely with the stock market. outside of recession/downturns with very attributable causes (e.g. mortgage in 2008 and .com [not mortagage] in 2000s the market has been positively correlated more than negatively. the most recent, covid, saw a quick drop in correlation in a few months to no correlation to back to a strong correlation by december 2020 of the spx and Case-Shiller Home Price Index. that being said, the spx has outperformed the home-price index at that time.
the stock market is heavily overpriced, so is the housing market. historically the stock market still had better returns and how they correlated in previous downturns and recessions is still questionable
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u/grebic 4d ago
US fed will cut their rates soon. Swap rates will fall. OCR will cut here. Interest rates will decrease. Housing prices will increase. That’s my “bet”
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u/Fellsyth 4d ago
Alternatively, goods increase in costs aka inflation and rates go up or hold still. No idea why you assume US Fed would cut rates after announcing they are putting up the cost of basically all their imports by a minimum of 10%.
I guess when we desperately want rates to drop everything that occurs signals a drop in rates.
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u/Apprehensive-Hand-16 3d ago edited 3d ago
I don't think rates going down is as unreasonable as you claim. Short term inflation will definitely go up. At some point though the price hikes across the board and decrease in trade will discourage global growth making it more likely to see central bank stimulus.
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u/Evening-Recover5210 4d ago edited 4d ago
Why would they cut their rates after just fueling inflation massively?
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u/okisthisthingon 4d ago
Rinse and repeat aye mate. What choice do the powers at be have to keep the engine running.
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u/Background_Pause34 4d ago
U might be waiting till Powell leaves in May 2026. Their unemployment numbers look too good to cut for now. If you follow the btc power law, its predicting market top end of this year and bear next year. Then the next fed chair will cut.
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u/skiwi17 4d ago
I don’t see this current situation going on for too long. I believe Trump is too egotistical and the last thing he’d want is be known as the president who was the downfall of the US markets.
I suspect the tariffs are either A) being used as a leverage tool and most will probably disappear in the next few weeks or B) he’s going to implement huge tax cuts in the coming weeks and potentially wipe out income tax for a large portion of the US population. He’ll falsely proclaim that he’s getting other countries to pay for their taxes instead (remember the wall that Mexico was going to pay for?) and portray himself a hero of the American people.
Either way, we’ve been through way worse crises than this.
So in answer to your question, I don’t see it affecting the NZ housing market too much - just my thoughts.
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u/vontdman 4d ago
I doubt this - he has indicated a 2 year timeframe on tariffs.
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u/QuriosityProject 3d ago
since when has what trump has said he's going to do and what trump then proceeds to do ever had more than a passing correlation?
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u/Fun-Replacement6167 4d ago
This seems like copium tbh. Literally no world leader or commenter is acting as if these tariffs will get reversed in a few weeks.
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u/Waste_Town4102 4d ago
And if even if they do get reversed there’s no doubt been some reputational damage which will see other countries less likely to want to deal with USA over the next few years at least
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u/x2lazy2die 4d ago
a - i personally think that he has over-leveraged his power. yes the world would've bent the knee if the demands wasn't so outrageous and unjust but the perception is that he can't be trusted. the only reason why i can't be completely sure of this is because countries CURRENTLY use it as world's reserve currency, which after this would need reconsideration and allow for another country to perhaps take its place.
b - tax cuts would only be PR because well, the country needs money to run and they r already at massive deficits. i don't think the public can b fooled, especially with his approval dropping even before the tariffs
*edit but who knows? he got re-elected after jan 6th and the various indictments
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u/miss_demean0r 4d ago
If you look at previous stock market crashes, people tend to withdraw money from stocks and invest in housing. So I would expect a significant increase
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u/croutonballs 4d ago
exactly, who wants to pile money into stocks right now? housing looks comparatively better since is already towards the bottom of its downturn with potential upside
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u/SippingSoma 4d ago
I don’t think it will impact house prices.
House prices will continue to fall though. Affordability is still very broken, especially with increased cost of from food and energy.
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u/Ramazoninthegrass 4d ago
Firstly, ten percent tariff for New Zealand exports will mean little unless we, the nz suppliers, are forced to pay for it via rebates by the people they supply to. In all honestly, it will not increase the price of processed beef to the US by much, as an example, is very little given how under valued the nzd is to the usd. What it does to our main trading partners and who it effects demand is uncertain. They may even dump cheaply products on other markets. We will just have to wait and see. I certainly can see why the US wants to take on protected markets like Europe and China. Let’s see how it shakes down but not as concerned at the minute and don’t believe will result in real changes in house prices, as there is already lack of demand here already, that trend is well established.
