With the Reserve Bank's increases to the cash rate last year and subsequent increases across all lending institutions for mortgages, the dominance of residential rental property as the standout preference amongst New Zealand investors may be coming to an end.
These are not the conditions that cause a big fall in house prices. I think it will fizzle out. Gradually the interest rate impost will hit people's pockets. Gradually the new houses and apartments still being built will affect the supplydemand balance.
Evaluating the data available, the average house price is still increasing at a rate similar to most of 2004 and 2005.