A property market expert says a prediction house prices will stop rising in 2021 because no one can afford them isn't true.
The cost of borrowing and servicing a mortgage for a property is actually cheaper than ever, Ashley Church told Newshub, but with purchase prices at record highs most people don't realise it.
Analysts CoreLogic on Tuesday said prices would continue to rise in the first half of this year, but it can't go on forever.
"Later in 2021 the potential flow-on impact of such strong growth will eventually be outright unaffordability reducing the pool of buyers able to borrow enough to participate in the market," its House Price Index for December said.
"At this point there will need to be an adjustment of expectations from both vendors and buyers."
Church, who used to head the Property Institute of New Zealand, said unlike past booms this one's causes are obvious.
"Every time there's been an increase or the beginning of a boom and property prices have started to take off again, there have been all sorts of phantom causes that have been put out by various parties. What happens is they spend a couple of years being percolated and eventually the Government passes legislation then we find out down the track they're not actually the real causes. A good example of that would be the foreign buyers ban - which addressed an issue that didn't actually exist.
"What's different this time is the causes it's being attributed to are the real reason."
Church, who has previously said there's nothing the Government can do to stop house prices going up and shouldn't try, expects prices to keep going up through 2021 - defying CoreLogic's prediction they'll stop due to the sheer unaffordability.
"That isn't going to happen... because the cost of servicing a mortgage now is actually less than it was 15 or 20 years ago. I know that's a strange thing to say when you consider house prices have increased so dramatically, but... the cost of interest has come down so dramatically."
Church says in the 1990s, thanks to higher interest rates it cost 52 percent of household income to service a mortgage - but that's fallen to 37 percent.
Data from interest.co.nz and the Ministry of Housing and Urban Development show household incomes to mortgage cost ratios this century peaked just before the global financial crisis, but have improved since then, with interest rates generally trending downwards.
This means while prices have gone up, making it more difficult to scrape together a deposit to get on the ladder, once you're there it's not as difficult to pay a mortgage as it has been at times in the past.
"Most people don't understand that. They think it's getting more expensive to buy property - it's actually getting cheaper."
A 20 percent deposit on the median house now would have been enough to buy the house outright in 1996, data shows.
The Reserve Bank will soon reintroduce loan-to-value ratios in an attempt to cool the market, which Church says won't do anything except make it harder for first-home buyers.
Debt-to-income ratios on the other hand - which limit how much you can borrow based on your income - would "kill" the market. But Church said like price and wage freezes implemented by former Prime Minister Sir Rob Muldoon, once they came off, the market would go "mental" - urging the Government and Reserve Bank to just leave it alone.
"It'll fix itself eventually."