New Zealand house prices could fall 12% by 2020 due to a cocktail of rising interest rates, falling net migration and slowing population growth, economic forecaster Infometrics says

Releasing Infometrics' latest set of forecasts, chief forecaster Gareth Kiernan said Auckland mortgage-holders look particularly vulnerable to even modest interest rate rises in coming years. A future rise of 1.5-2 percentage points would clearly stretch many borrowers in Auckland and squeeze potential buyers out of the market, he said.

Infometrics and most bank economists are expecting the Reserve Bank to keep the OCR on hold until mid-2018. The Reserve Bank itself is forecasting an OCR hike at the start of 2020.

Infometrics last year forecast an 11% drop in house prices in the two years to 2019.

Finance Minister Steven Joyce has been sounding warnings on the potential for rising interest rates recently, saying this week people were hopefully getting the message on potential pressures in the housing market.

See the comments from Kiernan on house prices and the New Zealand economy below: