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Property Confidence Drifting – Dead Cat?

The NZPI Property & Construction Confidence Index, complied in partnership with Maltby & Partners Ltd (www.maltby.co.nz) appears to be drifting with latest results around the same level as four to five months ago, New Zealand Property Institute CEO Conor English said today. The index (month-by-month results) picked up in April, before slowly retreating back to around the level in July 2001.

“It appears to be becoming a bit of a dead cat. It would be good to see an increase in confidence levels in the next survey. Following the American move to 3.5%, if Dr Brash reduced the OCR from 5.75% and there was a turn around in the number of residents leaving the country, we may see some more positive movement. The rural upturn could be peaking with the dollar now picking up and the risk associated with that sectors reliance on high commodity prices,” Mr English said today.

“Looked at on the basis of a three month rolling average, this index has declined slowly but steadily in the first half of 2001 (although there has been little movement over the last few months). Compared with a peak of around 120 points in the November 2000 – January 2001 roll, consecutive three month rolls between February and July 2001have all been under 100 points.

“However, as in February, Wellington results are still more positive than those for Auckland. Both areas, however, have declined over the first half of 2001.

Outlook: “On the May-July 2001 roll, 57% if respondents expected conditions in the construction industry to improve over the next 12 months (up 4% on April-June, and 6% on March-May). Sixteen percent thought things would get worse (up 1% on the previous roll), and 22% believed conditions would get better (down 4%). Shorter-term expectations were, however, less positive. On the same May-July roll, 38% thought conditions would improve over the next six months, while 20% believed they would get worse.

“Looking at conditions in the industry over the next three months, most expect things to remain the same (May-July 56%). Just 24% thought things would get better, compared with 42% in the December-February three-month roll. 20% thought this would get worse.

Government: “While perceptions of the government’s understanding of the construction and property industry are still quite negative, figures in this area have shown a steady improvement since mid 2000. In the June-August 2000 results, 13% thought the Labour-led government understood the issues facing the industry either “very well” or “fairly well”, while 80% believed it understood the issues “not very well” or “not well at all”. By May-July 2001 this had improved to 32% “very” or “fairly” well, 63% “not very well” or “not well at all”

www.propery.org.nz for full report and graphs.

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