Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


NZ doesn’t face US-style property bubble, price growth eyed

NZ doesn’t face US-style property bubble though price growth eyed, says S&P

March 6 (BusinessDesk) – New Zealand’s housing market is unlikely to mutate into a US-style bubble, says Standard & Poor’s, although rising prices are at the upper level of the credit rating agency’s tolerance, it told a briefing in Auckland today.

“We continue to believe there’s some underlying demographic features that mean we don’t have a US-style bubble in the property market,” S&P senior director Peter Sikora told the NZ Capital & Credit Markets briefing.

He said annual growth in property values of 9.6 percent, was “the upper range of our tolerance” but there were signs the market has stabilised, helped by the Reserve Bank’s speed limits and higher capital requirements for banks.

Last month state-owned valuer Quotable Value said the annual pace of property values slowed to 9.6 percent in the year ended Jan. 31 from 10 percent a month earlier, and suggested restrictions on low-equity home lending may have started to bite.

The Reserve Bank introduced loan-to-value mortgage lending restrictions from Oct. 1 on concern rapidly accelerating house prices in Auckland and Christchurch may lead to an asset bubble and cause financial instability. The central bank is expected to start hiking interest rates from next week to cool the economy as inflation accelerates.

S&P still has what Sikora called a ‘negative risk trend’ on New Zealand because of “the material dependence of the economy to external borrowing.” Yet the nation was unlikely to be punished for running a high current account deficit in the same way India or Indonesia have, he said.

New Zealand’s current account deficit widened to $8.8 billion, or 4.1 percent of gross domestic product, in the year ended Sept. 30, according to government figures, and is expected to deteriorate over the coming three years as households recover appetite for credit, forcing banks to seeking funding overseas.

S&P’s Sikora said key risks from offshore were a hard landing for China’s economy, which had a low probability but with “a potential impact that could be material.” There was also a chance of Eurozone crisis contagion though that wouldn’t have such an impact on New Zealand, he said.

Last year Reserve Bank governor Graeme Wheeler singled out a potential downturn in China’s economy as the biggest threat to New Zealand, due to the increasing reliance by local exporters on the world’s second biggest economy.

Government figures last week showed a trade surplus of $306 million in January, a record for that month, as exports into China almost doubled, cementing its status as New Zealand’s biggest market.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Price Of Cheese: Dairy Product Prices Fall To The Lowest This Year

Dairy product prices fell in the latest GlobalDairyTrade auction, hitting the lowest level in the 2015 auctions so far, as prices for milk powder and butter slid amid concern about the outlook for commodities. More>>

ALSO:

Houston, We Have An Air Route: Air New Zealand To Fly Direct To The Heart Of Texas

Air New Zealand will fly its completely refitted Boeing 777-200 aircraft between Auckland and Houston up to five times a week opening up the state of Texas as well as popular nearby tourist states such as Louisiana and Florida. More>>

ALSO:

Scoop Business: Reserve Bank’s Spencer Calls On Govt To Rethink Housing Tax

The Reserve Bank has urged the government to take another look at a capital gains tax on investment in housing, allow increased high-density development and cut red tape for planning consents to address an over-heated Auckland property market. More>>

ALSO:

The Nation: Call For Cross-Party Auckland Housing Plan

Penny Hulse calls for cross-party accord on Auckland housing because “it’s too important to score political points on”. More>>

ALSO:

Flu Season: Overcoming Vaccination Reluctance

While research shows that 40% of New Zealand businesses offer free or subsidised flu vaccinations to employees this time of year, HR professionals say persuading staff to participate is the biggest challenge. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news