First-home buyers will benefit from a catastrophic collapse in New Zealand's property market that could see house prices fall by more than 30 per cent in the next few years, an American economist and demographer predicts.
Harry Dent has predicted some of the worst market crashes in recent history, including the decade-long economic slowdown in Japan in the 1990s and the 2008 global financial crisis.
Now, he is predicting property prices in New Zealand will fall between 30 to 50 per cent in the next few years.
Speaking from Australia - where he is promoting his latest book, The Demographic Cliff, and talking at seminars - Dent said New Zealand was in a property bubble that was ready to burst.
He said the bubble was being propped up by baby boomers, immigration and foreign buyers, especially from China.
"China is holding up real estate, especially in Australia and New Zealand, and one of the reasons is the rich Chinese are getting out of the country."
However, China's housing market was also in an "unbelievable" bubble. While house prices in Auckland were about nine times annual income, they were about 30 times income in China.
When the Chinese real estate bubble bursts - like Japan's did in the late 1980s - it would trigger a similar collapse here. That could happen within the next few years.
Mr Dent - whose predictions draw on demographic data and long-term trends - said people wrongly believed property prices could not go down in value because there was strong demand.
"But what people don't understand is the reason you get a bubble in the first place is because there's strong demand versus limited supply, and that's what you have in Australia and New Zealand," he said.
"I think you're going to see at least a 30 per cent correction, and you could see as much as 50 per cent - a lot of that depends on how bad China goes."
When the New Zealand bubble bursts, it would be a good time to buy property here - especially for younger first-time home buyers.
"Young people should be praying for this, because they don't have a shot," Mr Dent said.
"High real estate prices are only good for the people sitting in real estate that bought it a long time ago. It's horrible for young families, it makes your business uncompetitive because they have got to pay higher wages ... it's a huge tax.
"Young people really don't have a chance. We really do need a reset."
Mr Dent said New Zealand, like other countries, would also have to raise the retirement age to be able to afford the rising cost of entitlements.
"If we adjusted all of our entitlements, healthcare and retirement benefits for rising life expectancy ... we'd be retiring at 75, not 65," he said.
"We have a big reset coming on that around the world. I think the world is going to have to go into a crisis to realise that real estate can't go up forever, that we can't afford the entitlements."
Mr Dent predicts the next global financial crisis will see the unwinding of commodity prices. That would be bad news for New Zealand's export-led economy, he said.
The crisis - which Mr Dent predicts could start as early as this year - would be a major depression rather than a recession, he said.