Ratings agency Fitch has warned that New Zealand and several other "hot" Asia-Pacific countries are in for a sharp slowdown in house price growth this year.
The housing market was likely to "decelerate sharply" in several Asia-Pacific (Apac) markets over 2017, as sheer affordability, increased housing supply and tighter lending and regulatory standards kicked in, the agency said.
Australia, New Zealand and China had had the region's biggest recent price rises, but they would now experience a "pronounced and overdue slowdown".
"We expect them to record single-digit house price growth, rather than the double-digit growth experienced last year."
New Zealand house prices, which grew 12.7 per cent nationally last year, were forecast to slow to 5 per cent, due to affordability limits and tighter regulation.
"Measures of relative home price expensiveness have deteriorated more in New Zealand since 2010 than in any other country covered by our report," Fitch said.
New Zealand also had the largest gap in house price growth between regions.
There was a difference of over 80 percentage points between Auckland, where prices increased by some 76.3 per cent, and those on the West Coast, where prices lost 5.1 per cent over the last four years.
The good news was that Fitch still rated New Zealand's economy and did not expected the housing slowdown to impact on it too greatly.
It gave New Zealand a 'AA' on its "issuer default rating", a measure of the country's vulnerability to defaulting on its debts.
Five of the six Apac countries Fitch looked at were in similar positions, supported by stable employment, limited housing, low interest rates and continued population growth.
Only Singapore was expected to see house prices fall, while Australian house price growth would slow to 3 per cent. from nearly 11 per cent in 2016.
Fitch said New Zealand's "economic momentum" was greater than it expected six months ago, and the buoyant economy was increasing the tax take while public spending was subdued.
Dairying's recovery continued, Auckland construction was lifting investment, and consumer spending had been particularly strong thanks to the growing population and lower mortgage repayments.
New Zealand's strength was its good governance but its vulnerability was high debt. Fitch warned that household debt was being supported by low interest rates and a strong labour market, and could become "unsustainable" if these conditions changed.
Fitch expected economic growth to slow from its current 3.2 per cent to 2.9 per cent this year, and 2.5 per cent in 2018, as net migration started to ease and the Christchurch rebuild tailed off.
"Nevertheless, at this level, the economy would still grow faster than the median of 'AA'-rated peers," it said.