ANZ Property Focus

The housing market continued to warm in February with house prices posting another monthly gain while seasonally adjusted sales volumes returned to growth. The strong flow of new listings onto the market continued, and the relative supply-demand imbalance is likely to restrain house price growth in the near term. We continue to expect price momentum to remain sluggish over coming months as a soft labour market weighs on household confidence. That said, there are early signs of stabilisation in the labour market, which should support momentum later this year, though for now households remain in a cautious mood.

The housing market started 2025 where it left off in 2024. House prices lifted modestly in January; sales volumes dipped but the upward trend remains in place. Supply is responding to firmer demand: new listings surged in January. That will keep the level of stock on the market elevated and restrain house price growth in the near term. We continue to expect momentum to build over the year ahead, with the recovery to accelerate in the second half of the year. While purchasing affordability has improved, enabling a recovery, affordability remains very stretched compared to history. That’s likely to limit the extent to which house prices can outpace incomes in the medium term, provided new housing supply picks up moving forward.

The seasonally adjusted REINZ House Price Index lifted for a second consecutive month in December – the third lift in four months – signalling the housing market stabilised to end 2024. However, underlying momentum in the market certainly isn’t suggesting the market is about to take off, with improving sales volumes being offset by a large backlog of stock on the market. Investor activity continues to lift, while owner-occupier activity remains relatively subdued, a reflection of the lack of churn in the market amidst the stock overhang, which is reducing housing market mobility. We continue to forecast a 6% rise in house prices over the year ahead, made up of a slow start to the year and a more meaningful upswing in house prices in the second half of 2025. 

Reflecting frontloaded OCR cuts, our expectation for a faster economic recovery from next year, and signs that housing market momentum is starting to shift, we’ve upgraded our house price forecast. While further falls are likely in the near term, we now expect house prices to rise 6% over 2025 (previously 4.5% y/y), and a further 5% over 2026. While lower interest rates and easing credit conditions are strong tailwinds for housing demand, the recovery faces plenty of headwinds too, with labour market conditions continuing to deteriorate, population growth slowing, and affordability stretched. With many moving parts affecting the housing market outlook, we see two-sided risks around our central forecast. In this month’s Feature Article, we detail the risks to our forecast by going through the each of the drivers of house prices in turn.

The REINZ House Price Index lifted in September for the first time since April, but underlying housing momentum remained sluggish. Sales volumes fell, days to sell lifted and the number of listings on the market rose further. There is significant uncertainty around the likely pace of recovery in the housing market as mortgage rates continue to decline, with plenty for forecasters to weigh up: falling mortgage rates, rising unemployment, a fundamental undersupply of houses, changes in tax policy, affordability constraints, and of course “animal spirits”. We certainly see two-sided risk around our forecast for house prices to stabilise around the end of this year and rise 4.5% over 2025. 

This month we look at housing market developments across 14 key regions. Now that interest rates are normalising after the post-COVID rollercoaster, regional over- or under-performance is worth investigating. We evaluate regional house prices, indicators of housing market tightness, key regional economic indicators, and regional measures of housing affordability. Most regional housing markets are currently on a loosening trajectory, though house price cycles have been far more pronounced in some regions than others. The West Coast takes the prize for the strongest performance, with house prices up around 65% from December 2019, while Auckland has seen the weakest growth, with prices up only around 10% over the same period. How does your region stack up? See this month’s Feature Article.

The housing market continued to weaken in July, with the REINZ House Price Index falling 0.6% m/m. Subdued sales over recent months and rising listings on the market suggest weakness is likely to persist in the near term, with prices likely to correct further to clear the backlog of supply. But a lot has happened in the past month that makes the July market snapshot feel like ancient history. With the RBNZ kickstarting its easing cycle this month, and mortgage rates having already responded, we expect dynamics in the market to shift later this year, with a recovery in house prices over 2025. Our updated projections show mortgage rates falling to around the level that prevailed in the middle of last decade. Mortgage rates are an important driver of the housing market, but they aren’t the only driver. There’s still plenty of strong headwinds facing the market. We compare the current landscape to the conditions that prevailed back in 2015, highlighting that risks to the housing market certainly aren’t one-sided.

