Housing industry slump predicted by Minister

Press, 3 February 1986, Page 22

Housing industry slump predicted by Minister

PA Auckland The building industry is likely to slow down during 1986, says the Minister of Housing, Mr Goff. The down-turn would be against a background of a contraction in the economy generally, he said yesterday at the opening of a roofing factory in Auckland. “Analysts are confident, however, that the contraction will be shorter than recent down-turns and that building activity will be expanding again by 1987, he said. High interest rates continued to concern him, although last year’s high rates helped to prevent the inflationary spirals that accompanied previous bursts of building activity in 1973 and 1981.

"Confidence in a con-

tinuing firm monetary policy and a decline in the annual inflation rate should, despite some hiccups, see an over-all, if gradual, downward trend in Interest rates,” Mr Goff said. The goods and services tax would add to the cost of new buildings from October, he said. “It will, however, be compensated for by a sharp reduction in income tax which in New Zealand is the highest in the Western world and which has led to widespread evasion and avoidance.” The lowering of income tax would make saving easier for home buyers, and a boost in net incomes would reduce pressure for a higher wage round in 1986 and 1987 and thus lower building costs, he said.