Financial ratings agency Standard & Poor's says there is a significant risk of a property crash in New Zealand.
S&P, which has come in for criticism over its failures to adequately assess risk on many investments in the run-up to the global financial crisis, said its "base case scenario" was for medium-term real estate prices continuing to stabilise at current levels.
But credit analyst Nico DeLange said: "We are of the opinion that a significant risk remains of a sharp correction in property prices occurring given the uncertain short-to medium term outlook for the global economy."
Such an event would have a flow-on impact on the ratings of New Zealand's banks.
DeLange said: "This could potentially lead to a build-up of economic risks, resulting in the lowering of the economic risk score of New Zealand to '4' from '3'.
S&P, which has come in for criticism over its failures to adequately assess risk on many investments in the run-up to the global financial crisis, said its "base case scenario" was for medium-term real estate prices continuing to stabilise at current levels.
But credit analyst Nico DeLange said: "We are of the opinion that a significant risk remains of a sharp correction in property prices occurring given the uncertain short-to medium term outlook for the global economy."
Such an event would have a flow-on impact on the ratings of New Zealand's banks.
DeLange said: "This could potentially lead to a build-up of economic risks, resulting in the lowering of the economic risk score of New Zealand to '4' from '3'.
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