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Inside Economics: Mojo deficit - why Kiwis still pin their hopes on property

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  Published in Humor and Quirks on Tuesday, October 21st 2025 at 13:41 GMT by The New Zealand Herald
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Inside Economics: NZ’s Missing Mojo – Did It Ever Exist, and Was It Just Property Prices?
(NZ Herald – Business – Economy – 2023)

The New Zealand Herald’s “Inside Economics” feature dives into a question that has loomed over the country’s post‑COVID recovery: is New Zealand’s recent economic boom genuinely robust, or is it simply a façade created by soaring property prices? The article, which appeared in late 2023, blends historical analysis, recent data releases, and commentary from leading economists to argue that the country’s “missing mojo” is a real, multifaceted problem that goes beyond the housing market.

The Concept of “Missing Mojo”

The term “mojo” in the article is used metaphorically to describe an intangible quality that gives an economy its dynamism—productivity, innovation, and confidence. The writer points out that, unlike the boom in property prices that has driven the headline inflation rate, the underlying economic engine has been slow, with real‑GDP growth hovering just above the 2 % target set by the Treasury’s 2021 Economic Growth Strategy. The article links to a recent Treasury brief, which notes that “the pace of GDP growth has been largely driven by real estate, with only modest gains from manufacturing and services.”

Property Prices: A Double‑Edged Sword

A large portion of the piece is dedicated to the property sector. The author cites the New Zealand Property Price Index (NZPPI) released by the Reserve Bank of New Zealand (RBNZ) in October 2023, which shows a year‑on‑year increase of 14 %. While this surge has helped many homeowners, it has also tightened household finances and squeezed other sectors.

• Housing Affordability – The article refers to the Housing Affordability Report (linked within the piece), which highlights that median home prices have outpaced wage growth by a factor of 1.8 over the last decade.
• Mortgage Stress – A study by the New Zealand Institute of Economic Research, linked in the article, suggests that 12 % of households now have a mortgage repayment that exceeds 30 % of their disposable income, a threshold historically associated with financial distress.
• Sectoral Impact – The author argues that the construction boom has come at the expense of other sectors. For example, the RBNZ’s 2023 data shows construction employment growth of 8 % versus only 3 % in the manufacturing sector.

The article also includes a brief historical comparison with the 1990s housing boom, citing the New Zealand Treasury – 1994 Housing Review as a source. That review warned that such rapid price increases would eventually lead to a correction, a warning that appears prescient in the present context.

Real Growth vs. Price‑Driven Growth

Beyond housing, the feature scrutinises the real‑GDP data released by Statistics New Zealand (Stats NZ) in November 2023. While headline figures suggest a 2.4 % growth rate, the underlying components tell a different story. The article breaks down the GDP components:

• Services – 2.1 % growth, largely driven by tourism and finance.
• Manufacturing – 0.9 % growth, but with high volatility.
• Agriculture – 1.2 % growth, largely export‑driven.

A notable point is that productivity gains remain stagnant, with the Productivity Monitor (linked in the article) reporting only a 0.5 % increase in labor‑productivity over the past two years. This stasis is a core part of the “missing mojo” narrative, suggesting that the economy’s core capacity to generate value is lagging behind the headline figures.

Wage Growth and Income Distribution

The piece also tackles wage stagnation. The NZ Labour Market Report (linked within the article) shows that real wage growth has been flat for five consecutive quarters. Coupled with rising living costs—especially rent, electricity, and food—the article argues that the average New Zealander is experiencing a decline in purchasing power. The author points out that this situation has fueled political and public unrest, citing the recent Union Review article from the Herald, which reports that 48 % of workers would consider leaving their job for better pay.

Government Policy and Investment

The government’s role is examined through several policy lenses:

1. Housing Supply Measures – The article quotes the Ministry of Housing’s Housing Supply Strategy (linked) which outlines plans to increase the national housing supply by 10 % over the next decade.
2. Infrastructure Spending – The Treasury’s Infrastructure Priorities (linked) document highlights investment in transport, broadband, and renewable energy, but notes that these projects are still largely funded by debt.
3. Fiscal Stimulus – The piece refers to the RBNZ’s Monetary Policy Statement (linked) to discuss the bank’s accommodative stance, including a 0.25 % policy rate and quantitative easing measures aimed at lowering borrowing costs.

The author argues that while these policies have kept the economy afloat, they have not addressed the productivity bottleneck. A quote from a former Treasury economist, included in the article, stresses that “policy needs to focus on incentivising R&D, upskilling, and capital deepening rather than just chasing housing demand.”

Outlook: What Comes Next?

The article ends with a cautious outlook. Using a simple scenario analysis, the author suggests that if property prices stabilize and productivity increases modestly, GDP growth could reach 3 % by 2026. However, if the housing bubble bursts, the economy could face a contraction. The piece links to a Reserve Bank Forecast (link) that projects inflation at 3.8 % in 2024, up from 2.7 % in 2023, driven mainly by rent and energy prices.

The final paragraph reiterates the central thesis: New Zealand’s economy has been riding a “property‑price‑driven” wave that masks a deeper, underlying weakness. The “missing mojo” is not an elusive magic number; it is the lack of sustained productivity growth, stagnant wages, and a reliance on speculative assets. The article calls for a balanced approach—stimulating real economic activity while managing housing market volatility—to reclaim the country’s mojo and secure long‑term prosperity.