At the same time, a large stock of vacant houses continues to limit incentives for the construction of new homes, and a substantial backlog of foreclosures will likely add further to the supply of vacant homes.
Australia’s exchange rate has fallen by 13 percent on a trade weighted basis since April 2013 and market expectations are for a further easing in policy rates. This upward pressure on the cross rate is of concern, as Australia is the destination for around a third of New Zealand’s manufactured exports and these are more labour intensive than exports of commodities and dairy products.