A housing expert warns house prices could fall by five percent in certain areas as the economy runs the risk of "stagflation".
CoreLogic chief property economist Kelvin Davidson told AM on Monday the housing market is currently "plateauing" but job losses could have a detrimental effect on housing prices.
"I would call it a soft landing that's the camp we are still in but for sure there is still some pressure for the housing market but there is still some supportive factors like unemployment is still low for now," he said.
"Soft landing for me means broadly flat housing prices at a national level, could be falls of up to five percent in certain locations but within that, you still have some areas still rising."
Davidson said even if house prices fall five percent, it only takes them to where they were in August and September last year.
"I would be watching the unemployment rate as I think that does hold the key and part of this stagflation story is if we do see a slowing economy and we do see job loses come through, then the outlook for housing would be worse but for now it is sort of a soft landing, a plateau with some falls in some areas and some increases elsewhere."
Davidson said New Zealand faces the possibility of falling into "stagflation", which is the combination of inflation and a stagnant or slowing economy.
"We've got high inflation and the risk of a slowing economy and part of that is what the Reserve Bank has to do in terms of controlling inflation, is push up the official cash rate, so that runs the risk of slowing the economy," Davidson told AM.
"This has direct impacts on the housing market of course because the official cash rate going up will put upwards pressure on mortgage rates and at the same time you've possibly got that risk of job losses too, so it's a pretty potent combination for housing as well.
Watch the full interview above.
