Property Confidence Down
Tuesday 18 June 2002
The NZPI Property & Construction Confidence Index, complied in partnership with Maltby & Partners Ltd (www.maltby.co.nz) and conducted by UMR Research has continued its downward trend. New Zealand Property Institute CEO Conor English said that the index has fallen below 100 for the first time this year from a peak of 135 in January.
Mr English said today, "This drop in confidence is a concern. However, while confidence has dropped by about a third since the beginning of the year, the NZPI Confidence Index is still at a similar level to what it was a year ago. Since then the index dipped to 65 with September 11 impacting, followed by a rebound to 135 in January. Since then it has declined to 98."
The Institute said respondent's expectations of conditions in the construction and property industry over the next twelve months were of concern. Looked at on the basis of a three month rolling average, 28% expected things to stay the same compared with 31% in January, only 34% expected things to get better compared to 47% in January, and 31% things to get worse compared to 19% in January.
Mr English said, "This is a significant change from expectation levels at the beginning of the year. We've gone from having almost half the respondents being positive to only a third. Two thirds more are negative now than back then.
"The Governments May budget does not appear to have increased confidence levels at all. The Governments ongoing borrowing programme will see continued pressure on interest and exchange rates. With much of the Cullen Super Fund being required to be invested offshore, initial high hopes of additional investment funds for the New Zealand property sector from this fund have declined. At the same time we are seeing a drop in some international commodity prices which will impact on rural and provincial investment levels. Immigration levels have been positive for the property sector but with this issue becoming a politician football there is increasing uncertainty on future policy settings," he said.
The gap between those who expect things will get better and those who expect things will get worse has narrowed substantially from its biggest gap of 51% in favour of those who thought things would get better in January 2001, to just 3% now. On current trends it looks likely that the pessimists may overtake the optimists soon, a factor perhaps taken into account with the timing of the election!
Auckland continues to be more positive than Wellington, as it has for the last 6 months.
Perceptions of the Labour Alliance Government's understanding of the key issues that affect New Zealand's construction and property industry are still quite negative. 55% believe that the Government does NOT understand the issues well, with 34% well, and 10% unsure.
The NZ Property Institute has some 3000 members who influence either directly or indirectly decisions made on New Zealand's $400 billion property asset base.