New Zealand banks predict 20% drop in house prices over next year

Economists say tighter credit conditions, higher mortgage rates and increased housing supply behind sinking prices

New Zealand's house prices are on track to drop by up to 20% in the next year - the biggest drop since the 1970s - two of the biggest banks have predicted, which would take prices back to where they were just over a year ago.

For years, the country has been plagued by a runaway housing market. The cities of Wellington and Auckland have some of the least affordable property markets in the world, and homeownership rates have been falling since the early 1990s across all age brackets, but especially for people in their 20s and 30s.