New Zealand is "vulnerable" to a fall in house prices, which could be triggered by an overseas financial shock, Reserve Bank deputy governor Grant Spencer says.
"If the growth in demand continues to exceed the growth in housing supply, house prices will become increasingly vulnerable to a sharp correction, which could be prompted by, say, a global financial shock," Spencer said.
Here we have a classic case of an increase in demand for diamonds. The lack of supply levels, hence, increases the price for this particular commodity.