"But there's a wide range of possibilities and a sharper decline is certainly a possibility."
Ireland's house prices stabilised in 2007, then started falling until the second quarter of 2010, by which time they had dropped 35 per cent.
Housing loan approvals dropped by 73 per cent.
Gaynor said the factors behind what had also happened in Greece and Spain showed the potential for a "devastating" situation in New Zealand.
"I think of the Irish example and the similarities which happened in Ireland [compared] to here are huge.
"The first thing is the role of the media," he said, citing articles about house prices being given the same prominence as articles about tragic drownings.
"House prices are one of the sensations. The media played a huge role in Ireland in record prices - the best suburbs to buy, highlighting people who had bought and three months later made huge gains of 20 or 25 per cent or more.
"It's a mirror image of the same thing here. It has a huge influence because we do have this massive herd instinct.
"We also have a big migration inflow here which is exactly what happened in Ireland and the Irish people were coming back," he said.
That had pushed the housing market up, but it could also be an influencing factor in a downturn.
The potential for extensive new-house building is another worry.
"At the start, there was no new supply and there was a really tight situation, with the media pumping up the market, the banks lending aggressively and the thing that killed us [in Ireland] was that supply increased. That's going to be one of the more interesting things here.
"Developers are now finding it easier to get finance. The Filipinos are coming in. The Chinese are coming in and supply will increase and that's what happened in Ireland," Gaynor said, citing Ireland's vast, empty, partly built ghost housing estates on which work halted when the economy collapsed.
In Ireland, banks called in loans and sought additional equity, Gaynor said, and that could be a warning for highly leveraged New Zealanders.
"Banks are ruthless with people. Be under no illusions. You owe them money and they will want it back."
A correction would occur, but he was giving no time frame.
"To me, this is really obvious. It's as clear to me as night and day and I don't know when it will happen, but it will happen," he said.
"It's not as if you have to be a genius to work these things out. It's happened in so many other countries in the world. We're caught up in an era where everything keeps going up. This is like the 1980s and the sharemarket then."
The immediate past president of the Auckland Property Investors Association, landlord David Whitburn, hit back at Gaynor and Stephens, predicting the sharemarket would fall at least 5 per cent between 2016 and 2018.
"In the long term, it is just another property cycle and prices may fall in the downturn," Whitburn said. "Then there will be a recovery and a boom phase before it repeats again."
New Zealanders now have about 73 per cent of their assets in real estate, drawing warnings from the International Monetary Fund, international credit rating agencies, Reserve Bank governor Graeme Wheeler and the Organisation for Economic Co-operation and Development.
Deutsche Bank economists have listed New Zealand houses as the world's third-most-overvalued behind Canada and Belgium.
This month's Demographia report listed Auckland as one of the world's 10 least affordable major cities when house prices are compared to incomes - slightly cheaper than London but pricier than Los Angeles, Toronto, New York, Perth and Brisbane.
NZ and Ireland
Similarities
• Role of media in hyping up the sector.
• Risk of people leaving, a net migration reversal.
• Big construction upswing increasing supply.
