ANZ economists say homeowners shouldn't expect that the Rese...

ANZ economists say homeowners shouldn't expect that the Reserve Bank will intervene to stop house prices falling too much

Homeowners are being warned by economists at the country's largest bank that they shouldn't expect the Reserve Bank will intervene to stop house prices falling too much.

"In the past, a waning demand impulse (and softening housing market) was likely enough to halt inflation pressures and for the RBNZ to achieve its targets," they say.

"But this time inflation has so much strength and persistence that the RBNZ will likely need to continue hiking despite softening housing and demand.

"That is, if housing market participants think the RBNZ have their back and will act to prevent house prices from falling too much, they may be unpleasantly surprised (if inflation remains well in excess of the 1-3% target band for too long that is). It’s all very uncertain, but we think this is a risk well worth outlining."

Inflation hit an annual rate of 5.9% as of December and seems likely to get up around 7% in the first half of this year despite the Government's recent move to temporarily reduce petrol taxes.