Friday, March 1, 2013

S&P Warns of Property Price Drop in New Zealand

This from the NZ Herald today:

"New Zealand is at risk of a sharp fall in property prices, an international ratings agency has warned.

Standard & Poor's has highlighted the "significant risk" of a sharp correction in property prices in its latest report on New Zealand's banking outlook.

S&P said the most likely scenario was that real estate prices would continue to stabilise at current levels over the medium term.

"That said, given the uncertain short- to medium-term outlook for the global economy, we are of the opinion that there remains a significant risk of a sharp correction in property prices."

A deterioration in the terms of trade or a widening of the current account deficit could heighten the risk of a sharp depreciation in currency and a sharp fall in property prices, analyst Nico DeLange said.

The warning came as Auckland's property market continues to boom. Real Estate Institute figures for January showed Auckland's median price up 8.1 per cent compared with 2012"... rest here

Note the spruiking from the property masters in the article. Sure, if you need to buy a house, for whatever reason, then do it, but to leverage up an already overpriced housing asset to buy another as an investment, then maybe you should think again.

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