House prices in New Zealand versus the average Kiwi income have more than doubled since 1980.

If you thought house prices were hot, you were right, but this figure shows home ownership is becoming a more and more distant dream for the average New Zealander, unless we see market slow-down or correction.

New Zealand is nearly 2000 on the global house price index in terms of home affordability, streets ahead of other English-speaking Commonwealth countries like Australia, Britain and Canada.

No economy can sustain house prices that appreciate, long term, greater than wages. While Kiwis love to own property, as an investment option, it's not looking too flash currently.

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I meet a lot of Kiwis who believe New Zealand residential housing will consistently deliver double-digit growth, with no risk. Common quotes include ''They aren't building any more land'', ''You can't go wrong with bricks and mortar'' and ''Don't you know that property prices only ever go up?''

Our love of bricks and mortar has long skewed the way we invest and allocate our capital. Some of this bias to property is due to an unfair tax advantage of property over other asset classes, such as shares and bonds, but also the behavioural element of "performance bias" whereby investors have become accustomed to high returns over a prolonged period of time and are blind to any form of risk.

The reality is, we can't have house prices consistently delivering these returns without there being underlying wage and income growth. In New Zealand, we have very low wage growth.

So where to from here?

We could enter a prolonged period of slower growth, or a period where there is a correction.

Look at Ireland and New Zealand as an example. Between 1980 and June 2007 New Zealand and Ireland house prices were very similar. On today's index, New Zealand sits at nearly 2000, while Ireland is at 750.

They have had a big correction, it's painful and people are still feeling it, but the Irish economy is in okay shape.

Whereas our market has just kept going and going. How long can it continue at this growth rate, when New Zealanders have become accustomed to it and our investing pattern revolves around it?

If house prices continue as they are, more Kiwis will become renters, rather than home owners.

Added to that, house prices have appreciated much higher than rent. House prices against rents have increased by 300 per cent since 1980.

The good thing for Hawke's Bay is our house prices have not appreciated the same way as the index has, we have lagged. Should there be a period of correction or a slow-down, our pain would not be as great.

Reference: The Economist, March 2017

*Nick Stewart is an authorised financial adviser and executive director of Stewart Financial Group. Stewart Group is a Hawke's Bay-owned and operated independent financial planning firm based in Hastings. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 878 961.