New Zealand is at risk of a sharp fall in property prices, an international ratings agency has warned.
Standard & Poor's has highlighted the "significant risk" of a sharp correction in property prices in its latest report on New Zealand's banking outlook.
S&P said the most likely scenario was that real estate prices would continue to stabilise at current levels over the medium term.
"That said, given the uncertain short- to medium-term outlook for the global economy, we are of the opinion that there remains a significant risk of a sharp correction in property prices."
A deterioration in the terms of trade or a widening of the current account deficit could heighten the risk of a sharp depreciation in currency and a sharp fall in property prices, analyst Nico DeLange said.
The warning came as Auckland's property market continues to boom. Real Estate Institute figures for January showed Auckland's median price up 8.1 per cent compared with 2012.
Harcourts chief executive Hayden Duncan said the idea that property prices were at risk of plummeting was almost scare-mongering.
"In order for that to happen, you need to have an oversupply of a product. There is no chance that we have an oversupply of homes or housing or accommodation in the major cities in New Zealand.
"I think the reality is, their comments are probably irresponsible and possibly uneducated in relation to this particular part of the world.
"I don't think there's any chance that it's going to plummet or decline any time soon."
But financial commentator Bernard Hickey said that while Auckland's property prices were "on another planet" because of lack of supply and continuing demand, they were not bulletproof.
"The economy would have to significantly slow down, you would have to see a sharp drop in the dollar, and an increase in interest rates. And at the moment there's no obvious suggestion that that's close by."By Nicholas Jones Email Nicholas, Vaimoana Tapaleao Email Vaimoana