House prices could drop as much as 10 or 13 per cent over the next three years, it has been predicted.

As more details are revealed of the coalition agreement between Labour, New Zealand First and the Greens, commentators are picking over the potential policy impacts on the housing market.

Infometrics chief forecaster Gareth Kiernan was already expecting a drop in prices before the new government was announced.

He said a slowdown in population growth and net migration would be exacerbated by the new government. Prices could come off by about 10 per cent over the next three years.

Investors had been squeezed by a lack of finance, he said, and that had already slowed the housing market. "Now we are seeing expectations of future capital gains have disappeared."

There was a "chicken and egg" scenario at play where investors saw less benefit in putting money into the housing market and even those who were not constrained by a lack of credit felt less incentive to buy. That then slowed the market further.

Nick Tuffley, chief economist at ASB, said the new government's tax policy would be the big issue for investors.

"Essentially what we are going by is if something isn't specifically mentioned in the coalition agreement, it's likely Labour's policy will go ahead."

That would mean investors could expect to see the end of their ability to off-set rental property losses against their other income, and to have the bright-line test extended so that a capital gains tax would be applied to any investment properties sold within five years.

"There's a degree of uncertainty largely for property investors, they're facing the potential for tax changes that come through to make property investment less attractive. What that suggests is, in the short-term at least, property investors will remain cautious."

Owner-occupiers might feel less pressure to buy, he said, if house prices were not rising as quickly. "The risk of prices galloping away on us looks very low in the short term."

Buyers would have the opportunity to do their due diligence more thoroughly and drive a harder bargain, he said.

But if a significant drop in listings continued, that would give buyers less to choose from and limit how soft prices would be, Tuffley said.

CoreLogic head of research Nick Goodall agreed there would be a more intense focus on property investment and foreign buyers' activity in the market, which would curb demand.

Labour and New Zealand First have agreed to ban foreigners from buying existing homes and set up a register of foreign-owned land and houses.

Prices would probably stay on hold for the next six or 12 months as investors questioned whether it was worth buying with fewer capital gains on offer, low rental yields, ring-fencing of losses and tighter rules around owning rental properties.

But he was unconvinced prices would drop substantially. For prices to fall, owners would have to be forced to sell.

here was still a lack of supply in many parts of the country and first-home buyers and movers who had been holding back might take the opportunity to buy.

Owner-occupiers would not sell for lower prices unless there was a substantial economic change that altered their financial circumstances - or much higher interest rates that made it harder to service their loans.