"People should have questioned the high house price rises in the last few years and realised that could not continue," he said.
National prices had risen 49 per cent within just two years to the peak marked by REINZ in November last year, he said. Yet mortgage rates were headed back to 2019 levels, he said.
"So if you don't think an 18 per cent fall is rational, why would you think a 49 per cent was rational?" he asked.
Swanepoel said he had been a financial analyst for more than 25 years and is a former head of research. He has an engineering undergraduate degree and a master of business administration degree.
He said the pace of the steep house price rise throughout New Zealand from 2020 to 2021 had taken him aback.
"I didn't expect house prices to continue to rise so sharply as did from August last year," he said.
Swanepoel released a report last August saying the market was nearing its peak. But he said he didn't expect prices continued to rise so sharply through to November.
"The $965,000 in November surprised me," he said referring to November's REINZ data. "Since then it's been trickling back down.
"I think house prices will continue to fall by 1 per cent per month from now till December 2023 which is how you get the 18 per cent," he said.
House prices are being driven by many factors and people often thought they wouldn't go down but that was not true, he said.
"We always expect more for a house when we sell it," he said.
Rising mortgage interest rates were the main factor which would depress prices.
"The reason I'm saying they're going to go down is when the two-year fixed mortgage rates begin to roll over, they're going from 2 per cent to 5.5 per cent. That hurts people's ability to buy a new house and to hold onto existing properties," he said.
Rents don't have the ability to rise to justify the current house price, he said.
Demand for new houses has also outstripped capacity for at least 18 months, he said.
Consents have been won for new housing to be built but those plans haven't necessarily gone ahead.
Demand for new housing had exceeded supply and that would help building activity to continue at capacity levels for at least another two years, he said.
If house prices did fall 18 per cent by the end of next year and this led to a steep fall in business confidence, it would be imperative for the Reserve Bank to ease up on its almost 4 per cent OCR target in the next two years to relieve mortgage rate pressure, Swanepoel said.
Barfoot & Thompson said yesterday some Auckland house vendors were swiping places from the market rather than accepting low offers, according to the head of the city's biggest real estate agency.
Peter Thompson, managing director, revealed this trend when the agency announced average sale prices fell 2.5 per cent in the last month.
"Some vendors not able to achieve the price they want for their property have delisted rather than lower their asking price," Thompson said.
He acknowledged the price drops but said they were "orderly" and steady since the peak late last year.
REINZ figures for May won't be out until around the middle of this month.
