I have posted in the past on how quantitative easing is pushing up assets prices. Here’s a comment from Tony Alexander on this topic:

“This is something new for New Zealand. Overseas experience shows that central bank buying of bonds and conversion of bond investors’ bond asset into a bank cash deposit places upward pressure on asset prices including shares and property. The Reserve Bank admitted in May that there is a risk their bond buying pushes up asset prices, and it is now commonly discussed that their actions are contributing to higher house prices – often in the context of a debate about their contribution to a widening of the wealth gap in our country.

Growing awareness of the impact of the RB’s actions is likely to be contributing to a desire by people to buy before the RB causes prices to rise further.”

Also bear in mind that the amount of money printing NZ is doing is substantially more than any other country in relation to our GDP, far too much in my mind, and very little, if any of it, is being invested in assets that will provide a return and grow the economy. The focus seems to be on giving money to groups who will support the current government’s election chances and not on how to support businesses and grow jobs.

Our debt will grow to 55% of GDP by mid 2024 from just 28% in 2019. The current estimates is that $100 billion will be created, from an initial estimate of $40 billion when we went into lockdown. So much debt with so little benefit. Money that could have gone into assets that would help grow the economy, create new jobs and save lives, like motorways and hospitals and the tech sector. Instead it’s just being given away.

As I have been saying for years now, expect house prices and rents to continue to rise.

John Kenel
Assured Property

#assuredproperty #housing #rentals #propertyinvestment