Today's figures from the Real Estate Institute provide further evidence that the New Zealand residential housing market has turned. Median prices are leveling off and in some regions are actually declining.
Yet it is the significantly reduced sales levels of residential property that foreshadow the market downturn to come. I think it might be more severe than a number of economists have forecast. I have seen this happen before. Business investment will be contained, consumer spending will decline, the economy will slow down.
As it does at this stage of every economic cycle. The question facing NZ, is how quick the decline and how deep the downturn. Come November's general election, the answer to that question will be critical.
What impact on Pingar? With our sales focus being very much offshore, the revenue impact is unlikely to be that significant. The key effect will be felt by any change in the Reserve Bank's interest rate policy. Any reduction in base rates to offset the decline in the domestic economy would almost certainly lead to a lower $NZ exchange rate. That in turn would increase offshore returns.
So new sensitivities are being built into the numbers to analyse the different possible scenarios. And I thought I worked in online publishing.
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