Slump hits new zealand's eco housing

The £200 million Kensington Park development in Orewa on New Zealand's North Island has failed after the company has gone into receivership, and experts are concerned other developments will go down with it as New Zealand struggles in the credit crunch.

The 750 house development in beachside town Orewa was originally marketed as a ‘verdant enclave without rival.'

Now, the intensive suburban living concept has failed dismally after its developers, Kensington Park Properties, went into receivership after borrowing from the Bank of New Zealand, (BNZ) Fidelity Finance and NZ Funds Management.

Subcontractors on the site are owed hundreds of thousands of dollars for work already completed at the site.

For months, Kensington had not been paying bills, enraging local contractors who eventually walked off the site in disgust. They now face finding themselves unsecured creditors of a failed business.

The New Zealand Herald reported that this is just the start of a succession of failed developments, all of which are vulnerable to the ongoing global economic situation.

"More failures are likely before the property downturn is over," said the newspaper.

Kensington Park Properties completed 20 major developments but has stopped work on its huge Taupo project, consisting of building 455 houses at the Huka Falls Resort near Lake Taupo.

New Zealand's housing market has significantly slowed in recent months, and the long-expected correction seems to be underway.

After a boom- since the start of 2000 to end-2007 house prices in New Zealand have risen 103.84 per cent, the inevitable bust has now happened.

The national median house price stood at £129,480 in March of this year, which is only 1.60 per cent higher than the March 2007 median price of £127,441.

Non-residents are generally allowed to buy houses in New Zealand. However, purchase of property does not give the buyer the right to live permanently in New Zealand.

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