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u/SippingSoma 4d ago
We got a pretty good “deal” as far as the tariffs go.
I think 10% is likely to be the base rate to export into the USA going forward. Trump will use the more punitive rates to negotiate barriers down in other markets.
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u/KiwiPrimal 4d ago
Compared to 90% of other countries our tariffs are bugger all. It’s going to be cheaper for the U.S. to buy our products than many others, why aren’t people seeing this?
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u/Greenhaagen 4d ago
Yeah our competitors got given higher tariffs than us. Our exporters must be stoked. They can charge 10% more and be on par with Aust and Europe new cost.
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u/KiwiPrimal 4d ago
I know of a few specialist manufacturers who are planning trips to the U.S. now leveraging off what happened last week.
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u/Levitatingsnakes 4d ago
Anyone who bought an overpriced townhouse will feel the pain and cry often. Anything with land in a decent area will stay solid.
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u/Levitatingsnakes 4d ago
I know a couple bought a place for 930k in 2023. KO tenants moved in around. They got told it was a foot on the ladder. It’s been on the market 3 months and the best offer was 540k. Seems more like foot on the throat
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u/mrwilberforce 4d ago
People seem to forget that one of the reasons house prices took off in the early nineties was silent and boomer generation fear of markets after the 87 crash. Of course then housing prices were at a much lower base.
If people fear the markets then they will invest elsewhere.
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u/GrahamGreed 4d ago
Given one of the levers governments have is to drop interest rates, it could actually push house prices and economic activity up a bit as mortgage rates and commercial lending become more "affordable".
No crystal ball here unfortunately.
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u/Most-Opportunity9661 4d ago
Governments do not set rates, reserve banks do.
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u/okisthisthingon 4d ago
And they are independent, regardless of whether or not people believe the central banks are controllled by politicians.
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u/Bikerbass 4d ago
Look at history to see what the future will bring.
What we are seeing is probably the crash of the American empire as the world’s leading currency reserve, and probably the rise of China being the world’s leading currency reserve. This mostly affects the country that’s crashing, and everyone else just moves on with their lives.
And if you look at house prices here in NZ there’s a fairly clear picture that every 10 years house prices double. In that 10 year period you get a to a point where prices peak, and crash a bit, and then spend the rest of the time increasing in valve.
We have had the peak and the crash…. Soo based on history I’d expect prices to increase.
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u/Richard7666 4d ago
Who's gonna be buying them though at double what they are now? Obviously wages will increase over that timeframe too, but I wouldn't think the house price to income ratio has much more wiggle room.
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u/Bikerbass 4d ago
Those who can afford to fight over those prices.
We need to consider a lot more apartment buildings if people want cheaper housing. Along with actual public transportation vs the crap we have now.
That or turn some of the smaller Towns into big cites and force people to move out of the big cities.
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u/eskimo-pies 4d ago
Who's gonna be buying them though at double what they are now?
Developers will buy them to build medium density dwellings.
If a residential section can accommodate four townhouses that each contain dual income households then eight individual incomes are now working together to purchase land that once supported a single wage earner in your grandparents’ generation. The impact on house prices should be obvious.
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u/NakiFarmHER 4d ago
I don't think there will be much of an issue, this post is more in the alarmist basket rather than grounded in any kind of logical thought.
Personally I think you'll find markets will rebound in the next 6 months - house prices will much remain the same as where they are now. Once the US gets over the shock of imports and begins to utilise buying American made again and the rest of the world adjusts to trade as usual; not much will actually change.
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u/HappyCamperPC 4d ago
While the 10% tariff on NZ exports to the US might not impact us much, the 34% tariff on China's exports to the US and the resulting 34% tariff and export ban of rare earth metals from China will. This will probably lead to a massive slump in China, our biggest export market, and reduce demand for our products, setting the scene for a contined recession here.
Inflation in the US will inevitably go up, resulting in increased interest rates and a recession there, too.
The wealth destruction caused by the stock market crashing on top of reduced economic growth will inevitably flow on to the housing market.
Or Trump could change his mind, scrap the tariffs, and house prices go up.
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u/Apprehensive_Head_32 4d ago
Houses won’t be rising anytime soon until the country can support higher wages and growth. We have already reached the peak of borrowing for DINKs.
