House prices are being tipped to grow by as much as 10 per cent this year and put questions of affordability firmly back in the election spotlight.
It comes as Auckland prices and house sales leapt to highs not seen in the month of January since the 2016 boom years, according to the Real Estate Institute's latest data.
It's also led to continued calls for the introduction of a capital gains tax despite the Government and Opposition ruling out bringing one in.
Dominick Stephens, Westpac chief economist, tipped annual house price growth to hit a peak of 10 per cent mid-year as low interest rates again pushed prices "too high for comfort".
"It's a faster rate of house price inflation than incomes are growing," he said.
"I predict concerns around people's ability to muster a deposit to buy a house will re-emerge just in time for the election."
Skyrocketing Auckland house price growth earlier played a key role in the 2017 election as many frustrated young buyers feared they would never set foot on the property ladder.
It helped the Coalition Government win election on back of a promise to tackle affordability.
By early last year, housing affordability appeared to have fallen down the list of political priorities as prices endured an 18 month slump and first-home buyers became the dominant buyer group.
However, new data from REI yesterday showed a housing market pick-up that began last spring was now in full swing and threatening to push Auckland prices to new highs.
Almost 10 per cent more Auckland homes sold last month than a year earlier making it the highest number of January sales since January 2016.
Auckland's median house price also hit $875,000, close to record highs and up 8.7 per cent on the median $805,000 price last January.
National house price growth was also up 7 per cent in the 12 months to January, according to REI's House Price Index measure.
"This time last year, only the Auckland region had a median price over the $600,000 mark and now the Bay of Plenty, Wellington, Tasman and Nelson regions all have median prices at or over that figure," REI chief executive Bindi Norwell said in a sign of the strength of the market.
Westpac's Stephens and his team last April predicted national price growth would hit 7 per cent in 2020.
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At the time, national price growth was just 1.4 per cent and all other major forecasters were tipping subdued prices in the coming year, he said.
The successful prediction showed low interest rates were the major factor driving prices up - even having more impact than the supply of housing, he said.
"Over the past year, New Zealand construction activity has ramped up substantially while net migration has steadily declined," he said.
"However, house prices have still shot higher. We think that has been due to a big reduction in interest rates combined with the cancellation of earlier plans to introduce a capital gains tax."
This showed that - with interest rates being controlled by global economic forces - the only effective way to solve New Zealand's housing affordability crisis was to reform the tax system, he said.
Government promises to build more houses would help, he said.
But these these would tend to simply be bought by property investors so long as the tax system allowed them to claim deductions on interest payments and maintenance while usually paying no tax on capital gains, he said.
"Meanwhile, first home buyers will remain out in the cold paying tax on their incomes and savings as they work towards raising a deposit."
Yet, while house prices were flying again, Stephens didn't tip 2020 to be another boom year like 2016, 2010 or the mid-2000s.
Interest rates were unsustainably low and would likely start to rise at the end of 2020, he said.
"And when they do, the housing market will cool very rapidly and we could experience declining house prices."