Rate race to the bottom

As the Reserve Bank races to the bottom by cutting the official cash rate -- now at 2 per cent and likely to drop to 1.5 per cent by the year end -- I am starting to wonder if this is the best course of action for the country and society.

Low rates have led to some savers having to save harder (due to low returns); and by saving more they put less into the economy -- which puts pressure on businesses, wages and product development.

House prices have risen as mortgage rates have dropped. People, feeling wealthy as their home increases in value, have borrowed against it for cars, holidays and TVs, putting them further into debt.

Low interest rates are a worldwide phenomenon, designed, following the GFC, to encourage banks to lend more -- which they have -- to property speculators (not to businesses that may create jobs).

Maybe, just maybe, low interest rates are not the only answer to our problems.

A reader writes

A reader writes to say we could do Aucklanders a "great service" by talking about living in Dunedin, where a three-bed home on a 1000sq m section can be bought for $400,000.

Kiwis need to stop complaining about Auckland prices and look around, writes the former North Shore dweller to our correspondent Diana Clement.

"Dunedin has all the jobs, shops and services that any other city has," he says. "Traffic is never a problem; drive to work in 10 minutes. Dunedin has a magnificent harbour, great beaches, outstanding natural beauty, an excellent cycle-way network and abundance of golf courses."

It's also as cold as charity in winter.

Retirement

According to Crockers Property Investment 74 per cent of investors it surveyed regard residential investment property as part of their retirement savings, and it seems this is a growing trend.

In September 2014, 36 per cent of residential investors surveyed owned three or more properties, but by July the figure had risen to 51 per cent. Meanwhile, the number of investors looking to increase their Auckland rental property investment has dropped dramatically, from 32 per cent in June to 10 per cent in July.

When it comes to the proportion of property investors looking to reduce their Auckland rental property investment, this has increased from 5 per cent in June to 22 per cent in July. The conclusion is that at least some property investors are looking to cash up.

Confidence

The latest ASB Housing Confidence Survey shows that 57 per cent of respondents expect Auckland house prices to rise next year. Confidence in the North Island, outside Auckland, is at an all-time high of 66 per cent.

Light

A survey by Consumer shows that cheap solar powered/battery garden lights may not be worth the money. Looking at things such as light output, the life of the battery and water-tightness, it said lights costing under $6 offered little more than a dim glow, while ones that cost $20 or more offered a brighter light.

It also says that 12v lights had much better light output and offered a longer-lasting solution than solar lights.