High Interest Rates Encourage Housing Speculation

http://www.scoop.co.nz/stories/HL0704/S00415.htm

Analysis:
Since 2005 in New Zealand, the housing market has seen more and more investments. "We must acknowledge that this is not a housing crisis. It's an investment phenomenon; a bubble in asset values, much like a sharemarket bubble." the irony here is as we've learned, high interest rates should slow down the housing market as consumers find it profitable to save their money in banks. So why have we seen this incredible boom in the housing industry?
- "if mortgage rates rise from 5% to 10%, but the expected rate of increase in housing prices rises from 2% to 9%, are people more or less likely to buy houses"?
From the example above we can see that mortgage rates have increased by 5% and increase in housing prices are projected at 7% and therefore it makes sense to invest in the housing market as it provides profit. This also has to do with New Zealand's overvalued currency as well as the amount of foreign currency in the federal banks.