Over the past few weeks there has been much debate about the future of house prices in the wake of the Covid-19 lockdown.

My own view is that the national median house price may drop a little for a few months but that, overall, house prices will be largely unaffected by the carnage taking place in other parts of the economy. My caveat to this is that there will be a handful of locations where prices will drop more markedly – and possibly for quite a long time.

But the reality is that none of us really know what will happen and that all of the different views – mine included – are just opinions. There are just too many variables at play at the moment to fully account for all possible outcomes and anyone who claims to have absolute certainty about how this all plays out is either fooling themselves or trying to fool you.

But although no one knows what will happen, it is possible to know how to prepare yourself for the months ahead. And while I’m largely confident about the market I can also give you some advice on how to handle any situation – even a drop in house prices in your area, should that come:

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1. Remember that you’re not alone

If you live in a part of the country where house prices drop, the same thing is happening to your neighbour. That may seem like cold comfort in the face of a loss of equity but it puts what’s taking place around you into perspective. Others will be in the same boat and facing the same issues.

2. "Value" and "affordability" are not the same thing

Even if the value of your home drops, that doesn’t necessarily mean it will have impact on other parts of your life. If you still have a job and are still paying your mortgage, then life will go on pretty much as it has been. The exceptions to this will be if the value of your home drops below the outstanding mortgage, or if you’re using your house to secure another asset, such as a business. But even in these cases, the banks will do everything they can to help. Which brings me to point number three...

3. Your bank will take a responsible approach

The banks are keeping a very close eye on what’s happening around the country and are as anxious as you are to know how the market will respond. They’ve already put in place measures to help those who are struggling to make mortgage payments – and I would expect them to also take a very pragmatic and supportive approach in locations where house values fall. So don’t panic.

4. It’s all relative

Unless you’ve bought your home relatively recently, or are using it as security against another asset, a drop in its value will still be relatively insignificant compared to the increase you’ve seen in its value over the past few years. Houses in many parts of the country have seen their value double over the past ten years, so even if we see the national median house price drop by around 11 percent as we did after the GFC, it will still be a small fall relative to years of gain.

5. A drop in house prices isn’t "real" unless you sell

If you’re happy in your home, have reasonable equity in it and have no intention of moving anytime soon, then a drop in value is little more than a number on a piece of paper.

6. House prices will recover

If 50 years of New Zealand housing market history teaches us anything, it's that house prices will recover. The long-term trend of the Kiwi market is strongly upward, with house prices having broadly doubled in each of the four decades following 1980 - despite global financial hits in the form of the GFC and the Asian Financial Crisis over the past 20 years. So if you see a fall in the value of your home, I’d encourage you to take a medium term view. The drop won’t be forever.

- Ashley Church is a property commentator for OneRoof.co.nz. Email him at [email protected]