Demand shrugs off rot fears

By BRIAN FALLOW

ASB's housing confidence survey does not reveal any impact on confidence from the rotting homes problem.

"But then people were not directly asked about the issue," chief economist Anthony Byett said.

"We do know from anecdotal evidence that buyers are becoming more circumspect about certain types of housing on offer.

"For example, they make offers conditional on passing a building inspection."

Byett said demand for housing remained strong, due to the migration surge. Lower demand for one kind of housing would show up as higher demand for another.

The impact would be a shift in relative prices.

"Overall, demand remains strong and the likelihood of rising average prices, especially in Auckland, is high."

The impact of the rotting homes problem might be greater on the supply side rather than the demand side, he said.

It is a legal requirement for private sector building certifiers to have insurance.

If insurance becomes unobtainable, or ruinously expensive, the resulting bottleneck could slow the rate at which new houses become available to ease demand pressures.

But so far there is little sign in the statistics that house building, one of the main propellants of economic growth over the past year, is slowing.

Dwelling consents fell 18 per cent in August, but that just reversed the strong rises over the previous two months and brought annual growth from an overheated 56 per cent to a more sustainable 7.8 per cent.

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Feature: Leaky buildings

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