2024, the year that was.

Written By Kim Manunui

Coming into 2024 the only high was inflation at 5.6%, the OCR at 5.5% and floating mortgage interest rates at 8.6% and 1 year fixed specials at 7.2% with the expectation that this will all ease through 2024 and it did.

Better than expected we now have inflation in the last quarter at 2.2% so back in the target range of 1% - 3%, OCR at 4.25% and floating mortgage interest rates around 7.39% with 1 year fixed specials at 5.79%.

So we’re getting there … 2024 was a year of consolidating and easing, restrictive policy from the Reserve Bank to tame inflation as it had done since its peak in July 2022 at 7.2%, flat GDP growth which is expected to continue into midway 2025 and unfortunately some long standing businesses and processing plants closing their doors for the last time due to increased costs and flat demand and the cost of living crisis we all felt.

This all looks easy when you compare to just before the GFC in 2008 with the OCR hiked to 8.25% and floating mortgage interest rates at 10.9% designed to cool the then rampant economy with everything including housing going nuts, then the GFC hit … we all got through however and came out this side into some very good years right up to Covid and we will come out of this in a similar way.

As we all know Covid came along in March 2020, threw a spanner in the works and it all went mad and of course we’ve been recovering ever since.

2025 will be the year where we get back to pre-covid levels for a lot of things with all being well in the world, which is questionable in itself.

So pre-covid, floating mortgage interest rates were at 5.5% with fixed rates in the 4 – 4.5% range with the OCR at 1%.

We’re expecting by the end of 2025 the OCR being around 3.5% and floating rates around 6.5% and fixed rates around 4.5% which when you look over time is the ideal terminal rate with just the right amount of everything to keep things on an even keel and not going crazy in any direction. Complete conjecture of course but its looking likely it will be in that vicinity or a tad better.

House prices that went mad post Covid, came off their peak and have been settling at around halfway between their peak and pre-covid levels which is about where they would have been anyway without the influence of post covid demand that just went mad then fell off, which we all know was just a bubble that we hope we’ve all learned our lesson from.

So from here, we have a new year coming up which promises further easing with the next OCR announcement at 2pm on Tue 19th February expected to result in further drops, at least by 0.25% or maybe more with further cuts at each 6 weekly announcement and of course mortgage interest rates following as well as finance rates for vehicles and machinery as they dropped about 0.5% last month.

The Government has just announced the books are in dire straits and will be 2029 before they show a surplus and latest GDP figures showed 1% negative growth for a second quarter in a row which technically puts us in a recession again, no surprises there after the last 5 years of craziness but it will sort itself out eventually.

So we’re in for a bit of a slow growth period through to at least mid-way through 2025 where things may start to pick up … but that’s for another report. You can check out an article on it here which shows which sectors did what, thumbs up to agriculture - https://www.rnz.co.nz/news/business/537126/economy-back-in-recession-as-gdp-shrinks-by-1-percent

The great news is … all that higher interest rate stuffs behind us and with more in our pockets we can create demand by spending again which means more consumption, which means more production, which means more jobs, especially if we all buy local and support NZ made … plus we have the world economy in a much better place for export demand.

So in spite of previous quarters being slower, the last quarter once reported could show much improved figures from reports of seasonal spending and be out of it again. Recessions come and go and with green shoots appearing its sunny days ahead and time to THRIVE IN 25.

So have a wonderful Christmas and New Year and we’ll see you on the other side … keep an eye out for our socials and be sure to like and share and remember we’re open over the holidays for finance, mortgage and insurance enquiries, just hit the contact tab below 😊

Kim Manunui

Hi, I’m Kim and I work with a great team to help individuals, as well as small and not so small businesses get their message, product and services to the world using digital media and creating wonderful websites that don’t cost the earth.

I was born in Canada, and grew up around Vancouver and the mountains of British Columbia. My love of pristine environments led me to New Zealand and eventually to the mountains, lakes and rivers of the central North Island which is home. My family’s heritage is here, and it’s from here that Korio traverses the planet.

The digital world is never static and neither are we.

And I say ‘we’ because I work with an awesome group of talented people who I gather together as required to complete a project.  Whatever your business, not-for-profit or individual needs are we gather the best team to get the job done.

Collaboratively we are creative, share sustainable values and work hard for great outcomes because that’s the buzz of satisfaction that drives us.

If you have an audience and market to reach, we can make that happen. Creative design, words that work and smart behind the scenes stuff that cuts through the online noise. We’ll design your website and then build it. We’ll manage the content as well as all your hosting needs. We can handle your online advertising so you get noticed,
and we’ll manage your social media presence so you get the clicks, likes and engagement to grow your business. All within the budget you set, because none of this needs to cost the earth.  And the job doesn’t stop when your website goes live. We are your virtual business partner.

https://www.korio.co.nz
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