No abstract

The main objective of this paper is to investigate the determining factors of loan delinquencies from the perspective of borrower attributes and loan characteristics. Empirical results indicated that the borrower-lender distance factor, collateral, education levels as well as availability of a monthly budget are having significant effects on loan delinquencies. On the other hand, level of income and gender have no significant impact on repayment behaviour. Credit is good as it allows the borrowers financial flexibility, however, debt is viewed as bad if it was not managed properly. Therefore, a correct attitude towards credit management and self-discipline can be encouraged to reduce loan default rates.

No abstract

Housing price in New Zealand has appreciated substantially after the Global Financial Crisis, resulting in an affordability problem for first home buyers. This paper studies whether changes in immigration activity and mortgage interest rate influence housing price. Empirical findings derived using VECM confirm the impact of immigration and mortgage interest rate on housing property price. Both variables explain 11.4 percent of the variation of Housing Index. An increase of 1 percent in mortgage interest rate would reduce the housing index movement by 1.44 percent whilst a 1 percent increase in immigrants would increase the housing index by 0.30 percent. In addition, about 2 percent of the short-run deviations of housing prices are adjusted towards the long-run equilibrium each month.

New Zealanders’ overwhelming favour of residential property investment has resulted in residential properties being overvalued with a house-price-to-income multiple equals to 5.9 for the country and 10 for its largest city – Auckland. With the deterioration in housing affordability; currently ranked the fourth worst in the world for Auckland (the largest city in New Zealand), investing directly in residential property become riskier. Under this scenario, a more passive property investment option such as REIT could be more viable. The objective of the paper is to assess whether REIT could offer a better risk and return contour then direct residential property option to potential property investors in New Zealand. Empirical findings from this study show that there is a significant difference between the rates of return of these two types of property investment options. Further analysis using Treynor ratio indicates that investing in REITs generated a higher return on a risk-adjusted basis. This finding has implications for investors looking for a more affordable and liquid way to tap into the property asset class.