New Zealand citizen departures to Australia are picking up sharply as the local economy underperforms. With so many Kiwis jumping the ditch, it’s worth asking what kind of housing market they might be jumping into. This month we open that can of worms to investigate that very question. While we don’t get all the way to the bottom of the can (this is a feature article, not a book), we discover a few interesting differences. And in terms of the relative housing outlooks, it appears that Australian house price inflation is set to outpace that in New Zealand for a little while yet. 

Following May’s weaker-than-expected REINZ data and taking signal from the forward indicators, we’ve downgraded our house price forecast slightly. We now expect house prices to rise just 1% this year vs 3% previously. It's worth noting that while a downgrade from 3% y/y to 1% y/y could give the impression that we’re able to forecast the housing market with a high degree of precision, we can’t, and nor can anyone else. But we’ve crossed a threshold warranting a forecast update, and the upside and downside risks feel more balanced around a 1% y/y rise this year than a 3% lift. In the big picture, this is only a tweak to our forecast, and it is probably best thought of as a slight delay to what we were previously expecting: modest growth, with gradually falling mortgage rates offset by softening household income prospects (including job security fears) as the labour market cools. But as always, there’s a lot more to the housing outlook than that!

Housing affordability deteriorated significantly following the pandemic, with house prices relative to incomes touching highs never seen before. It’s been a particularly bumpy ride for new entrants, who have not only had to save a larger proportion of their income to come up with a deposit (and/or wait longer), but who now face a much higher debt-servicing cost as a share of income compared to the decade preceding the pandemic. The good news is that the worst is hopefully behind us. But international comparisons show that some economies may have it even worse, implying that the recent peaks in unaffordability seen in NZ may still be shy of any “natural limit”. We present a range of affordability indicators as well as a weighted affordability index based on some of these measures. Plugging in our forecasts show that the only major relief on the affordability front over the next few years is expected to come via the debt-servicing channel as mortgage rates decline. But overall, our outlook implies housing will remain less affordable over the next few years than it was prior to the pandemic.

House prices came in a little softer than we anticipated in the first quarter of the year, and forward indicators suggest the second and third quarters could be just as soft. Auckland often leads nationwide housing outcomes, so this month we take a closer look into what some of the Auckland indicators are saying about what might lie ahead for the country as a whole. Given Auckland tends to get the lion’s share of net migrants, this regional lens on the housing market is particularly important in the context of current surging net migration. However, we find little evidence in rental yields to suggest migration is about to drive a surge in investor demand for houses. In fact, rental yields in Auckland have been somewhat muted in recent months compared to the national average. All in all, indicators of market tightness in Auckland, and the rest of New Zealand for that matter, are running on the colder side of tepid, and that points to some downside risk around our house price forecast for a modest 3% rise in prices over 2024.

Is it better to buy a house, or rent it? It’s a question a lot of people grapple with. As always, the ultimate answer is “it depends!” but in this article, we shed some light on the question by taking a long-term perspective. In what follows, we take data from 1999 to 2023, make a bunch of assumptions about the outlook, and compare cash flows of someone who buys a house versus someone who rents. The upshot? When borrowing at a high LVR (we assume 80%), servicing a mortgage and paying other ownership costs will generally be more expensive than renting in the first years of ownership. But eventually, homeownership costs will typically be lower than renting. Therefore, to the would-be borrower-buyer, what’s best does depend to some degree on how long you are willing to wait to break even. But as we show, the amount of time that takes depends on a bunch of variables and assumptions, and how you frame what ‘breaking even’ actually means. Do you care about annual cash flows, cumulative cash flows, or discounted cash flows? And what about capital gains and opportunity costs? We discuss the lot. But it’s important to note that the mythical “median person” in our analysis is likely to differ greatly from personal experiences. And as with most choices in life, whether big financial decisions work out well will inevitably partly depend on luck.

The housing market looks stagnant. While January house prices were stronger than we expected, sales were abnormally soft, listings continue to rise and days to sell are back near their 2022 peaks, especially in Auckland. We are expecting the Reserve Bank of New Zealand (RBNZ) to lift the Official Cash Rate (OCR) two more times to combat increasingly stubborn domestic inflation. Homeowners should be conscious that mortgage rate cuts in the near future are not a sure-fire bet, as the RBNZ will be unwilling to provide mortgage rate relief until they’re confident that inflation will stay in their 1-3% band. Our expectations for further lifts in the OCR put the risk of further house price falls back on the table. At this stage, it’s a risk only, because the HPI remains robust in the face of a deteriorating outlook. We still expect house prices to go broadly sideways over the first half of this year, but the picture is looking a lot less certain than it was at the end of last year.

