ANZ's economists think the housing market could start to cool next year.
In their latest New Zealand Property Focus report, they say recent market conditions have created a perfect storm for rising prices.
"Housing demand has remained strong, spurred by low mortgage rates and a speculative dynamic," the report says.
"Added to that, a lagged response in new listings has meant that buyers are chasing relatively few properties - a perfect storm for house price rises."
However the report sounds a note of caution about how long those conditions will last.
"We are wary about the sustainability of the upturn," it says.
"Low mortgage rates will provide ongoing support, but the market appears out of step with fundamentals.
"The RBNZ is planning to re-impose LVR [loan-to-value ratio] restrictions, and banks have already signalled a tightening in credit conditions for investors.
The report also sees an increase in listings, which will increase the numbers of properties available for sale.
"The outlook is uncertain, but on balance, we see some cooling in the market over time," it says
"The question is how long this raucous party can go on.
"Population growth is very weak, new builds are becoming available, and income strains are likely to increase as the impact of the closed border on the economy becomes clear and direct fiscal support wears off.
"And for those whose incomes are unaffected, affordability constraints are expected to be a constraint at some point, even at low interest rates.
"Given these factors, we think that heat from the market will abate in time, though the support of low interest rates and abundant liquidity will provide a continuing offset.
"As the economic recovery stagnates in 2021, our current expectation is that the housing market will lose some steam, with a possible wobble expected.
"The outlook is uncertain and the market has momentum for now, but overall, we don't expect the current heat to be sustained."
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