Via Stats NZ
Increases in borrowing, interest paid, and investment in housing by households and the private unincorporated producers sectors (sole traders, partnerships) suggest that New Zealand increased its international indebtedness through offshore borrowing to finance housing, among other things.
That is from their new Institutional Sector Accounts, which I’m going to spend a bit of time thinking about. The key thing to differentiate for me here is – were we spending too much building houses, or simply building up the mortgage in order to consume excessive amounts of non-housing goods. My impression is generally in the former camp, and I’m hoping that a bit of time looking at this data will give me a clearer idea of which view is more reasonable.
I continue to believe that any adjustment in the NZ economy will come through investment in housing, rather than through a large scale shift in household consumption (which if anything has been restrained in NZ). In this view we borrowed to build bigger houses, not to buy plasma TVs. So it will be interesting to see.