Construction may be about to bottom out. Fair to say, the housing market rebound has been underwhelming since it found a floor earlier than anticipated in April. However, the outlook for construction is nonetheless intriguing, as population growth and still-high interest rates square off. While consents are yet to find a floor, builders in the ANZ Business Outlook survey became much more optimistic some months ago, and their colleagues in the NZIER QSBO now concur. That suggests that consents and construction activity could soon base. The RBNZ is relying on a prolonged slowdown in residential construction as part of their plan to bring down domestic inflation, and the risk is that the slowdown will be sharper but not as prolonged as the RBNZ expects. The implications for the inflation outlook are unclear.

December 2023: Renovation nation (PDF 1.74MB)
Kiwis love a good renovation. Buying a run-down villa and doing it up has been a popular project for Kiwi families for decades. This month’s feature article explores consenting, lending, and construction data to see how the pandemic and recent elevated interest rates have affected Kiwis' appetite for renovations. The upshot: high interest rates have squeezed people’s ability to afford a do-up, with sharp rises in construction costs not helping the case for a new bathroom or kitchen. As inflation eases and interest rates decline, we expect demand for houses in need of some DIY to pick up, as first-home buyers become a larger share of the market

 

November 2023: A spring chill (PDF 1.59MB)
House prices rose in October, with the REINZ house price index rising 0.4% m/m (ANZ seasonal adjustment), a touch weaker than we expected (figure 1). It’s not just house prices that were on the weaker side this month; the forward indicators of sales and new listings showed that there’s perhaps some further softness to come. Accounting for the starting point surprise, and adding a little more election inertia into our near-term view, we have revised down our 2023 house price forecast and now expect house prices to fall 0.4% in 2023 (3-month moving average), versus a 0.2% rise previously. If momentum doesn’t recover after the election-related dust has settled, our 2024 forecast is on thin ice for a downgrade too (we'll get our first post-election read in December). This month we changed our Official Cash rate forecast and now expect the next move on the OCR to be lower, albeit with cuts one quarter later than previously (Q1 2025). However, insofar as markets anticipate cuts, fixed mortgage rates are likely to fall before then.

 

October 2023: New faces, not many new places (PDF 1.43MB)
Migration into New Zealand is at record levels. Over the last year more people than live in Palmerston North or New Plymouth have moved here on net, after accounting for departures. All those migrants need a place to live and we are not consenting and building enough new dwellings to keep pace. The extra demand for places to live is putting upwards pressure on house prices and rents, especially in Auckland. At the same time, large numbers of New Zealanders are leaving the country permanently, further raising property market churn. Net migration also boosts labour supply, dampening wage growth, so the net impact on inflation and therefore mortgage rates is ambiguous. The RBNZ is assuming it will be a small positive net impact, but time will tell. 

 

September 2023: Going up (PDF 1.30MB)
We’ve revised our near-term house price forecast upwards and now see prices lifting around 4% (previously 3%) over the second half of this year, with house prices rising at around their current pace until autumn next year. Underpinning recent momentum, first-home buyers appear to have re-entered the market after a long hiatus. We don’t think recent levels of house price growth will be sustained over the second half of next year, as unemployment rises while interest rates remain high. Our outlook is for annual house price inflation to come in around 5% over 2024, then moderate to around 3% in 2025. If upside housing pressures result in upside CPI inflation pressures, the RBNZ is likely to respond with hikes, stopping the housing upswing in its tracks. Be careful what you wish for.

 

August 2023: Regional revelations (PDF 5.53MB)
This month we look at housing market developments across 14 key regions. Now that the house price cycle has convincingly turned a corner at the national level, regional over- or under-performance is worth investigating. We evaluate regional house prices, indicators of housing market tightness, key regional economic indicators, and regional measures of housing affordability. Only one region is currently experiencing positive annual house price inflation (clue: it rhymes with ‘best’ and ends with Coast). And while that region also happens to be experiencing some of the strongest retail spending relative to trend, it’s not the region with the lowest unemployment rate (Wellington) nor the region with the highest consents per capita (Canterbury). How does your local market stack up? See this month’s Feature Article.

