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The world has been printing money for several years, in anticipation of inflation and interest rates eventually rising. Neither of those happened. But the short-term has changed.

We are so fixated with property that talk of any kind of bubble quickly turns the conversation to housing. I’m going somewhere else. History is a great teacher.

Growing house construction is a substantial boom for the economy through extra business for materials manufacturers and distributors, architects, inspectors and so on.

I started writing this property-focussed column for Squirrel Mortgages back in June this year. If you’ve been reading it from then you'll still be surprised like I am that housing markets around the country are so strong, but not as surprised as those who haven't had the chance to read it.

Some people retain a negative view on the housing market on the basis of an expectation that the economy is stuck in recession. Actually, the recession ended two months ago and there is little chance of it returning then morphing into a depression.

There is a certain moralistic view which many analysts have of the housing market. It goes along the lines that people who make money from rising house prices are not as worthy as those who make money from working 40 hours a week, and one day they will get their comeuppance through house prices going back to where they were in some imagined glory days.

The adage 'cash is king' is never truer than in a crisis. Cash gives you the flexibility and freedom to respond to changes. Now is a good time to have a small cash buffer in your mortgage. The thing to remember is banks don’t want you to default on your mortgage, and they have temporary options in place which are designed to support those who find themselves in financial hardship.

The Reserve Bank has come out with a gloomier outlook for the NZ economy and the global economy. In the short term that means the potential for lower mortgage rates has increased.

12 Month interest rates are at all time lows for New Zealand, however it may not be prudent to fix over that term. In part 1 we covered the OCR, inflation the connection between inflation and interest rates. Let's now talk about forward interest rates and current inflationary drivers in NZ.

It's become common practice in NZ for banks to offer cash backs with new mortgages, whether that's a refinance or a new purchase. One of the advantages of using a mortgage broker is they can help maximise your cash back.

12 Month interest rates are particularly appealing at the moment. Kiwibank has most recently offered a 12-month fixed rate sub 4% and many banks are moving in the same direction. This is fantastic for the next 12 months, however it pays to think about what you are going to do post the expiry of this rate.

It’s time to pull out the crystal ball and talk property prices. With house prices falling in Sydney (4.5% in the past year), the question is, will the same thing happen here? For this post I thought I’d develop a bottom-up ‘economic’ model.