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Solid economic growth is projected to continue at 3% in 2018 and 2019. Private consumption will slow with lower net immigration and moderation of wealth gains from house price increases. Residential investment will be supported by demand in Auckland and government funding through the KiwiBuild programme. Government infrastructure spending will also rise, while business investment should recover from weakness in late 2017 as capacity remains tight.
Projected increases in interest rates and government spending will improve the macroeconomic policy balance. Both should also serve to reduce housing market pressures, but resolution of infrastructure and planning constraints in Auckland is critical to easing affordability challenges, boosting weak productivity and avoiding a further house price breakout.
Economic Survey of New Zealand (survey page)