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Warning from Joyce for borrowers

NZ Newswire logoNZ Newswire 8/02/2017 Paul McBeth
Finance Minister Steven Joyce has cautioned potential home buyers to brace for higher interest rates. © Getty Images Finance Minister Steven Joyce has cautioned potential home buyers to brace for higher interest rates.

Finance Minister Steven Joyce has cautioned potential property buyers from getting too comfortable with New Zealand's historically low interest rates.

He says people should consider whether any mortgage debt taken on is still affordable in three or four years if rates rise.

Speaking to the parliament's finance and expenditure committee, Mr Joyce said New Zealand's housing supply shortage was shrinking given the country's "biggest ever building boom" and there were signs Auckland's property market was cooling. All of that suggested "there's not much upside in house prices".

"The bigger risk that people should just think about is the potential for interest rates to now rise in the years ahead - we're seeing that now in bond rates and that's why I think it's important people don't overextend themselves at this point," Mr Joyce said.

"It's often in the case of economics that once people have something for a while, whether it's low oil prices, high oil prices, or low interest rates, they seem to assume it will last forever, but it doesn't."

The Reserve Bank will make its first policy review of the year Thursday with governor Graeme Wheeler expected to keep the official cash rate at 1.75 per cent and retain a neutral bias for the benchmark rate's future track.

Will Travel for Affordable Housing?: Finding affordable housing may seem like the impossible American dream these days, but here's a small consolation: America isn't home to the priciest city in the world. In fact, a full four (yes, four!) places bested U.S. locales when it comes to super-costly places to lay your head, according to the <a href="http://www.demographia.com/dhi.pdf">13th Annual Demographia International Housing Affordability Survey: 2017</a>.The survey measured affordability in 406 metropolitan housing markets in nine countries around the world — Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the U.K. and the U.S. — using data from the third quarter of 2016. Demographia then ranked 92 major housing markets (those with populations of more than 1,000,000) using the "median multiple," a measure recommended by the World Bank and the United Nations that takes the median house price and divides it by the median household income.Ready for more good news? The U.S. actually has the most affordable housing among the measured nations, netting all 11 slots on Demographia's least affordable cities list (there were a whole bunch of ties). The World's Priciest (& Cheapest) Cities to Live in 2017

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