Bay financial experts are warning residents with increased value in their property not to "use their house like an ATM".
Craigs Investment Partners head of private wealth research, Mark Lister said it was risky to use borrowed money to buy up large on boats, cars and overseas trips in boom times.
"People start to use their house like an ATM," he said. "We do tend to see that behaviour creeping in when things are going well."
The increased spending could leave homeowners carrying more debt into an inevitable economic downturn, he said.
"You've spent it on nice-to-haves that don't necessarily hold their value, or go up in value."
Mr Lister said Tauranga homeowners had made 20 to 30 per cent capital gain on their homes in the past year.
"These gains are only on paper until they actually sell their house. It's only something that you can put to work if you're downsizing or moving to a much cheaper region," he said.
He predicted the Tauranga property market had a few more good years in it.
"Prices dropped 10 to 15 per cent during the global financial crisis, then they didn't really do anything (between 2008 and 2014)," he said. "What you're seeing is really just a bit of catch-up."
Jane Benton, owner and financial planner from G3 Financial Freedom, also warned against using increased equity to invest in non-increasing assets.
"That's always where the issues start when it comes to financial crisis. In really bad situations you end up with negative equity. If interest rates go up that puts a lot of strain on cash flow."
Most clients were looking to use capital gains to generate passive income in retirement, she said.
"We're finding that people aren't using equity in their property to buy rentals because they're seeing the market as over-priced," she said.
Investing in rental property and paying interest only on the mortgage, in the hope of collecting capital gains in retirement, may not pay off, she said.
This month the Bay of Plenty Times met Mal and Linda Lewis who sold their three-bedroom Papamoa home for a $216,000 profit, 18 months after buying it.
The Lewises bought the house off the plans for $399,000 and sold it for $615,000. In search of a quieter life, the couple planned to build a new home in Te Aroha.
Harcourts Tauranga managing director Simon Martin said it was a "bit of crystal ball-gazing situation" to determine if Tauranga's housing market had hit its peak.
Mr Martin put recent dips in sales down to limited stock on the market and said numbers had already increased over the last few weeks, heading into spring.
"The lack of supply probably is starting to ease, which will please a lot of buyers," he said.
Increased supply could see prices begin to plateau but, in the absence of any major world event, Mr Martin did not see them dropping.
"It's very rare in the property market to get a very big spike. It's a long-term investment, property, it's always proven to be that way."
He expected this month's drop in the Official Cash Rate to lead to six months of increased sales numbers. However, the new loan to value ratio restrictions (LVR), which require investors to have 40 per cent deposits on existing homes, may cancel this out, he said.
Owner of First National Tauranga Anton Jones said with interest rates still low it was a good time for families to upscale.
"Demand is still good and Auckland buyers are looking to come down and everything's still ticking over quite nicely."
The new LVR rules for investors may only have a short-term effect until they "got their ducks in a row" and came back.
"I think the market's still got a lot of demand in it yet. Whether we're at the top of the curve, or close to it, that remains to be seen."
Realty Services chief executive Ross Stanway said whether it was a good time to sell was dependent on an individual's circumstances, but there were types of homes - well-built and in good locations - that were highly sought after.
"At current prices, for some people, it would certainly represent good business sense to sell."
Other owners had what they needed and simply wanted to stay put with increased confidence and equity.
Mr Stanway said the city was coming out of a long, wet winter and housing stock remained low.
While normally spring, and the increased number of listings, would mean prices plateaued, demand remained high, he said.
"This year, without a doubt, I believe we will continue to see a high level of interest from out of town."
The last 12 months had also seen renewed attention given to suburbs where sales were previously quite stable.