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House prices in New Zealand will keep falling

The RBNZ's proposal to ease loan-to-value ratio (LVR) restrictions is unlikely to be a panacea for New Zealand's ailing housing market. With housing still far too unaffordable for most, house prices won't turn a corner until the RBNZ pivots to an easing cycle towards the end of the year. Meanwhile, Q1 CPI data out of Australia confirmed that headline inflation is past its peak. However, with services inflation continuing to accelerate, we think the RBA will err on the side of caution and deliver one final 25bp rate hike next week.

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