Hey Everyone! With all the changes in the market last week and we have started to see a larger rejection and difficulty around what seems like a never-ending hike of interest rates / the cost of living. Keep in mind that the Reserve Bank uses a very, very blunt tool (OCR) to control inflation and in the case of property, they work with very delayed data. So… there are bound to be some side-effects. It is like putting out a house fire and by the time the fire is gone, there are other things to worry about now.
We worry about inflation primarily around cost the cost of living. But are we really going to see a fair/proportionate drop in cost of living against the rising interest rates? Keep in mind a massive portion of the population have loans / mortgages, and in my situation, repayments have doubled, and the cost of living has also gone up.
Yes, I get this may just be a correction phase and we should just suck it up and let the banks/reserve bank continue to dictate the financial health of the population – but there has got to be better ways to avoid the endless ‘passing on’ of increased costs. It is a cyclic butterfly effect, where a business needs to charge more as cost of operation (staff/materials) have gone up, the consumer then needs to pay more for things… which means they need to earn higher income, which then also affects the company they work for etc, and it the cycle continues.
Global economies and inflation are far more complex than just simply changing cash rates... but for now, homeownership is more expensive than renting and home buyers continue to see their Kiwisaver balance & pre-approvals decrease.
Although this is a global issue that may seem bigger than us, we can still look at the efficiencies in our own little worlds. In our business we haven’t passed on higher costs, in fact we’ve opted to subsidise and provide more FREE marketing when selling, kept everyone employed, still delivered pay increases and continued to fund community projects to the best of our ability.
Yes, the market is hard right now, but if we continue to neglect the bigger picture and the wider wellbeing of our community, we will actually suffer more. Markets are dictated by human behaviour, so together if we look to work together, live simply, give more and expect less - we can hope to get our community back on track faster!
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