Housing report: Credit squeeze creates Mexican standoff in farm and house sales

Watch on our video page here Watch on YouTube here Bernard Hickey delivers a housing report in association with BNZ which looks at the 'Mexican standoff' developing in the housing market and the rural real estate market as sellers refuse to accept lower prices and buyers are either unable or unwilling to pay top dollar. The standoff is likely to remain as long as banks are unwilling to force the issue by pushing for mortgagee sales. New Zealand's banks remain well capitalised and are reluctant to push customers over the edge into a mortgagee sale unless they absolutely have to. This implies a long period ahead of very low sales volumes. This report looks at farm sales figures for January from the Real Estate Institute and housing approvals data for the last week from the Reserve Bank of New Zealand. There were just 46 farms sold in January and housing approvals were down 8.7% in the last week from the same week a year earlier. Banks globally are clamping down on lending growth as they prepare for tougher regulations on capital requirements and leverage levels. This is all part of the global de-leveraging that has been unleashed by the Global Financial Crisis in the wake of rising debt levels throughout the developed world. Bank lending to farming in New Zealand fell NZ$315 million in the four months to December, the first sustained fall in 9 years. The REINZ has blamed a lack of bank confidence for the very low sales in January, which are down 76% from two years ago.