Property market at risk of 'sharp correction'

ROB STOCK
Last updated 05:00 01/03/2013
mortgage
SHARP CORRECTION: Standard & Poor's says there is a significant risk of a property crash in New Zealand.

Relevant offers

Money

Kill your mortgage faster Self-discipline is key to manage money Strong dollar drives sales Fewer homes on the market Rising house prices blamed on lack of land - report Beat the power bills with solar, say couple The story behind your coffee price Christchurch $3000 job incentive nets 50 Families feel bite of food cost Food prices rise 1.4pc in June

Financial ratings agency Standard & Poor's says there is a significant risk of a property crash in New Zealand.

S&P, which has come in for criticism over its failures to adequately assess risk on many investments in the run-up to the Global Financial Crisis, said its "base case scenario" was for medium-term real estate prices continuing to stabilise at current levels.

But credit analyst Nico DeLange said: "We are of the opinion that a significant risk remains of a sharp correction in property prices occurring given the uncertain short-to medium term outlook for the global economy."

Such an event would have a flow-on impact on the ratings of New Zealand's banks.

DeLange said: "This could potentially lead to a build-up of economic risks, resulting in the lowering of the economic risk score of New Zealand to ‘4' from ‘3'. Such a change could have a direct impact on the stand-alone credit profile of New Zealand banks, and the issuer credit ratings of banks in New Zealand."

Earlier this week, Finance Minister Bill English indicated new rules that could take some of the heat out of housing market could be in place by mid-year.

Ad Feedback

- Fairfax Media

Comments

Special offers

Featured Promotions

Sponsored Content