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Commercial property and financial stability

Ashley Dunstan, Hayden Skilling

Commercial property lending has been the main reason for defaults during most financial crises, both internationally and in New Zealand. With the commercial property market recovering strongly, this article reviews the structure of the New Zealand market and its relationship to financial stability. A key conclusion is that risks in commercial property have declined since the global financial crisis (GFC) because less leverage is being used to fund new purchases and developments.