Unless intervention comes quickly, we are in for a crash, according to leading financial personal trainer, author and principal of financial advisers enableme, Hannah McQueen.
Immigration is too high, property supply is too slow, interest rates are low and the cost to build gets more expensive every year, she says. The result is that prices will keep going up until they don't.
The big question is: When property values stop going up, will they "flatline" or does the market topple? The answer is: The longer they are left to escalate with no considered intervention, the bigger the fall, McQueen warns.
The government's consensus seems to be that we are going to have a "soft landing"; demand will slow and property prices will eventually correct themselves as supply catches up with demand.
"If this is the case, at best we would enter a period of stagflation, where property values hold for a prolonged period of time, longer than previous property cycles, before they increase in value again. This is the hope," she says.
But according to a report on housing affordability (November 2014) it is expected to be more than three years before the supply catches up with demand - which means that if left unchecked, properties will continue to increase in value during this time.
"If this plays out, we need to expect that the market will correct itself ruthlessly. Whether you call it a crash is your call.
"In this scenario, prepare for prices to come down. The trick is to ensure you don't have to sell your property when the prices drop. To do this, you need to get your house in order," McQueen says.
As a country our income-to-debt levels are running at 162%, higher than just before the 2007 GFC. A rising property market hides a multitude of sins; in particular it masks overspending because many people put their overspending onto their mortgages.
What should property owners be doing? Says McQueen, "the most important thing to remember is that if you are a property owner, interest rates are at a record low - this is your time to make as much progress as your financial situation allows.
"You must pay down your debt as fast as possible. If you do not have a cash surplus at this point, then you are going to have to take some drastic measures to get one. Make the hard but necessary calls to protect your own financial situation."
• If you have a mortgage, your strategy has to be to reduce your debt by 30% over the next five years. If you don't have a strategy to do this, then you need to get one, McQueen says.
• Reduce your debt to position yourself to weather the pending economic downturn, which will see higher unemployment, higher interest and divorce rates.
• If you own an investment property, review the numbers. If the yield is less than 5%, assess if it is a good time to sell.
• Implement a strategy to reduce the debt to a level where the property breaks even, without you having to "top it up". If your property cannot do this, consider replacing it with a better performing one.
McQueen estimates less than 10% of properties advertised would constitute "good investment properties" because the numbers don't stack up.
"Now is the time to get your house in order, especially if the said house is worth more than $1m as you will be the one in for the bumpier rides when a correction takes place.
"If you do not have a plan to make real progress over the next 5 years, then you may as well sell your property now and downsize to a cheaper alternative, reducing your exposure for when the correction comes," she says.
On political options, McQueen believes the government needs to stop denying the size of the problem and intervene.
"Intervention can take many forms. Reduce immigration, or if we need immigration to offset our low financial performance as a nation, then send the immigrants to other parts of new zealand for a period of time so that the auckland market, which is already overheated, has a chance to breathe.
"Tax foreign investors, or better yet prevent them from investing in our country unless they are both citizens and residents. Increase the rates for people who have properties but are choosing to keep them unoccupied, therefore contributing to the problem of poor supply," she advises.
She advocates a stamp duty or capital gains tax, using the proceeds to lower personal tax rates and lending or donating the proceeds to first-home buyers; and investigating why our building costs are so high compared to any other country in the developed world.
"The options are not endless, but there are some concrete opportunities that should be explored," she says.
Hannah McQueen is the founding director of enableme - financial personal trainers, and author of best-selling self-help books kill your mortgage and sort retirement, and perfect balance: how to get ahead financially and still have a life.