BNZ economist Tony Alexander says a mixture of higher property prices, firm economic growth, and lower interest rates could see the tide turn on rising home prices.
"There is an end game," he says. "It will come. It always does. It usually comes from rapidly rising interest rates. It won't this time. It will instead reflect a hammering from spreading, strengthening credit controls."
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However, he says it will only become a painful rout if the economy's growth rate tanks at the same time as these restraining measures start to bite.
This may happen, he says, because the credit control spread will be put in place and not removed "until the economy does tank and excesses in the housing market are cleared out".
When and if this happens cannot be predicted, but Alexander says the first condition for a correction, namely widening credit controls, is imminent.
Speaking before Thursday's rate announcement by the Reserve Bank, he speculated that property investors may require a 50 per cent deposit in Auckland, and 30 per cent everywhere else.
"Be in no doubt," he says. "Simply raising interest rates to target generalised inflation, and an over-heating housing market, is no longer workable for our central bank and others overseas."
Foreign buyers
Alexander also predicts that more Chinese buyers are heading our way as leaders in Beijing loosen credit controls and take a more relaxed approach to its people taking money out of the country.
He says that as Australia tightens up policy on foreign buyers of its real estate, and banks across the Tasman cut lending to offshore buyers, that those buyers will increasingly look to New Zealand.
New Zealand is one of the few places willing to sell residential real estate to non-residents.
Land tax
A few weeks ahead of a report that will show if foreign buyers have played any part in driving up Auckland property prices, Prime Minister John Key, who campaigned saying there would be no new taxes, has floated the idea of an annual land tax aimed at making foreign buyers think twice before investing here.
Trouble is, I don't believe international investors -- who think our property is cheap compared to other leading cities -- will be too concerned about the tax (that may push up weekly rents).
Key is just throwing a bone to middle New Zealand who are starting to realise their children can't afford to buy a home of their own, given average prices are well above $900,000 in Auckland.
A land tax may have had some merit three years ago, but even Key can't afford to see Auckland house prices drop too much, not least because there's an election next year.
New homes
The number of homes available to buy is at its lowest level in two years, according to Harcourts.
But a new subdivision at Hobsonville Point will see 400 new homes built by the Nga Maunga Whakahii o Kaipara Trust.
Up to 80 per cent of the properties will be sold at "affordable" and median prices. The development will be on land known as the Village Precinct, but is to be renamed Te Uru.