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

Auckland prices, rentals may increase Saving money by thinking of books Judge me, budget me, take away my booze Money's Worth: SCF a lesson for all New service to help KiwiSavers choose Banks launch PayTag for mobile payments Interest rate rise, dollar fall predicted John Key reminds Aucklanders of property risks NZ shares outperform: AMP Teach your kids to be money-smart

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