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u/LearnRD 4d ago
People keep saying, 'This isn’t the bottom yet,' or 'The tariffs have just started,' or 'The worst is still ahead.'
But the market has already taken those views into account in today’s prices.
For the stock market to go up or down from here, it needs NEW better than expected news or worse than expected news.
We cannot predict what is going to happen next in the stock market and property prices. You can only based on your needs. If you need a house now, buy now.
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u/AdInternational1672 3d ago
This time it’s different in the market. This time for real though. 🙄 Keep buying, shares will recover… like every other time.
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u/SkinToneChixkenBone 4d ago
I'm probably wrong but with my uneducated answer:
Land Limited, People baby all time
Land more needed. People Fight buy Land
Land more and more expensive
No new Land, More more baby
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u/eskimo-pies 4d ago
You’re not wrong. You’re speaking to a fundamental and unavoidable truth that most people never fully understand.
Our economy and population are growing and will continue growing into the future. This means that more money and more people will be competing for each unit area of land in the future - and the price of the land will continue increasing. It cannot be avoided.
Demography is destiny.
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u/ReincarnatedCat 4d ago
Using the word baby prompted me to add that the NZ birthrate is 1.6, whereas 2.4 is the number needed to sustain a population.
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u/Evening-Recover5210 4d ago edited 4d ago
There will be no problems sustaining the population. It will never stop growing with immigration.
Funny how people are worried about human population growth when we’ve gone from 2 billion to over 8 billion in just 100 years.
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u/SkinToneChixkenBone 4d ago
where there is land there will be people to buy it.
especially a place like new zealand where there is less involvement in wars and issues of the world.
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u/spoollyger 4d ago
Stocks go up stocks go down. No one complained about it when the stock market fell by more during the pandemic.
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u/SurfKing69 4d ago
No one complained about it when the stock market fell by more during the pandemic.
I mean they definitely complained about it haha
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u/mrwilberforce 4d ago
That is because the central banks flooded the market with money straight after collapse. Markets were fully recovered in three months.
Now - I wouldn’t put it past the Fed to bail this out as well but the reality is that all economies have just got a lid on inflation and have little room to move given the central purpose of monetary policy.
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u/Natural-Oven8889 4d ago
What? Seasoned investors know if you haven’t sold by now you hold and it will recover. How soon who knows but eventually it will recover
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u/PerryKaravello 4d ago
I was talking to a risk assessor for one of the big four today and he believes the Reserve Bank will have to reverse its policy to protect against coming inflation caused by Trump’s misadventures.
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u/butterchickenmild 4d ago
I don't think interest rates are unlikely to fall here as a consequence of this. If anything, it could stimulate other interest rate drops. (1) to encourage growth to mitigate and associated drops in NZ GDP, and (2) that seems to be where the Fed is going, and we usually follow closely after.
Also, to your point about investors - you are right, confidence in the markets has plummeted. People looking to invest might find brick and mortar investments even more appealing, pushing up prices.
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u/Lesnakey 4d ago
If trump succeeds in undoing global supply chains and global trade, everything is currently over-valued.
But he won’t succeed. Unlike previous restructurings of the global economy, there is no crisis to convince voters that the pain is necessary.
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u/Independent_Role4618 4d ago
We will know what happens with OCR this week. I hope the drop is bigger than previously expected. But lower interest rates will inflate prices over time.
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u/BrowneAction 4d ago
Should be another quarter of negative growth in the US in Q2 which means recession. 2 rate cuts looking more like 3 now, stagflation, and then a 2008 type housing crisis late in the year. What impact it has here on housing is hard to say. The sovereign debt crisis everywhere is getting worse every year. I see rate cuts in Switzerland down to 0.25 with negative 10 year bond rates, which generally means other nation reserve banks tend towards similar situations. Ie the outlook is dire. Recessions are cyclical? If there's not a big one now then when it does happen later it will be huge
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u/Quirky_Chemical_5062 4d ago
There are so many variables at the moment, globally and locally. NZ house prices are very high and have been for a long time. What's happening now could cause a house price decline. It really all depends on if the tariffs cause inflation. If it does, then things will really get bad. I don't think it will cause any lasting inflation, but the lack of spending will cause a recession and a decline in prices anyway.
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u/Fatality 4d ago
Devlue the NZD so it's even cheaper for overseas investors to get their lawyer or nephew to buy on their behalf.
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u/Most-Opportunity9661 4d ago
Positively, or perhaps negatively. Or maybe not at all.