Brokers report thinner pipelines as election uncertainty stalls decisions
New Zealand businesses are putting decisions on hold ahead of the 7 November general election, and mortgage brokers say the slowdown is reaching their pipelines. Meanwhile, concern about interest rates is climbing again, according to the latest Mint Harvey Cameron Group Business Insights survey by independent economist Tony Alexander (pictured).
The October survey drew 288 responses from a wide range of sectors. Politics topped the list of concerns for the year ahead, followed by the general economic outlook and customer demand. Many respondents said projects would stay on hold until there was greater clarity on the uncertainties in play, the election chief among them.
Brokers feel the squeeze
Comments from the mortgage broking sector painted a subdued picture, with a slow housing market feeding directly into fewer loan enquiries.
“Very sluggish property market resulting in fewer sales, therefore fewer potential mortgages required, therefore fewer people looking for help to get those loans,” one broker said.
Another broker warned that pressure was falling hardest on newcomers to the industry.
“Battling brokers are getting desperate, those that are relatively new entrants have it very hard,” the respondent said.
Residential real estate respondents described a similar standoff, with buyers and sellers holding off.
“Upcoming election has people not willing to make a decision,” one residential real estate respondent said.
Official figures support those accounts. Real Estate Institute of New Zealand (REINZ) figures show September house sales fell 11.6% year-on-year to 5,752, while the national median price eased 2.3% to $755,000.
Not every survey points the same way, though. A Trade Me survey of more than 2,000 active buyers and homeowners found only 20% of sellers and 22% of buyers saw the election as a primary factor in their decisions.
Rate concerns return
Concern about the economy itself has eased slightly. Alexander said this was the fourth such easing since the survey began in March 2023, and sustained growth had yet to emerge. At the same time, worries about interest rates have risen firmly.
The rise comes as rates move higher. The Reserve Bank lifted the official cash rate (OCR) by 25 basis points to 2.75% on 2 September. Westpac’s latest weekly commentary notes markets are pricing an 83% chance of another hike at the 28 October review, with fixed mortgage rates for two to five years now above 5%.
Businesses remain broadly upbeat about revenue, with a net 50% expecting higher takings in 12 months. Alexander said it remained to be seen whether improving growth would keep outweighing rising rates.
Pricing plans offer some comfort for now. Of those surveyed, 39% plan to raise prices over the coming year and 43% do not, leaving a net 4% with no plans for increases.
Alexander cautioned, however, that rising global inflation pressures could change that, writing that “...the risks for interest rate increases could easily be greater than signalled by our indicator here.”
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