More housing doom and gloom from BNZ survey

The monthly survey of the bank's Weekly Overview economic bulletin readers found a net 39% feel the economy will deteriorate over the coming year from 30% in the July survey.

The BNZ report says, “Things are nowhere near as negative as they were in the second half of 2005 but apart from June this year the latest result is the worst since March 2006”.

The survey captures the period after the Reserve Bank increased the cash rate to 8.25%.

The report describes sentiment in residential real estate as “overwhelmingly negative”.

Of the 21 responses 18 were bad, one neutral, and two were on the positive side. “Even in the early part of 2006 when there were many worries about interest rates and migration flows and consumer confidence was at multi-year lows the anecdotal feedback was never this
Bad,” says the bank.

“It appears that at long last the Reserve Bank's interest rate increases are definitely gaining some traction in the residential real estate market. Which just goes to show that the official cash rate can be an effective weapon.”