(9 February 2010 – New Zealand) The Reserve Bank of New Zealand’s governor, Alan Bollard, has said that the country’s housing market has not worked itself up into another boom, due partly to weaker mortgage approvals.Weaker sales, less home building and lower mortgage approvals have all contributed to a ‘spongy market’ said the RBNZ’s governor.
Mr Bollard said that New Zealand’s tax system has encouraged ‘quite unusual’ household balance sheets, with kiwis ‘relying heavily on houses and house capital growth for retirement and for income’.
The economy resumed expansion in the second quarter of last year, the growth partly reflects the government’s stimulus, stimulatory monetary policy, restocking by companies and strong prices of commodities such as dairy products, however domestically it is still fragile, Mr Bollard said.
Mr Bollard also added that New Zealand is unlikely to catch up to Australia’s wealth and income, which are driven by the demand for the nation’s abundant raw materials.