New Zealand’s central bank may have more scope to cut interest rates after the government joined the assault on soaring Auckland house prices, analysts said.
Finance Minister Bill English yesterday announced measures to more rigorously enforce taxation of capital gains on investment properties and ensure non-residents are included in the tax net. The move came less than a week after the Reserve Bank said it will require investors to have a 30 percent downpayment to get a mortgage on Auckland property. The changes take effect Oct. 1.
Policies designed to cool Auckland’s rampant market, where prices are rising at an annual pace of almost 17 percent, could embolden RBNZ Governor Graeme Wheeler to lower borrowing costs as falling dairy incomes threaten to curb economic growth. He said April 30 it would be appropriate to lower the benchmark rate from 3.5 percent if demand weakens and near-zero inflation starts to damp wage and price-setting behavior.