A sharp drop in property prices could happen in New Zealand, but is unlikely because our economic boom is being driven by more than one sector, says a property valuation boss.
Top end property prices in Western Australia are said to have collapsed by 30 per cent since a 2009 peak and families are at breaking point, plagued with mounting debts they can't pay off, as they face the reality of a collapsing economy.
Australian media have reported that as properties decrease significantly in value and unemployment rates rise, many are now struggling to find jobs to make ends meet.
Ashley Church, chief executive of the New Zealand Property Institute, which represents valuers and other property experts, said there were some parallels between New Zealand and Western Australia.
Like New Zealand, Western Australia had seen a dramatic increase in its population driven by an economic boom which had pushed up house prices.
But over there the boom was driven by mining, whereas New Zealand's economic boom was broad-based.
"If you look at what has caused it... We have got a much more diverse base."
Church said to see a drop in house values in Auckland or New Zealand of the magnitude which has taken place in Perth, the country would need to see a dramatic turn around in migration and an exodus from the country.
"While that's possible — it would require the simultaneous or similarly timed collapse of the primary, tourism, education, finance and tech industries — something that is extremely unlikely to happen."
Church said all sectors had down-turns and the property boom would end at some point.
"But the broad base of the economy means that one or more should always sustain the stability.
"This wasn't true of Perth although it is true of Melbourne and Sydney — both of which are much more like Auckland and which have not had Perthesque house price collapses."
Church said if you looked at past history the only time property values took a substantial hit in New Zealand was in 1973 and 1974 when the market dropped 38 per cent on the back of the oil shocks and the British entering the common market.
Since then New Zealand had experienced the global financial crisis and the dotcom crash without seeing a significant collapse in property prices.
"New Zealand has this ability to endure through these changes in economic fortunes.
"Could it happen to us? Yes. It is likely to? I suspect not based on history."