Economy / Housing

Expert analysis: low interest rates vs soaring house prices

09:08 am on 15 April 2021

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The run of low interest rates continues with the Reserve Bank yesterday, as expected, holding the official cash rate at a record low 0.25 percent. 

The central bank says its bond buying programme - a means of printing money -  and its cheap loans to banks will continue unchanged, and it's ready to cut the official cash rate if needed.

The Reserve Bank's bond buying programme, of up to 100 billion dollars, is its key means of supporting economic stimulus alongside low interest rates, a strategy matched by central banks around the world. 

But the huge stimulus in response to the pandemic is also driving up asset prices such as real estate and shares, severely impacting the cost of housing. 

Kathryn speaks with Michael Reddell, the former Reserve Bank economist and Dr Michael Rehm, senior lecturer in property at the University of Auckland Business School.

The Reserve Bank of New Zealand Photo: RNZ / Alexander Robertson