Further, if at the same time an increased volume of new houses and apartments was starting to come on stream, then an excess supply situation could develop, causing prices to come back more sharply. We have seen this happen in regional housing markets in New Zealand.
For example, house prices in Thames-Coromandel and Queenstown-Lakes saw relatively large falls in the wake of the 2008/09 recession, after experiencing relatively strong building activity during the 2000s. In other countries, excess housing supply has seriously exacerbated housing market downturns – as seen in Spain and Ireland during the GFC.