Until recently, investors did not have to worry about business as credit was readily available and, although New Zealand interest rates are somewhat higher than other countries, they still have the ability to borrow. Now, investors are being warned of tightening requirements.
Lenders are reigning in the loans they are providing, making it more difficult than ever for investors to get their hands on these loans. This is being blamed on the credit crunch that is happening on a global level. Finance companies are fearful of losing too much more in the coming months.
The hardest hit are the developers and those that are working to subdivide land. Even small investors are hurting though.
As reported by New Zealand Herald, Williams Cairns of the mortgage bank Cairns Lockie said that, "That market is very, very hard." Some developers are even seeing properties such as apartment complexes and commercial properties being stopped for lack of funding. Some are unable to borrow to complete these projects.
All of this comes at a time when New Zealand house prices rose the least in the last year. Plus, the cost of living continues to rise, precariously as does the interest rates. These factors couple to provide trouble for the New Zealand market as a whole. The demand for property is dropping, which could further hurt investors here.
