According to this article, the housing and economic problems felt so painfully here in the U.S. have made their way across the globe to New Zealand. Property sales have fallen and, unfortunately, this trend is forecast to continue. Furthermore, the article states that the amount of time that houses remain on the market has increased to 33 days. Not surprisingly, the slump in property sales is directly correlated to a rise in unemployment. With the increase in unemployment, banks are reluctant to approve mortgages. In situations where loans are approved, interest rates have risen significantly.
As I stated above, I think this article gives an accurate depiction of not only the economic climate in New Zealand, but the general economic environment worldwide. The article explains that the housing slump has, apparently, not affected Auckland, but it doesn’t explain why. One explanation might be that Auckland is a more affluent area that would, therefore, be less impacted by financial difficulties.
http://www.nuwireinvestor.com/articles/new-zealands-real-estate-market-expected-to-slow-in-2010-54249.aspx
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I agree that in order to achieve lower interest rates with an in increase in loanable funds the employment rate first must increase. With people out of work there is obviously a lack of spending and hence a lack of loans coming in and out of the banking system. I personally feel that the million dollar question, especially for the present U.S administration, is how can we provide more jobs that people are willing and able to participate in during this economic recession? Anyways, good informative post keep it up
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