 

July 2023: Running start (PDF 1.20MB)
House prices broke out of an 18-month downtrend in June, rising 0.7% m/m (sa). This was on the slightly stronger side of our expectations. We remain cautious about the outlook, and suspect that the running start to the upturn had some one-off factors nudging it along. But not all the data we monitor concurs. Auction clearance rates in particular suggest our forecast for around 3% growth in house prices over H2 is a touch soft. That may well be true, but we can’t lose sight of the broader economic backdrop: the RBNZ is seeking to engineer a looser (and more sustainable) labour market (ie higher unemployment) in order to tame CPI inflation, and if it doesn’t achieve this with the OCR at 5.5% it will hike by more. Our expectation is that CPI inflation will prove harder to tame than the RBNZ currently anticipates, pushing it back into hiking mode come November. That’s likely to lead to renewed upwards pressure on mortgage rates later in the year, and could even see housing headwinds dominate tailwinds as we head into 2024.

 

June 2023: Sure to rise? (PDF 2.12MB)
This month, we run a statistical analysis to try to disentangle the various drivers of house price inflation over the past 30 years. We find significant impacts from net migration, mortgage rates, consumer confidence, LVR restrictions, and a combination of policy changes including the introduction of the bright line test, the removal of interest deductibility on investment properties, CCCFA changes, and the COVID lockdown. Models are always as much art as science, and none should be taken as gospel. Sadly, they can’t magically eliminate the problem of trying to work out causality when lots of stuff is going on at once – as has certainly been the case in recent years! But the analysis is helpful for looking at how the market may evolve from here.

 

May 2023: On the floor, ready to floor it? (PDF 1.70MB)
The RBNZ’s relatively muted response to surging net migration and additional fiscal stimulus in the May MPS surprised us. Ultimately, for a time at least, this implies looser monetary conditions than we have been expecting. This, combined with surging net migration and the confirmed loosening in LVR restrictions from 1 June, has led us to upgrade our house price forecast. We now expect quarterly house price inflation to return to around its historical average pace over the second half of 2023 before sticky inflation (and its implications for the OCR outlook) puts renewed upwards pressure on mortgage rates. Net migration is a huge wild card for the outlook currently. The recent explosive pace alongside slowing construction activity is resulting in a rapidly widening housing deficit, adding pressure to house prices. In short, housing tailwinds now appear to be blowing a little stronger than the headwinds. But we’re not convinced the RBNZ will be able to let that run. We expect the RBNZ will need to tighten monetary conditions later in the year once all has been revealed in the data.

 

April 2023: Nearing the bottom (PDF 1.92MB)
The RBNZ is proposing that loan-to-value restrictions be eased. With inflation still well outside the target band, why would they want to juice the housing market? In our view, this isn’t the right way to think about it. Decisions about macro-prudential tool settings are not made through a monetary policy lens. That said, they’re relevant, and all else equal, any easing of financial conditions presents upside risk to the Official Cash Rate.

 

March 2023: Not a straight line (PDF 2.03MB)
2023 is turning out to be yet another year fated to be ‘interesting’ economically: January brought flooding, February brought cyclone Gabrielle, and March delivered global banking sector wobbles. This month we provide an update on how we’ve factored recent weather events into our outlook (spoiler alert: these are very uncertain), and also discuss the possible ways in which a global financial shock could impact the New Zealand housing market and broader economy. The potential impacts of recent financial market wobbles range from ‘complete game changer’ (ie if they are the beginning some something much larger) to ‘a relatively small blip in the road’. Without convincing information to suggest otherwise, our forecast assumes the latter. However, even if the wheels stay firmly on, global financial market woes could well mean tighter credit conditions for a given level of the OCR, meaning it’s difficult in this environment to focus only on upside inflation risks when discussing risks to our OCR call (for a peak of 5.25%). Market pricing has certainly shifted lower (a loosening in financial conditions all else equal), but that could all change in a number of days.
 

