Low-interest rates

PHOTO: Westpac chief economist Dominick Stephens 

An economist says low-interest rates are driving the price of housing and other assets up, with the Reserve Bank (RBNZ) last week saying property prices falling would be New Zealand’s “worst-case scenario”.

RBNZ chief economist Yuong Ha last week referred to house prices falling as a “deterioration of wealth”, amid revelations a three-bedroom house in Auckland’s Sunnynook had sold for $2.33 million on Thursday – more than double its capital value.

The RBNZ is preparing to implement never-before-used measures to drop interest rates for loans like mortgages even lower.

“Assets – of all kinds – are going up all around the world,” Westpac chief economist Dominick Stephens told The AM Show.

“Why’s it all going up? It’s because Central Banks have reduced interest rates – it’s almost free to borrow money.”