Housing crash unlikely

While some commentators have talked of prices slumps of 20-30%, Bruce McKay over at his blog, The Analyst, suggests house prices will remain static over the next few years.

...house prices will enter into an extended period of minimal, if any, growth...my view is that there is scant evidence to suggest that house prices are about to “fall out of bed.

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Part of his reasoning is that because the housing market in New Zealand is so illquid, it will take a long time for it to find its equilibirum.

I disagree, as if this theory were valid, then we could also apply it in reverse meaning the dramatic price increases of the last five years couldn't have happened.