A stark warning the global financial market is "starting to smell a bit like 2007" has come from an ANZ Economist who has shed light on what the next government could face.
Speaking on TVNZ's Q+A programme this morning, Sharon Zollner said when the next government is briefed on the state of New Zealand's economy, she acknowledged there are "still plenty of tailwinds" to the so called 'rock star economy', but confessed "a number of those tailwinds seem to be running out of puff."
When discussing potential shocks the new government could face, Ms Zollner said, "It's fair to say that some things are starting to smell a bit like 2007 out there in global financial market land.
"'There's been a bull market in everything,' as the Economist called it.
"And that’s completely understandable, because the price of borrowing money has been at record lows for a very long time, and so the price of anything you could borrow money to buy has been pushed up, whether that’s equities, commercial property, residential property, collector cars, fine art – you name it, it has all benefited from this extreme monetary policy stimulus.
"Just not wages, not inflation.
"It's been a bizarre time, but it is probably fair to say that the quality of the growth that we’ve seen since 2008 has not been great. It’s been fuelled by debt and by leverage. And at some point, that debt has to be paid back."
Fuelling concern for the future of the New Zealand economy is the Auckland housing market.
"Our major vulnerability, I'd say, is Auckland house prices – how stretched they are. And also consumer debt, mostly mortgage debt, is now at a record high relative to income."