House prices set to fall

PHOTO: Photo: RNZ / Claire Eastham-Farrelly

The outlook for New Zealand’s banking system has improved because of the better-than-expected management of the Covid-19 pandemic, while house prices are set to fall, according to a leading credit rating agency.

S&P Global Ratings said the economy had defied predictions of a sharp recession and a slide in house prices through the management of the pandemic and this had cushioned the banking system from an anticipated credit shock.

Given the fact that New Zealand has done an incredible job of containing Covid … and is still continuing to do better than most developed economies of the world, we would say that is certainly a positive economic influence on the banking system,” S&P’s financial institutions director Lisa Barrett said.

It is now forecasting economic growth of 2.4 percent this year and about 1.5 percent between 2022 and 2024, underpinned by the strength in the housing market.

Barrett warned the price rises would not last.