February 2023: Rain check (PDF 1.16MB)
House prices fell less than expected in the month of January, but it’s far too early to say if that’s the beginning of the market finding a floor a little earlier than expected or just a blip. Our outlook implies it’s the latter, as we maintain our outlook for a 22% peak to-trough decline in house prices, which if correct (a big if, to be honest) implies house prices have another 7% or so to fall from here. But cyclone Gabrielle, and to a lesser extent the Auckland flooding in late January, will certainly change the outlook for housing and residential construction in parts of the country, representing an upside risk to both house prices and construction activity. In largely unaffected regions, on the other hand, if the inflationary impacts of the weather events mean interest rates need to go higher, that would be an eventual negative for house prices and activity. That’s actually necessary, to free up resources for the rebuild. At this early stage, we don’t have a good handle on the timing or the magnitude of these impacts. We discuss some of the risks to the housing outlook that these events present, and will endeavour to incorporate more into our outlook as information comes to light.
 

January 2023: Key themes for 2023 (PDF 1.49MB)
In our first edition for 2023, we take a look at the key macroeconomic themes for the year ahead that will matter for the housing market. The economy is clearly softening, and over coming months, the RBNZ Monetary Policy Committee will need to make a call regarding when they have cooled things sufficiently to knock wage-price spiral risks on the head, allowing them to sit back and “watch, worry and wait”. All else equal, the end of rate hikes should quickly be followed by an end to house price declines, but that’s assuming the household sector broadly holds it together and forced house sales don’t pick up meaningfully. The wobbly global economy could always throw us a curve ball; housing policy changes and/or a significant net migration surprise could alter the landscape at the margin too. Forecast uncertainty remains elevated so we’ll need to remain nimble.

November/December 2022: Six reasons (PDF 1.62MB)
We now expect the OCR to peak at 5.75% (previous forecast peak: 5.0%) and that means a higher mortgage rate outlook and more downward pressure on house prices than otherwise. Accordingly, we have downgraded our house price forecast from a decline of 18% (peak to trough) to 22%. The potential shock value associated with the accelerated pace of rate hikes present additional downside risks to the housing outlook that we cannot, with any confidence, incorporate into our forecast. The housing market will find a floor at some point. But there’s a considerable amount of uncertainty around both the magnitude and duration of price declines that will play out before that floor is discovered. This month we look at six reasons to believe downward house price momentum is yet to ease, but also look at six things to keep an eye on as they may signal the eventual floor can’t be too far away. Broadly, all 12 points are consistent with our forecast that we’re just over half way through the house price correction, and that the level of house prices will find their floor around Q3 2023. While upside interest rate risks remain a key downside risk for the housing outlook, household income and housing confidence risks are both intensifying, and would likely pack a bigger wallop if they were to materialise.

 

October 2022: Testing times (PDF 1.19MB)
The economy is so far holding up pretty well in the face of a rapid rise in interest rates over the past year and a double-digit fall in house prices from their peaks. While robustness is hard to label ‘bad news’, it does suggest the RBNZ needs to do more to drive a wedge between supply and demand such that capacity pressures are diminishing meaningfully, reducing inflation pressures. And, unfortunately, for those with a mortgage, the recent CPI data suggest that wedge needs a few more solid whacks from the sledgehammer. For recent first home buyers, and the highly leveraged in general, this is going to hurt. But failure to restore inflation stability would be an even more painful experience. We now expect the RBNZ to deliver two consecutive 75bp hikes, taking the OCR to 5% in February. And if that doesn’t see capacity open up, they’ll keep going until it does.

 

September 2022: Spring bounce or false floor? (PDF 1.97MB)
The housing market continues to evolve in line with our forecast for a 15% peak-to-trough decline in prices, with the August data suggesting we’re about two thirds of the way through that. From a fundamentals perspective, we don’t see any good reasons why the housing market might suddenly turn a corner over the coming months. Mortgage rates are still lifting, housing scarcity has been greatly eroded, and affordability remains dire (albeit a little better). Importantly, if the market does put out any green shoots while the labour market remains too tight and CPI inflation too high, the OCR (and mortgage rates) will very likely need to go higher than otherwise. And for households with a high debt-to-income ratio, that would be particularly bad news. But the RBNZ has to tame inflation, and if tightening isn’t working as quickly as needed, they will do more until they get the balance right. We’ve recently lifted our expectation for how high the OCR will need to go.

 

August 2022: No place for green shoots (PDF 1.39MB)
Why have some fixed mortgage rates fallen lately despite the Official Cash Rate lifting another 50 basis points in August? By providing an overview on how mortgage rates are determined, we hope to answer this very question in this month’s feature. Intended as a beginner’s guide, we gloss over some of the nitty gritty, rather providing a high-level overview of what banks do, where they get their funding from, and key ways in which the cost of that funding can change. In particular, we hone in on how the OCR – and expectations of what the OCR may do in the future – impact floating and fixed mortgage rates. See this month’s Feature Article.

