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Subject

The likelihood of a housing market crash in New Zealand.

Significance

On March 1, average house prices in Auckland, New Zealand's largest city, reached an all-time high of 764,424 New Zealand dollars (564,420 dollars) -- an increase of 1.9% from January 2015. There are considerable fears that the New Zealand housing market, as with its Australian counterpart, could be in a bubble at risk of bursting.

Impacts

High property values will detract from New Zealand's appeal as a destination for entrepreneurs.

Further 'currency wars' may drive investment in the relative safe holdings of New Zealand property.

Expectations of a rate hike in Q4 may be too relaxed if property values continue to rise.

Forecast GDP growth of 3.0% in 2015 will be revised downward if China faces a greater slowdown than at present.

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