Tariffs. A small word that has put fear into just about every market in the world. President Trump’s erratic application of tariffs and his constant chopping and changing is causing unforeseen panic and concern.
And it is possible that tariffs will impact the property market here in New Zealand.
One of immediate impacts will be on inflation. After years of hard work by the Reserve Bank inflation her has fallen back from its peak of 7.7% to currently 2.5% – which falls within the banks target range of 1-3%.
As our businesses struggle with the impact of tariffs and struggle with increased costs it is (almost) inevitable that increased costs will be passed onto consumers locally. A market downturn may result in another round of unemployment.
Higher inflation may result in the Reserve Bank once again resorting to higher OCR levels in order to cool spending. Mortgage rates may increase again placing further hardship on mortgage holders.
A possible benefit to property investors is that such a scenario may make potential home buyers wary of economic instability and they will remain as renters for longer.
This is a sad scenario. But it is just that. A scenario. Something for you to bear in mind as we move forward. Monitor global economic shocks and watch how the country responds. Sorry to be negative at a time when we all are looking for a boost.