Economist Cameron Bagrie says the property market in Australia is being closely watched for signs of similar movement in New Zealand.
Bagrie says: "We are watching closely what's going on across the Tasman in regard to the Sydney property market, and Melbourne's. We are starting to see early signs that Auckland's starting to follow that lead, it's probably a bit of a lite version at this stage."
He says affordability is an issue in over-inflated markets around the world.
"If you step back and look at the bigger picture around the globe, you are starting to see the property market cool off in some other what you call over-inflated pretty hot areas, such as Vancouver and London. Affordability is a bigger issue," Bagrie, from Bagrie Economics, told Corin Dann on the Q+A Business Podcast.
"When you stretch that affordability rubber band eventually you can't stretch it anymore and the market starts to snap back, then of course you overlay that with the Banking Inquiry in Australia in regard to where responsible lending rules is going to take us, what the new regime is going to look like will all of a sudden it is a lot tougher to get credit."
He said that with affordability problems, less credit, and a couple of "marginal economic tweaks" we could see that "all of a sudden the market starts to come back at a fairly hefty clip" as is now happening in Sydney and Melbourne.
He added that "the Auckland property market is falling as we speak - let's not sugar coat this - people are out there saying the market is flat, the market is not flat.
"Auckland house prices are down 3% from their peak about 12 months ago and some wards are already down 5-6% but at this stage it is very orderly, it's very manageable."
Auckland property prices are up in excess of 120% since 2009, so dropping 3-10% is "a bit of a drop in the bucket".
"If we start to move into a scenario where house prices start to move back in the 10-20% range then that becomes a little bit more problematic in regard to confidence, what it does to spending, what it potentially does in regard to availability of credit for small to medium size enterprises."
Bagrie says Auckland should not expect to provide a big boost to the New Zealand spending for the next five years or so.
He says the big issue is affordability first and foremost.
"People have said that the Auckland property market is not going to move backwards because we have got a housing shortage in Auckland - that's just baloney, because we've got a housing shortage and Auckland is the only region across the country where house prices are falling, that basically tells us affordability is the big game in town."
Other centres with the same sort of unaffordability characteristics will include Tauranga and Queenstown. But he says there is still growth in other smaller urban centres.
"An awful lot of other regions, if you look at Wellington for instance, Wellington has been completely desynchronised from what has been going on in Auckland."
He says the Wellington property market was pretty late to the economic party, so it has started to play a bit of catch up, as have Hawkes Bay, Whanganui, Palmerston North, and parts of the deep south.
While interest rates are at historic lows, Bagrie says it is going to be tougher for borrowers to secure loans.
"There is an argument here that the Reserve Bank could be cutting the official cash rate over 2019 so markets have repriced that and that has given banks a bit more wriggle room to get out there and be a bit more aggressive offering those sub 4% mortgage rates.
"Banks are asking a lot more questions not about serviceability of the loan today where today's interest rates are going to be but it's about where interest rates could be on average over the next 5, 6, 7 years and that could be up around 5-6% so banks are a lot more focussed on serviceability and they're asking a lot more questions. This will be become a big story over the next few years as responsible lending rules start to bite."
* Q+A is back on TVNZ1 on Monday February 18 at 9.30pm.
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