He says banks should introduce more voluntary lending restrictions, saying they are unable to keep lending at current volumes without turning to pricey overseas capital.
If there was an economic downturn, people could be unable to cover their mortgages and overseas investors would look to sell up "most probably in a stampede", Hisco wrote.
"There are storm clouds on the horizon for sure and when they break who knows what will happen."
Eaqub said Hisco's comments were a sign of the troubled times.
"It's funny that the banks are saying that something must be done. It's a complete crisis when you've got Hisco and all these guys coming out saying the same kind of thing - even businesses and people you'd think would be the supporters."
Eaqub said the housing market in Auckland was "absolutely nuts".
"It is extraordinarily unaffordable and income simply will not be catching up fast enough to take care of a risk of a future downturn."
Associate Finance Minister Steven Joyce said the Government agreed with some of what Hisco said but disagreed on other points.
"Around housing, one thing we'd definitely agree on is a comprehensive response - it involves the Reserve Bank, it involves councils and it involves the Government. And that's why we have a comprehensive plan that works in a range of areas.
"From the Government's perspective, we've been taking a steady and conservative approach for many years - and we'll continue to do so."
Labour finance spokesman Grant Robertson said Hisco's message reflected the fact the housing market was in crisis.
"This is the kind of warning from inside the system that should, if nothing else, shake the Government."
Labour policy is to ban foreign buyers, extend the "bright line" test so investment properties on-sold within five years have to pay a tax on the capital gains achieved, fast-track the building of affordable homes and begin consultation on ending negative gearing.
Robertson said immigration policies should also be reviewed.
Greens finance spokeswoman Julie Anne Genter said ANZ's call for more restrictions on lending spoke volumes about the housing market.
"It definitely feels like a bubble."
NZ First leader Winston Peters said Hisco's warning of a "messy end" was totally predictable and avoidable but had been ignored by the Government and others for too long.
"There will be a correction. It is going to be enormously painful for hundreds of thousands of New Zealanders and that's the sad part about it. Many people will lose their equity." Liam Dann, Moana Tapaleao, Nicholas Jones and Claire Trevett
