KEY POINTS:
The property market's big boom is finally about to end, with a top investor analyst predicting price drops in Auckland within the year.
Kieran Trass, of Suburbwatch.co.nz, said his data forecasted a drop in three main indicator suburbs in Auckland - Manurewa, Forrest Hill and the northern bays of the North Shore.
"I would be surprised if in 12 months we don't see a decline in values in the North Shore and in other parts of Auckland. I haven't been as confident of a drop-off in Auckland in the past six years," Trass said.
"It's almost like the setting sun. It has not gone yet but it's obvious it's not going to be around much longer. You are not seeing blood on the streets and you are not going to, but it's certainly time for caution."
Even blue chip areas, such as Mission Bay and Kohimarama in central Auckland, are showing signs of a drop in growth. "East Coast Bays - even top-notch areas like St Heliers - the trends in those suburbs look like the growth is tailing off," he said. "Wellington, meanwhile, still looks great but Christchurch is looking very patchy."
Trass analyses data from Land Transfer Authority sales and he said several Auckland suburbs had had a dramatic decline in price growth.
With an expected sales downturn in winter, the suburbs could see price drops in the next six months.
He said the biggest concern was Manurewa - an area that has seen huge growth but might have peaked too early. It's in stark contrast to nearby Mangere, where prices continue to increase.
"Perhaps the value of property in Manurewa has reached a point where compared with Mangere you are better to buy in Mangere. There has been a flood of investors going into Manurewa but there have been fewer in Mangere."
Trass said these areas offered a warning to the Auckland region as a whole, particularly the North Shore.
He predicts that in the next year prices will flatten out or drop there first, followed by central Auckland, east Auckland and, finally, the west and south.
Trass said this wasn't just another in a long line of failed attempts to predict the end of the property boom.
"This is the first time we have had clear anecdotal evidence that says we are looking for the first time at the end of this property boom. In a year's time the picture will look different still - it will have deteriorated even more."
Trass isn't just a lonely voice. Other real estate experts backed up his analysis. Olly Newland, author of The Day the Bubble Bursts, said Manurewa and the North Shore were triggers to the state of the market.
"I think it would be correct to say those suburbs are going to be the first to suffer any of the thousand and one cuts. The people there are pretty much on fixed incomes and any interest rate rises and expenditure rises are going to cut into their incomes. They live up to the last dollar they earn. The same happened in places like Sydney."
However, the downturn is unlikely to be a big crash, said Newland. It's likely to be a steady drop, but there will be some high-profile casualties.
"There will be a few spectacular developments failing. It's people who have borrowed up to a 100 per cent or whose expenses have reached crisis point or developers who are relying 100 per cent on selling their properties and need that cash coming in."
Bob Hargreaves, director of Massey University's Real Estate Institute, said those suburbs would indicate a slowing of the market. However he was loath to accurately predict a downturn.
"If it goes down it will be those mortgage belt suburbs that feel the hit. Those would be indicator suburbs - if things are going to go that would be where it's happening," Hargreaves said. "There's a whole graveyard of economists predicting it will go down. I think it would take some dramatic event for it to fall."
Meanwhile, Real Estate Institute president Murray Cleland said he saw no indication that prices were dropping. "If you talk to most agents they will say there's a big shortage of listings. There's plenty of buyers but not many listings.
"When you get that scenario only one thing happens in the real estate market - it goes up. With that happening there's no way this market is going down. I have been listening to this for a few years now that there's going to be a crash in the market and it's just not happening."
Real estate agents in the suburbs Trass identified are sceptical as well. Sue Douglas of Ray White Manurewa said price rises might flatten but wouldn't drop.
"I would probably agree there has been a decline in the growth of prices - they have stabilised. I think it [the market] will flatten out but I don't know that it will drop. We are competitively priced compared with other areas in the city and there's high demand and good employment rates."
Mark Finnigan of Barfoot and Thompson Torbay, said he hadn't seen a sign of a drop-off.
" I haven't seen a decrease in prices. We have had many auctions and tenders and they have hit record prices."
'It makes me wish i could sell'
Kieran Trass' prediction of price drops in Manurewa comes as a shock to John van den Broek - he pays close attention to what Trass says.
Now van den Broek is going to have to seriously consider what he'll do with his two investment properties in the South Auckland suburb.
He said: "Kieran is the person who's been most accurate, as far as I've seen, in what's happening in the market.
"It makes me say I wish I could sell them now."
But he's not sure he will.
Two years ago, he sold three other investment properties in Manurewa, fearful of a coming slump.
He regrets that decision and has learned his lesson.
"I'm of the opinion now that if you really want to get into property investment, never sell it.
"It's always going to grow, and it's a safe way of investing.
"If you try to follow the cycle and make money on the ups and downs, you have to be so much more switched on... If I sell those two houses, what am I going to do with that money?"
But he still trusts what Trass has to say, and would advise others to take heed.
He said: "If someone came up to me and said 'Should I sell my property in Manurewa?' I would say 'yes'."
'I don't believe a word'
The commentators may not believe things are looking rosy for the price of his Forrest Hill home, but Neil Christie doesn't believe a word.
"It's not immediately obvious to me why it would have a problem compared to other areas of the North Shore or in Auckland. It's a pretty mature suburb - it's well connected to all the areas of the North Shore and the motorway. There's development going on and there's going to be a lot of people working in the area. You've got good schools around like Westlake Boys and Westlake Girls."
Since he moved to the area in 2000, Christie said Forrest Hill had been on the up. And there was further industrial development in the region which he reckoned would see more growth in property prices.
"Well what Suburbwatch is saying may be the case, and I'm not denying it, [but] it's not clear to me why those areas would be singled out. But it could be a reaction - I heard North Shore prices had gone ahead more than other areas in Auckland so it may be simply a correction."
But if what Trass predicts is true, Christie won't be selling up.
"It's irrelevant to me personally, it's our home. Property investors might take a different view but I think most people would want to see some solid evidence before doing anything. Projections may or may not come true."
At a glance
* Prices in indicator suburbs such as Manurewa, Forrest Hill and the North Shore's northern bays are due to drop within the next year, according to suburbwatch.co.nz.
* "Mortgage belt" suburbs where homeowners are on fixed incomes will feel it worst.
* However, it won't be a price crash, and only about 10 per cent of the market is likely to be affected.
