Monday, March 10, 2008

New Zealand most vulnerable, says Weldon

New Zealand would be hurt more by a housing market collapse than any other country in the world, says NZX chief executive Mark Weldon. Speaking in The Dominion Post today, he said that was because homeowners had borrowed heavily, and because so much of their wealth was tied up in housing.

Mr Weldon said he hoped house prices would not fall more than 5-10 percent, but added that he was "not at all confident" they wouldn't fall more.

The risk of a housing market collapse was one of the factors that prompted Mr Weldon to call today for a cut in official interest rates as soon as the middle of the year. (The Reserve Bank held the official cash rate at 8.25 percent last week.) The other factor was the prospect of a rise in business failures, as a result of the high interest rates, the high kiwi dollar (about US80c), and a shortage of labour.

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