New Zealand property market headed to relapse of recession
Many parts of New Zealand are effectively back in recession and this is having an impact on the country’s real estate market, it is claimed.
A construction industry leader is calling for an immediate reduction in the official cash rate to restore consumer confidence and support the property sector and protect jobs.
Richard Carver, director of Jennian Homes said that the prospect of New Zealand’s economy being in recession again by the end of 2010 is a real possibility. ‘Many parts of New Zealand are effectively back in recession now. Inflation is virtually non-existent. There’s no demand. People just aren’t buying. I’ve never seen New Zealand this quiet. New homebuilders are suffering and the economy is stalling. It needs a confidence boost now,’ he said.
He’s placing the blame firmly at the feet of the Reserve Bank, which he believes is partly pinning its hopes for economic recovery on the housing market. But the housing market is falling and the latest outlook for 2011 is for lower levels of activity than 2010 in existing house sales and new residential construction.
‘Residential construction activity is falling and will fall further next year, too. Building consent figures were down last month. The September figures, due out this Friday, will probably be down again,’ he explained.
Property sales fell 33% in September from a year earlier and property prices are near a 12-month low, according to figures from the Real Estate Institute of New Zealand (REINZ).
Some estate agents though are challenging the figures. Whangarei real estate consultant Barry Joblin claims they are incorrect because fewer agents are sending information to REINZ. He said a number of companies no longer belonged to REINZ after last year’s industry restructuring. They have stopped sending in monthly house sales figures and even some REINZ members might not be sending in sales figures, because it is not compulsory.
He believes that as fewer companies are submitting data a more negative picture than might really be the case is emerging.
‘They say just 32 houses were sold in Whangarei in August. We had nine unconditional house sales that month so we know sales were at least 28% higher. Sales were well down on the same month last year but not as far down as the institute was saying,’ he explained.
A spokesperson for REINZ said it is confident the statistical data is of sufficient depth and strength that it is reflecting the marketplace and if there was any BNZ chief economist Tony Alexander said a downward bias exists but it is probably not significant. ‘There is a downward bias to house sales data reported by REINZ at the moment because an uncertain proportion of those who used to report now are not doing so, either because they don’t have to or because free stuff they got in exchange for reporting is no longer available. We believe the downward bias is small but don’t really know by how much,’ he said.