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HOUSE prices in New Zealand are due to settle down, according to most market experts, although high levels of immigration will stop them falling very far, especially in Auckland.
Most of it would be driven by migration. "I think we will be looking at some fairly strong migration numbers for a number of years," said BNZ Bank Chief Economist Tony Alexander.
He believed the net gain from migration would double from about 100,000 in the 1990s to 200,000 between 2000 and 2010. "That's a lot of extra people and a lot of extra houses."
Others were more cautious. REINZ President Rex Hadley thought the market would remain strong for the rest of this year and the beginning of the next, but after that "it is in the lap of the gods", he said.
And Infometrics economist Gareth Kiernan thought the market had peaked and the decline of sales in June and July was more than a seasonal downturn. "The momentum is slightly downward."
The strong housing market had stimulated the building sector and as new housing stock became available it would slowly take the heat out of the market.
"I think it will slowly ease back to the same levels as early spring last year," Mr Kiernan said. However, house prices don't appear to be rising as rapidly as they did in the mid '90s boom.
Median selling prices increased 7.9 per cent nationally in the year to June 30, according to the REINZ. Surprisingly, median prices in Auckland, where the market is the most buoyant, were up only 3.5 per cent. "It's significant that prices haven't risen dramatically," Rex Hadley said. "I think we'll see further modest price increases in the remainder of the year but it's really just steady as she goes.
"And people who bought homes at the last market peak in the '90s are probably only getting back to the sort of price levels they paid for them," he said.
Opinions varied on how long the boom would last. BNZ chief economist Tony Alexander was bullish on housing's prospects. "I really think the only restraint on the housing market in places will be the availability of stock.
"Our mobile mortgage managers are finding a high level of confidence and a shortage of listings pretty much around the country. People don't view interest rates as onerous, in our view they are a bit below average and we've got continuing strong population growth," Tony Alexander said.