 

July 2022: Hardening headwinds and soft landings (PDF 1.29MB)
The NZ Q2 CPI figures suggest high underlying (“core”) inflation may stick around longer than previously thought. And with the labour market still tightening (from already record-tight levels), the RBNZ has plenty of work to do in order to prevent a damaging wage-price spiral. We’ve added a further 0.5% points to our expectation for how high the OCR will need to go (now 4%), and that means higher mortgage rates – and more downward pressure on house prices – than otherwise. We’ve downgraded our house price forecast to reflect this, with a peak to trough decline of 15% now pencilled in (previously -12%). But forecasting uncertainty remains high.

 

June 2022: When, not if (PDF 1.78MB)
Residential investment is in the firing line as interest rates push higher to combat decades-high inflation, house prices fall, and shortages of both materials and labour continue to add uncertainty in the near term while limiting upside growth potential. In short, the calculus of building has shifted dramatically in the space of a few quarters and the stars are now aligned for an unwind. In fact, some indicators are already pointing sharply south, but it’s difficult to diagnose whether this is more a story about constrained supply or waning demand. We think it’s a mix of both, but come 2023 softer demand will be the dominant driver.

 

May 2022: Better fundamentals mean softer prices (PDF 1.58MB)
Two big events have taken place since our last edition: The RBNZ hiked 50bps on 25 May (as expected), and lifted its forecast for how much higher the OCR will need to go (that was more of a surprise); and the Government released Budget 2022, which included another increase in government spending. We have since tweaked our OCR forecast to be slightly more front loaded. While we continue to expect it to peak at 3.5%, we have also centralised some of the downside risks we are seeing to our (still very uncertain) house price outlook. We now expect house prices to fall 11% in 2022 (previously -10%), with a much soggier recovery thereafter. The latter reflects very solid progress in recent quarters towards addressing NZ’s housing deficit.

 

April 2022: Regional rollercoaster (PDF 5.91MB)
This month we take a look at housing market developments across 14 key regions. While the house price cycle has been broad based, there are some differences between regions when it comes to the magnitude of price gains over the past couple of years. We evaluate regional house prices, indicators of housing market tightness, key regional economy indicators, and regional measures of housing affordability. Where does your region sit? Wherever you live the answer is likely to be “on a cooling trajectory but less affordable than before the pandemic”. See this month’s Feature Article.

 

March 2022: A soft landing as headwinds gather (PDF 1.61MB)
Recent housing data have come in broadly in line with our expectation. Looking forward, our call change for more aggressive OCR hikes and a higher OCR peak have translated into an even softer outlook for housing. We now expect house prices to fall 10% in the year to December (previous: -7%). With CPI inflation intensifying, it’s our forecast that the RBNZ will continue lifting interest rates even as economic momentum (and housing) fade. That’s a dynamic that may surprise some kiwis, but central banks must defend their inflation targets (and credibility) at all costs. It may not take much for our expectation for a relatively soft landing in housing to surprise on the harder side.

 

February 2022: At your service (PDF 1.50MB)
How much will OCR hikes hurt household balance sheets? The answer to this question is a function of three key factors: the degree of interest rate rises, growth in household incomes, and growth in household debt. We put all these together on a path consistent with our broader economic outlook to investigate the likely looming change in household debt burdens. There are certainly tougher times ahead for borrowers, but based on our forecast for a 3% OCR, we don’t yet see flashing red lights. However, our aggregate analysis likely understates debt concentration risks. That is, there are a lot of highly indebted recent first home buyers out there who will feel the pinch of rising rates a lot more than the average mortgage borrower.

 

January 2022: On the house (PDF 1.67MB)
In this feature article we explore whether the moderate house price declines we’re expecting in 2022 will cause wider economic momentum to stumble. Our modelling suggests that household consumption won’t be too badly impacted by moderately declining house prices – especially given that the tight labour market should support household incomes. But there are risks. Falling house prices may cause a more significant decline in the construction industry, or a souring in consumer and business sentiment, and either of these factors could feed through into more serious impacts on the wider economy.