Consumer confidence is plunging and inflation is roaring, leaving many homeowners with big mortgages that could get bigger, Justin Giovannetti writes in The Bulletin.

Unsustainable expectations about house price growth have now been dashed. Or: the boom is over.

The number of people who think this is a bad time to buy a house now outnumber the positive group by five-to-one. That’s the lowest level of home owner confidence in 26 years, Stuff reports. Last year’s overconfidence is now being replaced by a hangover, according to ASB, as mortgage rates climb, credit margins tighten and home buyers become increasingly stretched. Most people now expect mortgage rates to climb while economists at the four biggest banks all expect house prices to fall. Some large landlords are now warning they might make a significant loss on some property sales as prices have started to fall.

The signs are everywhere that the housing market is going into decline.

The average house price hasn’t grown this year, with values staying flat in January and falling in February. RNZ looked at the Quotable Value’s report released earlier this week and found every indicator pointing to a gradual decline. With the average home in Aotearoa now priced at over $1 million after two years of breakneck growth, most first home buyers have been priced out of the market and there’s little to celebrate. “There are less buyers out there now with the tightened credit rules and rising interest rates taking a number of first-home buyers and investors out of the market altogether,” QV’s general manager told the broadcaster. Westpac declared last month that the housing boom is over.

Is this actually the end of the great rise in house prices?

The boom may have ended semi-officially a fortnight ago but there’s been little celebration. And little to celebrate. Liam Dann wrote about his surprise at the lack of media commentary in the NZ Herald. Partly it might stem from a disbelief that this is actually happening. A week after he wrote his column, CoreLogic reported that the average house price in Auckland pushed past $1.5 million for the first time. That shows the great momentum of last year’s titanic house price increase, pushing into the first few months of this year. But it also reflects the fact that even a 10% drop this year, as ANZ now warns, won’t solve the housing crisis. Getting back to affordability will take a much larger drop in prices, or a large rise in incomes.

The wider economy now points to what is coming next.

There are now widespread warnings that the reserve bank may need to double interest rates by winter, sending a shock to consumers. As Interest writes, it could derail the economy with the much dreaded “hard landing”. Inflation was already on pace for the worst year in a generation and then Russia’s invasion of Ukraine sent prices at the pump spiralling. We could be reaching the point where businesses have no option but to start hiking wages and prices, fuelling more inflation. Dileepa Fonseka has written about the possible tough economic times ahead for Stuff.